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2 The Role of Advanced Technology in Future Manufacturing The recent performance of U.S. manufacturing (see Chad ter 1) suggests that relatively few firms have begun to make the changes necessary to compete in the manufacturing environment of the future. As competition intensifies and technological change affects both products and processes, standard practice will become less and less effective. In many cases, success in the marketplace will require reassessment of total business strategy and the tools used to pursue it. Functions such as purchasing, marketing, and distribution will need to adapt, but the primary need in many industries will be suitable design and production strategies. In fact, the effectiveness of the design and production functions in supporting overall business strategy may prove to be the major determinant of the competitiveness of U.S. industry. Effectiveness is a relative term that should not necessarily be equated with the most advanced design and production technolo- gies. Selecting the proper technologies is a major management challenge that will become more complex as technology advances. The selection will depend on factors such as the capabilities of the technology, the type and number of products being manufac- tured, the relative costs of production, the abilities of competitors, and the long-term objectives of the company. Advances in flexible manufacturing systems (FMS), for example, will be more valuable to a batch manufacturer with frequent modifications in machin- ing requirements than to a mass producer of standard parts with 31

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32 infrequent design changes. Each manufacturer, even each plant, must assess its objectives and employ technology accordingly. Management also must implement technology effectively. Ef- fective ~rnplementation requires recognition of the effects that new technologies can have on total operations. Material handling sys- tems and automated assembly systems for instance. mav he in stalled to reduce direct labor inputs, but they also can result in lower inventory costs, a streamlined production process, and new part designs. Such systems, however, may create a need for ad- ditional computer hardware and programming Relent. ~e ~ ~] I _ _ ~_ ~A._ ~ _ ^~^ specialized engineers, so total labor costs may not change much. Managers also must understand that needs and capabilities may change rapidly. None of these technologies can be once-for-all in- vestments. The best approach may be a modular system based on a long-term strategy of integrating "islands of automation" int.~ ~ cat ~ AL ~ AL ~ 1 - oll`6lO 111 WlLl1 a comprehensive data base and communication network. Appendix A provides a description of the major technolo- ~,-" A ~= Mu to be avaiianie tc, m~.n,~f~rt.'lr_r~ i" the future. This chapter, instead of focusing strictly on the physical capabilities of the technology, emphasizes issues in using advanced technologies in design and production processes-issues that may represent radical departures from traditional manufacturing ex- perience. Some companies are already confronting these issues in their efforts to modernize production facilities. These U.S. man- ufacturers are well into the ~ .rl~r ~.t.~.~^a Of ~1 1^,~,~ BAND RADII__ logical revolution in manufacturing. Their early experiences give strong indications of the direction that manufacturing manage- ment, strategy, and competition will take in the future. New technologies will permit manufacturers to implement strategies that previously were, at best, ideal objectives subject to a range of compromises. These strategies will vary by company, but several objectives will be common to all. Every manufacturer will continue to strive for more efficient use of total resources. Un ~V ~^ _^ ~A44 UAA~ ~ , ~_ _w~- v- ~ avow-~1 111 UO~1111~ der this overriding goal, key objectives can be summarized as (1) more rapid response both to market changes and to changing con- sumer demands in terms of product features, availability, quality, and price; (2) improved flexibility and adaptability; and (3) low

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33 costs and high quality in design and production. More specific categories could be added, but these three broad objectives are likely to be major elements of successful competitive strategies. Clearly, new technologies alone cannot achieve these goals. Great strides can be made using new management approaches, more flex- ible work rules, and organizational changes. In fact, these factors (see Chapter 3) are absolutely crucial to improving manufactur- ing effectiveness, particularly since new technologies are not likely to achieve optimal results without modifications in the human resource aspects of the organization. Managerial and organiza- tional changes are necessary conditions for improved manufactur- ing competitiveness-new technologies can increase those benefits exponentially. RESPONSIVENESS A manufacturer's response to change varies with specific cir- cumstances, such as the structure of the industry, the particu- lar product line, the market in which the product is sold, and the firm's competitive emphasis. Because of the many permu- tations of external factors and possible responses, the important requirement is not a strategy for every contingency but the ability to pursue a range of strategies aimed at particular combinations of circumstances. Much improvement in responsiveness can be achieved by reevaluating the company's operations, particularly in design, engineering, and manufacturing, to determine hand- icaps, improve functional cooperation, and strengthen common goals. Cooperation and even integration of the many functions in the entire manufacturing system will need to be pursued ag- gressively to achieve many of the necessary improvements in pro- ducibility, productivity, quality, and responsiveness. In the future, these efforts will be strengthened by the capabilities embodied in advanced manufacturing technologies. When combined with effec- tive organizational changes, advanced manufacturing technologies will be powerful tools for achieving enhanced responsiveness to many external factors that affect design and production. The technologies that can help maximize responsiveness will vary among firms and product types, and an enormous amount

