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OCR for page 1
SUNMARY
A growing number of U.S. manufacturers are concluding
that they must employ advanced manufacturing technology
(AMT) to survive and prosper. The experience of those
who have started to use AMT suggests that companies can
best benefit from these investments if they make com-
plementary changes in organization and management. The
critical question is what kind of changes should be made
and how.
The Manufacturing Studies Board of the National
Research Council formed the Committee on the Effective
Implementation of Advanced Manufacturing Technology,
which was sponsored by the National Commission for
Employment Policy, to study that question. The com-
mittee, composed of nine managers, union officials, and
academics, visited 16 sites where AMT had recently been
implemented. Thin report contains observations from
there visits and conclusions based on both field
observations and the prior experience of committee
member..
In the context of this report, AMT refers to an array
of process technologies, including computer-aided
manufacturing, computer-aided design and engineering,
manufacturing resource planning, computer-aided process
planning, and the integration of these technologies in
computer-integrated manufacturing. Severe international
competition will prompt manufacturers in most industries
in every competitive country to consider the strategic
role of this technology. Some will be able to exploit
its potential; others will not.
The technology itself will readily cross the bounda-
ries of industries and countries. The human resource
practices used for its implementation, however, are not
so easily transferred. Manufacturers will need to spend
1
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2
more time and effort to develop the needed organizational
and industrial relations capabilities for implementing
and operating the technology. Indeed, some U.S. manu-
facturers may not be able to improve human resource
practices at the rate required to remain competitive.
Realizing the full benefits of AMT will require
systematic--not piecemeal--change in the management of
people and machines. The committee concluded that a
critical mass of interrelated changes is required in
seven areas of human resource practices: planning; plant
culture; plant organization: job design; compensation and
appraisal; selection, training, and education; and labor-
management relations.
Certain basic characteristics of this new technology
are fundamental to identifying human resource practices
that are effective in implementing AMT. Compared with
the technologies they replaced, the AMT applications the
committee observed were characterized by:
· greater interdependence among work activities;
· fewer employees in a unit responsible for each
product, part, or process;
· different skill requirements and usually a higher
average skills
· higher capital investment per employee;
· more immediate consequences of the malfunction of
part of the production system for.the whole system;
· more costly consequences of malfunctions; and
· more sensitivity of output to variations in human
skills, knowledge, and attitude, and to mental rather
than physical effort.
These characteristics of AMT have prompted many
manufacturers involved with the technology to initiate
or intensify pursuit of the following interrelated
organizational objectives:
~ a highly skilled, flexible, problem-solving,
interacting, and committed work forces
o a flexible, humane, and innovative management
organization with fewer levels and job classifications;
0 a high retention rate of well-trained workers: and
o a strong partnership between management and labor
unions--where unions represent the work force.
These objectives and their related human resource
practices are being pursued in diverse workplaces in
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3
service and manufacturing industries employing a variety
of technologies. They are part of a general transforma-
tion of U.S. workplaces, a trend dr iven by competi tive
forces unleashed in international markets and deregulated
domestic industr fen and shaped by changing employee
expectations.
The committee found that while there objectives are
not unique to AMT, they are especially applicable to AMT
in a number of respects. For example, increased flexi-
bility and problem-solving capabilities are responsive
to the greater interdependence among AMT tasks. The
higher priority given to employee commitment with AMT
is acknowledgment of the more severe consequences of
employee apathy or antipathy. The greater need for
retention of employees derives from the greater invest-
ment in training and the dependence on people trained to
run an individual company 'a unique system. Changes in
management style and labor-management relationships are
prerequisites for the other objectives.
The plants visited by the committee had a clearer
understanding of the objectives for the work organization
than of the precise human resource practicer that would
achieve those objectives. Plant managers were more
articulate about the need for flexibility and closer
coordination, for example, than about ways to achieve
them. Nevertheless, the committee found many promising
trends in the specific human resource practices used to
introduce and operate AMT. Frequently observed were the
following six practices and corresponding rationales:
· Jobs with broader scope are defined to include
more planning and diagnosis, and both operating and
maintenance duties, in recognition that traditional
distinctions between such tanks are blurring.
e Work teams often are employed to manage the more
tightly interdependent work role. usually required by AMT
· Operating decisions are more often delegated, in
recognition of the need for immediate action on AMT
problems and the fact that those qualified to operate the
equipment also have much of the salient information and
expertise.
· Management and unions have developed inventive
selection processes for AMT jobs that preserve the
concept of seniority, yet place in those jobs the
candidates who are more likely to succeed. The new
acceptance of this type of selection procedure results
from union recognition of the higher level of skills and
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4
knowledge required by AMT and the higher cost associated
with mistakes in working with this capital-intensive
equipment; it also results from a general improvement in
union-management trust.
