Opportunities and limitations of the intelligent systems of manufacturing adoption: Romanian case.

Militaru, Gheorghe ; Dumitrescu, Corina

1. INTRODUCTION

Global competition and rapid change of customer requirements are forcing major changes in the production styles and configuration of manufacturing organizations. Increasingly, traditional centralized and sequential manufacturing planning, scheduling, and control mechanisms are being found insufficiently flexible to respond to the changing of production styles and highly dynamic variations in product requirements (Hernandez-Matias et al., 2007).

The Romanian manufacturing companies, as well as those from the former communist states in South-East Europe, need to assimilate new technologies, after they have been privatised and reorganized. These companies have to make great investments in the Intelligent Systems of Manufacturing (ISM) in order to get through the pressures created by the global competition and the technological gap between developed countries and those with emergent economies.

Investments in modern manufacturing technologies can provide competitive advantages for the companies on the long run. Nevertheless, the Romanian manufacturing companies have purposes on the short run especially, such as: the maximization of the profits, capitalization or the accelerated recovery of the funds advanced in the privatization process by the owners. This behaviour is punished by the market. For instance, the exports of manufactured goods produced by the Romanian companies decreased by 40 %, in the first trimester of 2008 comparing to the same period in 2007.

The authors try to identify the factors which impede or limit the investments of the Romanian companies in the Intelligent Systems of Manufacturing. Therefore, the main purposes of this paper are: (1) the determination of the extent in which the Romanian companies adopt the new manufacturing technologies, (2) the identification of the risks when they assimilate these technologies, and (3) the impact of these technologies on the traditional manufacturing companies.

The paper is organised as it follows. After a brief introduction there is a presentation of the way in which the investments in the intelligent system of manufacturing might generate competitive advantages for the manufacturing companies. Then, a study based on a sample of specialists from few manufacturing companies is presented in the third section of the paper. The fourth section is dedicated to the presentation of both the results and the limits of the study. Finally, the last section presents the main conclusions and the directions of the future research.

2. THE INVESTMENTS IN ISM CAN PROVIDE COMPETITIVE ADVANTAGES FOR COMPANIES

In this section, we will explore in more details the literature on the intelligent systems of manufacturing adoption and its impact on business performance.

In Fig.1 is illustrated the impact of the investment in intelligent systems of manufacturing on the traditional manufacturing companies.

The traditional approaches limit the reconfiguration capabilities of the manufacturing systems. Reducing costs often means to use expensive equipment. At the same time, to increase sales means being able to respond quickly to market requirements even if the equipments and people might be less used. Low inventory levels mean less cash tied up on the shelves but customers want product options and more products means more inventory. Short cycles contribute to cost reduction and revenue increases (Kuzgunkaya & ElMaraghy, 2008).

[FIGURE 1 OMITTED]

Computer Integrated Manufacturing (CIM) is a new production approach in which the functions of design and manufacturing are rationalized and coordinated using computer, communication, and information technologies. CIM has the capability to largely or entirely automate flexible manufacturing by coordinating work cells, robots, automatic storage and retrieval facilities and material handling systems (Hsich & Jiang, 2007).

The competitive advantage of CIM in manufacturing companies comes from its ability to develop a large quantity of new products quickly, to produce small production runs of custom-made items efficiently and maximize the flexibility of the manufacturer in responding quickly to changes in the environment (Heizer & Render, 2006).

Computer Aided Design (CAD), Computer Aided Manufacturing (CAM), Flexible Manufacturing System (FMS), Robotics together with Knowledge and Information Based Systems and Communication Networks are expected to respond effectively to the manufacturing requirements that are becoming highly integrated and complex (Halevi & Wang, 2007).

3. RESEARCH DESIGN AND METHODOLOGY

The research method is a comparative analysis of interviews conducted in several Romanian manufacturing companies. We conducted in-depth interviews with production and project managers. Before the interviews, we developed a questionnaire focused around our research question.

4. ANALYSIS AND RESULTS

The analysis involved iterating between theory and data. We first conducted an in-depth examination of the initial interview data to uncover key themes, then a second-level data analysis, which included follow-up interviews. During this process, we reviewed theory on the identification of both the factors which impede or limit the investments in the ISM and the risks of the companies when they purchase such assets. Results of the exploratory analysis are reported in Table 1.