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34 of tailoring wiD be involved. A major consideration wiD be the degree to which the firm's competitive strategy depends on price leadership or product differentiation. A low-price strategy implies the ability to offer the combination of performance and quality demanded by customers at the lowest possible price, yet still re- spond to demand changes, variations in input availability and rel- ative costs, and changes in competitors' capabilities. A product differentiation strategy, on the other hand, aims to supply a range of price and performance options that covers most consumer de- mands. A firm with a low-price strategy may benefit more from improved production, material handling, and inspection technolo- gies, while a product differentiation strategy may demand more emphasis on computer-aided design, flexible manufacturing sys- tems, and new materials and processing techniques. For many manufacturers, a CAD system is a necessary first step in improving responsiveness. A CAD system that includes a comprehensive CAD data base and modeling capabilities can pro- vide significant benefits beyond such simple use as an electronic drafting board. It can speed changes in product design to meet market demand by improving the productivity of design, manu- facturing, and process engineers and ensuring that new designs are readily producible. When coupled with an effective group tech- nology (GT) data base (see Appendix A), such a system permits parts to be designed and produced rapidly and effectively with minimum changes in tooling, numerical control programs, and ma- terial requirements because new parts will resemble current parts as much as possible. Of course, designing for producibility is a crucial goal regardless of the technology used, but a CAD system can improve the designer's ability to simplify new and existing part designs, improving manufacturability and reducing the need for complex multiaxis machining.) The benefits in terms of design costs, design-t~production times, and quality can far outweigh investment costs. The full benefits will not be achieved, however, without vigorous efforts by management to train engineers and technicians, encourage acceptance, and change the corporate cul- ture, support systems, and business philosophy in a way that will allow the capabilities of the CAD system to permeate the com

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35 p any. Improved design response does no good if new designs are allowed to languish on the factory floor. Although some type of CAD system and GT data base will be a major factor in most firms' efforts to maintain competitive response times, the types of process technology that offer sub- stantial benefits will vary tremendously among firms depending on the types, variety, and volume of parts produced. With batch parts, for example, numerically controlled (NC) machining centers and turning centers with cutting too! drift sensors, selcorrecting mechanisms, and laser-based inspection equipment should provide significantly better quality, reduced scrap and rework, and shorter response times. The manufacturer could be more confident that each part was within specifications and, therefore, could respond more quickly and electively to changing consumer demands. A flexible manufacturing system (FMS) would take these ben- efits a step further. An FMS can perform a number of operations on a limited variety of parts within a family (e.g., parts having a fundamental aspect in common) without the need for manual handling of the parts between operations. Given this definition, a single complex NC machining center conceivably could be de- scribed as an FMS. More sophisticated FMSs might combine a number of machining centers with material handling systems and automatic tool and part changers and integrate the required CAD, GT, material, tooling, and NC program data. In the future, au- tomated assembly operations will be included in the FMS instal- lation, eliminating much of the required human intervention, but this development depends on progress in a number of technological areas. (Appendix A includes a detailed description of FMS tech- nology.) Current FMS installations cover a range of equipment combinations, complexity, and capabilities, which indicates that manufacturers' production operations must be evaluated carefully in developing an FMS that is effective and appropriate for produc- tion needs. For many applications, responsiveness through rapid set-up and delivery is as beneficial as the flexibility offered by an FMS. In many other cases, however, FMSs provide more complex- ity, capabilities, and costs than are really necessary for the firm's production, and alternate approaches, such as design simplifica- tion or hard automation, would be more appropriate.

