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Manufacturing survey shows: technology-investment payoff slipping.

Manufacturing survey shows:

Technology-investment payoff slipping

Manufacturers are having trouble deriving and sustaining benefits from the application of technology. That's one of the disturbing findings from a study of 759 companies responding to a survey conducted by Deloitte & Touche Manufacturing Consulting Services, Cleveland, OH.

Even though the application of advanced manufacturing technology was touted as a panacea for the malaise of American manufacturing as the decade of the 1980s began, the study concludes, as the 1990s begin, the majority of manufacturers have little or no experience with advanced manufacturing technologies. What's more, only a handful (primarily in the aircraft/aerospace industry) claim to be applying it at a state-of-the-art level. Asked if technology yields benefits, 23 percent said "No", 48 percent of the respondents felt they have accrued only "moderate or minor" benefits, and only 29 percent reported "significant" benefits.

"Perhaps the most troublesome trend our survey has identified is the steady decline of manufacturers citing significant benefits from the application of advanced manufacturing technologies...over the past three years," the study reports. The study found that attempts to reach the "Technological Garden of Eden" have been slowed by gaps in the availability of products, the failure to integrate systems properly, and a perceived unfavorable cost-benefit ratio. "This represents an overwhelming indictment of the technology vendors and technology integrators in North America," the study concludes.

Craig A Giffi, senior partner and one of the study's authors, expressed the fear that "with such a dim view of the payoff for the investment in technology by American manufacturers, the retardation of the application of technology may be both real and severe in the 1990s." He points out that "in general, manufacturers are not counting heavily on technology to contribute to future success."

What's worse, the study points out, is that the technologies being selected for use in the near future are "old and relatively unsophisticated, certainly not the vision of CIM." For example, Mr Giffi points out, the personal computer (PC) was the only unanimous selection by the industry groups as being an above-average contributor to success in the early 1990s. Even so, the integration of PCs into local-area networks ranked considerably lower in manufacturers' plans. "Manufacturers don't appear to understand technology. The identification of stand alone PCs as the most significant contributor to success in the early 1990s suggests that US firms are developing `islands of information'", Mr Giffi adds.

Gregory Seal, a partner in Cleveland's Deloitte & Touche management consulting group, has a theory on the disenchantment over technology. He feels that it has come because American manufacturers have the "cart ahead of the horse. Essentially, executives were relying on technology `Nirvana' to set the course before they put their workplace in order.

"World-class companies understand," Mr Seal says, "that the major impediments to the adoption of technology in manufacturing are not technological, but rather are human related. They understand that the task of technology implementation is not complete simply because crates have been unpacked, equipment assembled, installed, and the wires connected."

He's encouraged, however, because the survey indicates manufacturers are planning to enhance their infrastructure. "The manufacturing environment is a human one, and technology is the visitor. By strengthening its infrastructure--allowing its personnel to interact, adapt and grow--technological advances in the manufacturing arena will become accepted and also grow."

Mr Seal sees another red flag raised by the survey--an indication that manufacturing will not be adding a significant number of new jobs in the early 1990s. "One must question whether manufacturing can significantly strengthen its infrastructure, yet ignore the need for bright, skilled people," he says while issuing this warning:

"We are concerned that manufacturing does not compete effectively for high-quality personnel. The future of manufacturing in North America is tied to its ability to attract the best and brightest people, and retain them. Manufacturing is facing two roadblocks for a competitive future: a scarcity of trained craftsmen, and a need to develop technology that can be fully integrated in the workplace. These roadblocks will be eliminated only by hiring talented, young people."

Other survey findings: * Rated high as a critical success factor for the 1990s is an emphasis to continue to deliver high-quality products, on time. * Manufacturers seem to be putting renewed emphasis on the value of customer service. * Relatively little value is being placed on offshore production, and only slightly above-average value in overseas sales. Mr Giffi suggests that, on average, US manufacturers are not prepared for the global marketplace, and they are ignoring its relative importance for future success. * Nonfinancial measures of manufacturing performance continue to grow in importance. While performance will continue to be measured by profitability, it'll also be measured by perceived quality, customer service, conformance quality, and on-time delivery.
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Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Publication:Tooling & Production
Date:Mar 1, 1990
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