· Paying employees according to their mastery of a
progressively broader range of tasks is often adopted to
encourage Both the learning and flexibility in work
assignments required in the operation of AMT.
· Managers and workers show significantly greater
concern for training. The introduction of AMT has forced
greater emphasis on the design and implementation of
training programs for various segments of the work force.
The committee cannot predict how effective all of
these innovations will be over the longer term. Some of
them--for example, the judicious use of team structures,
the increased deleqetion of responsibility, and the more
systematic assessment of individual potential for success
in AMT jobs--seem to be especially promising. Others,
such as pay for knowledge mastered and utilized, have a
sound underlying rationale, but the committee in con-
cerned about whether they can be implemented over time in
a way that is regarded as fair and equitable and is cost
effective. Innovation in needed in the area of pay
schemes, and the pay-for-knowledge idea in a worthy
innovation, but it is too early to endorse the practice
generally.
In addition to these specific human resource prac-
tices, successful AMT implementations seem to require
other characteristics. First, none of these innovative
practices can be fully effective unless the planners also
give high priority to addressing an overriding concern of
the work force and unions--employment security. The
effects of AMT on the number of jobs tend to be mixed.
On the one hand, AMT can achieve a given level of output
with fewer employees than required by older technology.
On the other hand, without the increased competitiveness
permitted by AMT, the number of jobs may decline even
more. Thus, a}1 parties must understand the role of
AMT in preserving or increasing market share and, in
turn, jobs. Finally, to build and preserve the human
commitment and skills required to operate AMY, the
policies that govern employment security and ease labor
dislocations must be as favorable as the competitive
circumstances of the enterprise permit.
Second, a critical prerequisite for effective imple-
mentation is a compelling business rationale for AMT--the
OCR for page 5
stronger its economic basis, the better. Moreover, the
committee found that the better implementation efforts
were accompanied by high performance expectations--major
improvements in design for producibility, quality, inven-
tory reduction, cost performance, and so on. Not only
are high performance expectations required to justify the
major capital investment, but unprecedented increments in
performance expectations are also psychologically neces-
sary to drive the processes of organizational invention
that will help fully utilize the technology's potential.
Third, AMT will be more profitable when human resource
issues are understood and addressed in the planning stage
and at every subsequent phase in the design, approval,
and implementation of the technology. It is important to
give as much thought to the human aspects of the new
technology as to the technical and physical aspects.
Fourth, the introduction of AMT will be more effective
when management has formulated a guiding philosophy, in
dedicated to improvement in plant culture, and in active
across the whole range of improvements in plant, equip-
ment, management effectiveness, and personnel develop-
ment. To introduce AMT effectively, management must also
try to build a favorable consensus among company, work
force, union, and community.
Fifth, effective implementation processes seem to
require an openness to learning from one's experience and
that of others. The introduction of new technology in a
subject of industrywide and worldwide study and exchange
of experience. The committee was struck by the trend in
recent years for managers and union officials to take
steps to learn from others' experiences.
Finally, other major aspects of an effective implemen-
tation process include:
· unprecedented efforts to communicate thoroughly to
employees and their re^-esentative~ the competitive
realities of the business, the conditions requiring AMT,
and the plans for implementing it;
· a variety of initiatives to promote a positive
culture for employee relations and labor relations;
· employee participation in the implementation
activities;
· early assignment to the project;
· broad training that begins before assignment to the
project; and
· systematic, periodic evaluation of the effective-
nes~ of AMT.
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6
A noteworthy trend is the frequency with which AMT
used to break with tradition. It becomes the occasion
for (1) candidly examining past habits, work rules,
prerogatives, and relationships, and (2) assessing their
adverse consequences for motivation, cooperation, and
other factors affecting productivity. Not infrequently,
corporate management considered whether to locate the
AMT at a greenfield (i.e., new) site or in an existing
unionized plant, and used the leverage inherent in this
option to induce unions and local managements to consider
new operating modes.
The dominant theme of the policies outlined above
is that they were intended to accommodate all parties
with a stake in the organization, and thereby to enlist
their support. Managers gain decreased cost, increased
quality, greater flexibility, decreased cycle time,
improved equipment up-time, and greater ability to bring
technology on line. Employees gain better information,
learning and retraining opportunities, higher skilled
jobs, marketable skills, advancement opportunities, more
opportunities to feel part of the business and exercise
influence, and, on balance, a more secure employment
environment because of the increased competitiveness of
the enterprise. Where employees are unionized, to the
extent that its members gain, the union also gains and
participates in a broader agenda of issues affecting the
membership.
Fortunately, the policies that are especially appro-
priate for AMT are also in line with the general changes
in work force management strategies that have been driven
by increased competitive pressure and rising employee
expectations. AMT both benefits from these trends and
gives additional meaning to them.
Representative terms from entire chapter:
resource practices