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36 Although most mass production industries may not need the capabilities promised by an EMS, computer-integrated manufac- turing (CIM) systems will find applications in all types of manu- facturing regardless of the process machinery on the factory floor. CIM refers basically to the data-handling capabilities of the man- ufacturer. It is a sophisticated system for gathering, tracking, processing, and routing information that links purchasing, dis- tribution, marketing, and financial data with design, engineering, and manufacturing data to expand and speed the knowledge avail- able to employees and managers. CIM systems will use interactive data bases and hierarchical control systems coupled to advanced CAD systems, modeling and simulation systems, computer-aided engineering (CAE) systems, production process planning systems, flexible manufacturing systems and/or hard automation processes, material handling systems, and automated inspection/quality as- surance systems. (Appendix A provides more technical details of each of these systems.) At a minimum, each of these elements will be necessary for an effective CIM system because each builds and depends on the others. Each also will require substantial invest- ment in hardware, software, and personnel, but the capabilities provided by CIM can be expected to introduce new priorities and new determinants of competitive advantage. In essence, a complete CIM system will allow teams of design, process, and manufacturing engineers to design products quickly in response to market demand, product innovations, or input price changes. The CAD system, modeling system, CAE systems, GT data base, and other manufacturing data bases will provide feed- back on producibility, material requirements and availability, vari- ous production process options, costs, and delivery schedules. The design data will then be transferred directly to the other elements of the CIM system, and the new product can be produced within a very short time. For many products, the interaction of the engineers with the CIM system may be the only significant di- rect human participation in the production process. Such a ca- pability has already been demonstrated, at least for simple metal parts in very low volume, at the National Bureau of Standards' Automated Manufacturing Research Facility, as well as by sev- eral private manufacturers. Substantial research will be required,

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37 however, to expand and enhance both the hardware and software technology to allow high-volume production of complex parts (see Appendix A). Manufacturers in the future are likely to find that the respon- siveness provided by CIM is a necessary competitive advantage. By providing virtually immediate information on every aspect of the manufacturing enterprise, CIM will force manufacturers to eliminate delays in design and production, because rapid reaction to new opportunities and changing conditions will be a major com- petitive factor. These developments will introduce new bases for competition and may change the economic environment in many industries. Competition will be based on management and labor skill, organizational effectiveness, the price and quality of the fi- nal product, speed of delivery, and serviceability of the design, including appropriateness of materials used, functionality, ease of repair, and longevity. Since CIM technology will be readily avail- able, market success will depend on proprietary refinements to the CIM system and how well it is used. The manufacturer who can use CIM not only to respond quickly but also to minimize total resource requirements will have a competitive edge. FLEXIBILITY Responsiveness, as discussed here, refers to a manufacturer's ability to react quickly to changes in external conditions; flexibility is really an extension of that concept to internal factors. In fact, one can distinguish several types of flexibility. Process flexibility is the ability to adapt processes to pro- duce different products without major investments in machines or tooling for each product. This type of flexibility is the cornerstone of flexible automation technologies that allow optimal matching of materials to product applications, the ability to use various materials, and the ability to produce a variety of product designs. Program flexibility allows process path modifications, adaptive control and self-correction, unattended operations, and back-up capabilities to maintain production even when some part

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38 of the process fails. This type of flexibility addresses the need to optimize equipment use and run multiple workshifts. Price-volume flexibility provides the ability to maintain economic production in a wide range of market conditions result- ing from cyclical and seasonal changes in demand. (This type of flexibility concerns external circumstances, but the firm's internal flexibility will determine the success of the response.) Innovation flexibility refers to the ability to implement new technologies as they become available. This type of flexi- bility depends on a modular approach to manufacturing systems integration that is essential to an evolving design and process ca- pability. Manufacturers have always confronted the problems these various types of flexibility address and to solve them have relied on compromises between production capabilities and costs. The costs of increased flexibility traditionally have included higher inven- tory, increased tooling and fixturing requirements, lower machine utilization, and increased labor costs. By reducing some of these costs through advanced manufacturing technologies, more pro- ducible part designs, streamlined organization, better functional cooperation, just-in-time inventory control systems, material re- quirement planning, and other mechanisms, future manufacturers have the opportunity to reduce the need for many of the tradi- tional cost-flexibility compromises. Cost-flexibility trade-offs will always exist, however, and the advantages of specific technologies will vary tremendously among industries and product lines. For many mass production industries, conventional hard au- tomation will remain the most efficient production process. Hard automation that is, transfer machining lines-is relatively inflex- ible; it is generally product specific. Advances in design capabil- ities, sensors, materials, robotics, material handling systems, and automated inspection technologies should introduce a degree of flexibility into these operations, but efficient production will still tend to depend on economies of scale and product standardization. For traditional batch part manufacturers, the flexible automation technologies embodied in an FMS will change many of the his- toric cost-flexibility compromises. In some applications, FMSs