Our exploratory analysis revealed two key findings. First, we recognized that despite all the money, energy, and time spent by companies trying to automate their factory, ISM is still an unfulfilled promise for many. We have investigated the problem and identify the primary obstacles to move rapid adoption of ISM technologies. Some of the barriers to ISM adoption are presented below:

1. Top management commitment. ISM installation must start from the top with a commitment to provide the necessary time, money, and other resources needed to make the changes that ISM requires;

2. Management perception and attitude. ISM requires a new perspective on the part of management - maybe even a new philosophy. Top management, industrial and manufacturing engineers must change their way of thinking and develop new skills;

3. Integration challenge. To take full advantage of ISM benefits, the entire manufacturing process from product design to procurement, production scheduling, management, production and delivery must by integrated;

4. Lack of planning. Lack of understanding of the technology and suitable infrastructures to support the new technology, inappropriate matching of technology to organizational strengths and weaknesses will all contribute to top management failure to appreciate the promise of ISM;

5. ISM requires flexible organizational structure. The tendency of the most managers from manufacturing companies to use less flexible organizational structures and rigid corporate rules are significant barriers to ISM adoption.

Secondly, the data revealed problems (risks) that may lead to failure in ISM adoption: partially obsolete facilities, user hostility, dynamic volume and mix, shortage of technical skill, incompatibility between systems, varieties of process options, and facilities with mixed processing.

5. CONCLUSIONS

Two strategic approaches about the adoption of the intelligent systems of manufacturing (ISM) might be outlined on the basis of both the results of the study and the literature reviewed by the authors. The first approach is proactive and it is applied by the companies which want to be the first that exploit the potential of the most advanced manufacturing technologies. These companies act in industrial sectors with a development rhythm on the long run comparable with capital cost. They have digital integrated systems, massive capital investments and a considerable market share.

The second strategic approach is reactive and it is adopted in most of the manufacturing companies from the emergent economies, among which Romania as well. These companies have low wages costs, but the lower this competitive advantage is the more interested in assimilating manufacturing technologies. In Romania the manufacturing companies impede or limit the adoption of these technologies because of the very high technological gap, the low investments in the information technologies, and the lack of knowledge about the ISM or the high opposition to changes.

Future research in this field ought to be focused on both the industrial sectors in which these companies act and the identification of such mechanisms which accelerate the adoption of the advanced manufacturing technologies available in both developed countries and emergent economies.

6. REFERENCES

Halevi, G. & Wang, K. (2007). Knowledge based manufacturing system (KBMS), Journal of Intelligent Manufacturing, vol. 18, no. 4, pp. 467-474, ISSN: 1572-8145

Heizer, J. & Render, B. (2006). Operations Management, Pearson Prentice Hall, ISBN 0-13-185755-X, New Jersey

Hernandez-Matias J.; Vizan J. ; Hidalgo, A. & Rios, J.(2006). Evaluation of techniques for manufacturing process analysis, Journal of Intelligent Manufacturing, vol. 17, no. 5, pp. 571-583, ISSN: 1572-8145

Hsich, S. & Jiang, Z. (2007). Evaluating investment-return based design for AMHS in semiconductor manufacturing systems, Journal of Intelligent Manufacturing, vol. 18, no. 6, pp.617-639, ISSN: 1572-8145

Kuzgunkaya, O. & ElMaraghy, H. (2008). Economic and strategic perspectives on investing in RMS and FMS, International Journal of Flexible Manufacturing Systems, vol. 19, no. 3, pp. 217-246, ISSN: 0920-6299

Tab. 1. Results of the exploratory analysis (selection)

 Antecedents of ISM adoption % Results

Management commitment 60 High
Organizational structure 30 Flexible
Customer satisfaction 76 Important
Loyalty 20 Important
Organizational learning ability 30 High
Efficiency 70 Very important
Flexibility (++) 90 High
Technical skill 65 Very important
Information technology 78 Advanced
Agility (+) 95 Very important
Adaptability (+) 93 Very important