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39 with flexible fixtures can be expected to reduce set-up times to near zero, allowing smaller and smaller lots produced on demand to become both econorn~cally feasible and competitively necessary. In other applications, group technology, designing for producibil- ity, and efforts to speech changeovers will increase flexibility at less cost and with greater effectiveness than elaborate FMS instalIa- tions. Although the flexibility of the process equipment on the fac- tory floor will differ between mass producers and batch manufac- turers, both will benefit from the flexibility embodied in CIM. The ability to gather and manipulate data in real time as orders are received and products are made will provide a degree of control over the manufacturing process that has not been possible in the past. It ~ in this context that the issues and benefits of flexibility become particularly relevant to a competitive production strategy. No manufacturer could afford and no technology could pro- vide infinite flexibility, and increasing investments in advanced technologies will not necessarily correlate with increasing flexibil- ity in production. As an extreme example, a machine shop using manual machine tools and expert craftsmen may be more flexi- ble in producing a broad range of parts and may be better able to improvise to produce prototypes than a more modern machine shop using NC machine tools. The manual shop, however, is likely to be less cost effective and slower, have more scrap and rework, and, most importantly, be ill prepared to take advantage of other computer-based technologies that could improve control over and the effectiveness of the total production process. The NC shop may have a narrower product line, but it is likely to have quicker response times, more consistent tolerances, better repeatability, and greater ability to integrate other computer-based technolo- gies, such as CAD, and use them effectively. Strictly from a pro- duction perspective, the manual shop could be described as more flexible, but from a total operations perspective, the NC shop is more flexible. Its potential for introducing new design and pro- duction technologies, particularly the data-handling capabilities of CIM, is incomparably greater than that of the manual shop. Nei- ther approach is indisputably correct, however; each is based on value judgments and trade-offs made by the owners in response to

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40 their circumstances. This example, although extreme, illustrates the unavoidable cost-capability compromises that will always be confronted in the pursuit of greater production flexibility. Determination of an optimal level of flexibility for a given plant must include not only the cost effects of different ranges of product mix and quality relative to production capacity, but also the cost effects of fluctuations in demand. The greater the invest- ment in production facilities and the associated fixed costs, the higher the break-even rate of capacity utilization. Consequently, cost savings expected from more capital-intensive production sys- tems at high levels of utilization must be balanced against higher average unit costs as seasonal and cyclical fluctuations reduce av- erage capacity utilization. This dilemma involves price-volume flexibility, but the lesson is applicable to all four types of flexibil- ity. Significant planning is required to achieve optimum flexibility; ad hoc programs and investments will be counterproductive. Although cost-flexibility compromises will continue to apply, the basic flexibility provided by new technology will be much greater than with current NC machining and turning centers or FMS installations. Future flexible manufacturing systems are ex- pected to accommodate a variety of process plans resulting in optimum use of equipment. The system will permit variation in the sequence of operations on the same part, constrained only by the need to drill a hole, for example, before reaming it. This multiple-path flexibility will be feasible not only because set-ups will be flexible and essentially cost-free, but also because part pro- grams will not be specific to any one machine. Machine tools will have sufficient embedded "intelligence" to determine their own parameters for a given part. CIM will ensure that the requisite information is transferred to individual machines from the original CAD data for that part. This scenario of an FMS and CIM system producing parts in small batches along an optimal processing path (but using multi- ple processing paths when necessary) from data generated by the CAD system is the basis of flexible automation. The operation of the system will be predicated on additional attributes. To il- lustrate, the feedback provided by the CAD system to improve the

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41 producibility of a given design depends on the production capabil- ities of the machine tools in the system. Although the system will automatically maintain data on current production capabilities, compromises will undoubtedly arise between maximizing the pro- ducibility of a design with current process capabilities and max- imizing the functionality of the part or increasing producibility with alternate production processes. The manufacturer may need to compromise with the purchaser to ease the specifications for producibility or increase the price to compensate for a less pro- ducible design; subcontract production of the part to a firm with the necessary production capabilities; or add new capabilities to his own production facilities. Even a sophisticated FMS will func- tion effectively only within relatively narrow ranges of material inputs, processing capabilities, and product dimensions. Its po- tential cost advantages are likely to be threatened when these determinants of production requirements are still subject to sub- stantial change. The process flexibility discussed at the outset involves these considerations, along with factors such as maintaining optimum equipment use rates while maximizing the overall flow of parts on the factory floor and minimizing routing costs. This type of flexibility also would include the ability to accept data from sub- contractors' CIM systems, determine the most efficient producer of the part, and integrate that subcontractor's production and schedule with the other aspects of the total order. If the part is not subcontracted, the CIM system will need to be sufficiently flexible to allow rapid acceptance and integration of new process capabilities. Continued development of new technologies is likely to increase the importance of innovation flexibility; to maintain competitiveness, the CIM system will need to be modular, using computer architectures and interfaces that permit additions to the system to be made easily (see Appendix A). The system should not be so integrated, however, that a sin- gle failure can stop the entire factory. Program flexibility should provide every CIM system with sufficient back-up to maintain pro- duction even if relatively crucial parts of the system fail. The risk of failure of each component of the system will be weighed against the cost of providing back-up for the component or some other

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42 acceptable alternative to maintain production. A wide variety of solutions to this difficult dilemma can be expected. Effective implementation of these technologies will require ad- justments from managers, engineers, and customers. The trade- o~s between cost and flexibility will vary among industries and products. Advanced CIM systems will not be infinitely flexible because flexibility will depend on management practices and orga- nizational effectiveness, as well as software, tooling, and material availability. In general, however, both mass production and batch manufacturing industries that can take advantage of CIM tech- nologies can expect a degree of flexibility unknown in the past, with benefits in responsiveness, competitiveness, and total pro- duction costs that outweigh the cost of the technology itself. COST AND QUALITY Advanced manufacturing technologies will give managers new tools to help them minimize use of total resources and thereby re- duce product life cycle costs. Whether competitive strategy em- phasizes low price or product differentiation, price competition in the future is likely to be severe. Reducing life cycle costs and maximizing quality for every product line will be an important de- terminant of competitiveness and profitability. Cost minimization must not be pursued, however, at the expense of responsiveness and flexibility, as many manufacturers may be tempted to do. The best way to avoid overemphasis on costs is to think in terms of minimizing use of total resources, not only in production but also in purchasing, design, distribution, finance, marketing, and service. Nevertheless, the attention given to individual produc- tion factors wiD continue to depend to a great extent on relative factor costs and the shifting importance of factors in particular industries. Because new manufacturing technologies will be developed and implemented at various rates, the eject of technology on rel- ative factor costs is difficult to predict. For some manufacturers, new technology is likely to have only a limited effect on direct la- bor costs and, indeed, will be applied for reasons other than labor savings. The use of CAD and CIM systems will allow these man

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43 ufacturers to continue to design and produce parts in the United States, but other operations, especially some assembly operations in which labor remains a high proportion of cost, may be candi- dates for subcontracting or movement to low-wage countries.2 The potential savings from low labor rates abroad would need to be balanced against the costs of coordinating demand, production, and delivery. Timely production and delivery will be important in avoiding loss of orders and inventory costs that may not be faced by competitors. These factors will require manufacturers with offshore facilities to use significant forward planning to align production with demand. Advanced technologies will allow man- ufacturers to handle data in ways that should help to ameliorate the disadvantages of offshore operations, but these gains may not be sufficient to offset the transportation costs, delays, and relative isolation entailed by distant production facilities.3 For many manufacturers, advanced technology can be ex- pected to allow more rapid reduction of direct labor inputs, al- though again, labor savings may not be the major motivation for the investments. A CIM system with flexible automation will per- mit managers to refine and adjust operations to reflect changes in relative costs over time. It also will introduce entirely new ele- ments to the manufacturer's cost structure, alter traditional ways of measuring costs, and eliminate some major portions of tradi- tional factory costs. It will be possible, for example, to reduce direct labor to insignificant levels or eliminate it in some applica- tions. With no direct labor inputs, some measurements of labor productivity and cost allocation based on direct labor will be ir- relevant. New cost accounting systems will be a major need (see Appendix B). Elimination of direct labor is not the same as eliminating la- bor costs. Technicians, engineers, and programmers will be needed in increasing numbers to maintain and implement CIM systems. Salaries for these employees are likely to exceed wages for direct labor, and their productivity may be more difficult to measure. Even with higher individual salaries, however, labor costs should decline as a share of total production costs because of the capital investments required to keep a CIM system up-to-date. It is difficult to predict the erects of investments in new tech

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44 nology on capital costs as a proportion of total costs. Firms will need to monitor the production capabilities of their competi- tors, as well as those demanded by the market; timely updates of the design and production system will be a competitive ne- cessity. Greater return can be expected and less total capacity may be needed, however, because CIM is expected to allow more workshifts and more optimal use of productive equipment through flexible process plans, less scrap and rework, higher-quality pro- duction, and lower product life cycle costs. Justification and amor- tization of technology purchases will be based on total system performance, which implies a significant shift in the measurement and allocation of capital costs. Although total capital costs in the future are unpredictable, one element of capital costs tooling costs can be expected to increase dramatically over historic levels. Continued implementa- tion of CIM systems and FMSs, along with the emergence of new materials and processes, will greatly increase the volume, variety, and complexity of tooling requirements and the need to move the tooling around the factory. Increased tooling and handling costs are already evident in many manufacturing operations, and the trend can be expected to accelerate as other new developments are implemented. Developments in new materials and material processing will have a significant impact on material costs and availability, espe- cially vis-a-vis product performance and quality. Advanced ma- terial handling systems should have a major effect on the costs of moving and storing materials. New materials such as high- strength resins, composites, and ceramics will create new options in product development, providing significant improvements in performance while reducing material requirements (see Appendix A). Ceramic engine parts, for example, are under development by virtually all major combustion engine manufacturers and will allow simplified engine design and fewer total parts. Once the ma- terial and processing problems are overcome, the effects on ma- terial costs and requirements will be substantial. Sirn~lar effects can be expected with other materials and applications. Even with more traditional materials (e.g., metals), progress in ultrapreci- sion machining will reduce material requirements and improve

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45 product performance.4 These developments will greatly expand the choices available to managers in material application and pro- cessing, which will make the data management abilities of CIM virtually indispensable. For all manufacturers, the ability to accumulate, store, and process data will become a growing force in production, motivated by a rapid decline in the cost of data management. Data will be gathered and accessed rapidly and easily, with a number of impor- tant repercussions, one of them being the increasing significance of tone as a factor of production. The time between design and pro- duction and from order to delivery will shrink dramatically. The trend toward shorter product life cycles and rapid technological developments can be expected to make very small increments- hours and days instead of weeks, months, or even years crucial factors for competitive production. The increased ability to manipulate and accumulate all types of data will have a significant impact on plant location decisions. Since information for the entire organization will be available al- most concurrently regardless of plant site, the criteria for plant locations will emphasize costs, available process technology, re- sponsiveness, quality, and optimal resource use. Some of the con- siderations involved in decisions to move plants offshore have been discussed; these considerations may lead to more decisions to keep manufacturing capacity onshore. In fact, there is some evidence that, due to responsiveness, flexibility, and quality concerns, future trends in factory locations, particularly for component manufacturers, will be toward a pro- liferation of smaller factories closer to final markets and greater use of contiguous manufacturing, in which progressive manufac- turing operations are located in close proximity to each other. New technologies will make both of these strategies easier to pur- sue for many industries, and market demands may make them a necessity. For some industries, the concept of the microfac- tory will become important: small factories, highly automated and with a specialized, narrow product focus, would be built near major markets for quick response to changing demand. Because of the unique circumstances of each industry, in terms of technology availability, labor requirements, cost structures, and competitive

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46 circumstances, it is difficult to predict how strong each of these trends will be, but they are representative of new options available to manufacturers in their efforts to maximize competitiveness. In addition to the costs of labor, capital, materials, and data management, CIM can be expected to change other traditional costs in manufacturing. The producibility feedback and modeling capabilities of the CAD system will reduce product development costs, which will allow firms to either reduce prices or do more product development. The monitoring and self-correcting mecha- nisms embedded in the machine tools will reduce scrap and rework costs. These capabilities also will result in higher quality, which will greatly reduce service costs and attract a broader customer base. Inventory costs also will decline because set-up times and costs will not be major considerations in the flexible CIM sys- tem, it should be possible to make very small batches of products to order without large inventories of materials or finished parts. Finally, the flexibility of CIM will permit companies to use ma- terials with a variety of specifications, customize products, and focus on markets for products with higher value added. The ex- tent to which companies pursue these capabilities will depend on their overall competitive strategies. All of these considerations imply that manufacturers will have a very different cost structure in the future than they have today. Continuous investment will be a competitive necessity and will be justified on a systems basis. The CIM system will manage the use of material, time, and equipment to such an extent that total inputs and, therefore, total production costs, can be optimized within the limits imposed by the hardware and software capabil- ities of the moment. Close monitoring of input requirements will be a crucial ingredient, along with responsiveness and flexibility, in determining competitiveness. High quality will be a necessity because customers will expect it; any perceived slippage in quality will cost customer loyalty and market share and obviate many of the benefits of CIM and new materials.

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47 CONCLUSION The most important factor in improving responsiveness, flex- ibility, costs, and quality will be the effectiveness of management practices, organizational design, and decision-malting criteria. As the capabilities and advantages of new manufacturing technologies progress, they will become increasingly important to managers' fu- ture strategies for improving competitiveness. Furthermore, the effectiveness of the technology in accomplishing corporate goals is likely to depend on having the most appropriate hardware and software in the CIM system. Changes and adjustments to the sys- tem wiD be based on each company's market situation, product line, and customer base, so many of these capabilities will be in- ternally developed and proprietary. Along with the management aspects of the manufacturing organization, they will determine competitive advantage in the manufacturing environment of the future. This view of manufacturing technology is very different from the traditional technical view. Advanced manufacturing technolo- gies are not going to solve all the problems of production. Instead, they will give managers many more options. Managers will have an even greater need to focus the goals of the firm and then as- sess the needs of the manufacturing function and how technol- ogy can best address them. Once choices are made, managers will not have the luxury of running the technology for long peri- ods while they focus on product design, marketing, or some other function to maintain a competitive position. Dynamic, continuous improvement of manufacturing capabilities will become essential to long-term success. NOTES iDeere and Co. has had much success in simplifying part de- signs, to the extent that the company is Reemphasizing the use of multiaxis machining centers in FMSs because much of the com- plexity in manufacturing components has been eliminated through simpler designs. See Giesen, Lauri, 1986, Deere Abandoning Fo- cus on Flexible Manufacturing Systems, American Metal Mar- ket/Metalworking News (March 24) :1,32.

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48 2 Any of these three operations design, parts production, and assembly may be subcontracted in the future to maximize efficient use of available technology. sin many industries, there are already indications that large multinational corporations are becoming disenchanted with a low- wage strategy. The need to move facilities continually as wages inevitably rise in developing countries, the increased viability of automating domestic facilities as an alternative to siting plants in low-wage countries, and the pursuit of long-term production strategies have underscored the costs of a low-wage strategy and other developments have undermined the benefits. See Ohmae, Kenichi, 1985, Triad Power: The Coming Shape of Global Com- petition, New York: The Free Press. 4McClure, E. Raymond. 1985. Ultraprecision Machining and the Niche of Accuracy. CIM (September/October):1~20.