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1 INTRODUCTION Advanced manufacturing technology (AMT) promises to reduce product cost, improve product quality, and increase flexibility in responding to changing market conditions. U.S. companies need all of these outcomes to respond to increasing domestic and international competi- tion. Some companies can achieve them without investing in AMT, by organizing and managing their human and physical resources more effectively. A growing number of companies, however, are deciding to make major invest- ments in AMT. Their experience suggests that companies can best benefit from these investments if they make complementary changes in organization and management. The critical question is what kind of changes should be made and how. The importance and widespread applicability of the question led the National Commission for Employment Policy to ank that the Manufacturing Studies Board (MSB) of the National Research Council appoint a committee to produce a report on the experience of companies that have used effective human resource practices for implementing AMT. As a result, the MSB formed the Committee on the Effective Implementation of Advanced Manufacturing Technology. The nine-member committee was composed of managers, union officials, and academics who have first-hand experience with the multiple dimensions of implementing AMT. ELEMENTS OF AMT AMT encompasses several types of technology, as shown in Figure 1. Computer-aided manufacturinq tCAM) encom- passes flexible manufacturing systems (FMS), robots,

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8 FIGURE 1 Scheme for the Integration of Four Types of Advanced Manufacturing Technology MRP Manufacturing Resource Planning ~ it\ / ~ Computer Integrated Manufacturing 1~1 C A D /C A E Computer-Aided Computer-Aided ~ - ~ ~ Manufacturing sign Robots CNC/DNC and Erig~n~ring ~ FMS Testing CA PP Computer Aided Process Pianning

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9 material handling devices, and numerically controlled (NC) machines, including computer numerical control (CNC) and direct numerical control (DNC). CAM also can include computer-aided testing. Computer-aided design (CAD) and engineering (CAE) can vary in sophistication from compu- ters that serve as electronic drafting boards to those that test alternative designs on the screen for stress, function, and other characteristics, and then translate the design into a program to produce the product. Manufacturing resource planning (MRP II) is software that translates demand for products into parts needed to produce them and orders the parts from inventory or from suppliers so they will be available when needed. Compu- ter-aided process planning (CAPP) in software that routes parts through the factory to maximize operating time and eliminate bottlenecks. These four types of AMT can be integrated, as shown by the arrows and central box in Figure 1. Until recently, companies for the most part have adopted each type in isolation from the others, leading to what has been called Midlands of automation.. This situation is beginning to change, however. The four technologies increasingly are ~speaking. to each other through local-area networks, and formerly isolated applications are being linked as computer-integrated manufacturing (CIM). Companies that are upgrading the technology used for an existing facility and product are more likely to have islands of automation, while companies that are inventing in AMT and at the same time are building a new plant or introducing a new product are generally more likely to implement CIM. The impact of AMT on a plant becomes more pervasive with increasing integration. The closer a plant is to CIM, the less tolerant of error it becomes, the more serious are the consequences of an error, and the more everyone 'a performance depends on actions taken by nearly everyone else. However, while human resource issues clearly become more important as AMT becomes more integrated, plants have a great deal of discretion in how they deal with such issues. SITES VISITED The committee began its work by developing an initial list of effective human resource practices. Not all of

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~1 these practices were new. Some had proved effective when used with more mature technologies; others had proved effective for introducing organizational change whether or not accompanied by new technology. The committee anticipated, however, that it would find recognized practices being used In new ways when linked with the introduction of AMT. The list of practices served as the basis for an interview guide used by committee members during site visits, and as a hypothesis to be tested during site visits. The committee designed this report primarily to inform managers, union officials, and workers with little experience in implementing AMT about practices being used by early adopters of AMT. So that readers of the report would recognize site findings as potentially applicable to themselves, the committee selected North American plants operated by U.S. companies that, although innova- tive technologically and organizationally, were not using experimental or exotic technology. The sites were chosen to represent a variety of circumstances, including both union and nonunion plants, new (.greenfield.) and existing plant., geographical diversity, and several industries. The committee decided at the outset to focus primarily on human resource practices that affect production workers. Of the several forms of ANT, computer-aided manufacturing (CAM) has the most direct impact on production workers, so most of the sites selected were implementing application. of CAM, with varying degrees of the integration shown in Figure 1. The committee, with help from others knowledgeable in thin area, developed a list of 22 plants that met its criteria. Of theme, 16 plants agreed to site visits. Committee members, usually in pairs, visited the 16 sites over a 2-month period. The 16 sites and their basic attributes are shown in Table 1. Seven of the 16 sites are union: of those seven, four are existing plants and three are greenfield plants. Of nine nonunion sites, seven are existing plants and two are greenfield plants. The 16 sites are referred to as plants ~A. through APT in the report. Occasionally, committee members offered personal experi- ence with other plants as additional support for observa- tions or conclusions based on the 16 plants visited. These additional plants, also shown in Table 1, are referred to as ~Q. through USE in the report.

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~2 TABLE 2 Innovative Human Resource and Manufacturing Practices Human Resource Practices and Chapter Where Discussed Manufactur.nq o-actices Human resource plan developed along with technological plan (ch. 2) Multifaceted employment continuity policy (ch. 2) Changes in plant organization and human resource management guided by an articulated philosophy (ch. 3) Plant orqanization (ch. 4) - f unctions more intaqrated - fewer organizational levels - self -contained work ~aodules - multifunctional teams plan (ch. 2) and qu ide (ch. ~ ) implementation Job design (ct. 5) - broad-ecoped work and multiskilled workers - fewer job classifications - nor k teams CompenseCion (ch. 6) - pay for knowledge - skill progression progr - s Selection (ch. t) - elaborate scr~ninq for socia1 and technical skills Training and education {ch. 7) - fun ~11 before technology is operas iona1 - includes interpersone1 and problem-Solving skills as well as teehn ica1 sk i 11s Labor-~nage~nt relations (ch. 81 - union involved early in implementation - outcomes that benefit all parties sought rnvestn~ent justified for strategic reasons ( return on Investment important but lonq-term competitive advantage given equal or greater we ight ) . Two or more type" of per introduced ~ imp ltaneous ly, qu ided by a v 1 S. Ion of eventually achieving computer- integrated manuactur inq. Introduction of ANT linked to other ambitious objectives. suen as just-in-tiac. inventory control or producibi lity enjoiner ing. ~ Introduction of AMT accon~panled by changes in process Layout, plant renovation, or new plant construction. Introduction of AMr associated with development of a new product or modification of an exsetinq product. .

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L3 HUMAN RESOURCE PRACTICES The human resource practices that the committee observed sorted readily into seven areas: planning; plant culture; plant organization; job design; compensa- tion and appraisal; selection, training, and education: and labor-management relations. Each of these seven areas is the subject of a report chapter. Table 2 shows a comprehensive list of the human resource and manufacturing practices observed at the 16 sites. As might be expected, none of the sites used all of the human resource practices shown. In addition to the innovative human resource practices, the committee also observed innovative manufacturing practices that appeared to augment the benefits of AMT. Table 3 shows the number of human resource practices (from Table 2) cited in each chapter for each plant visited. The number of citations in a chapter indicates the extent to which plants used the practices discussed in that chapter. The six plants (A, C, D, G. M, and N) that ranked highest in number of human resource practices used--those having 9 or more citations in Table 3--also ranked highest in number of innovative manufacturing practices. Two possible explanations of this finding are (1) that innovative manufacturing practices stimulate innovation in human resource practices, or (2) that willingness to innovate is a general management attribute that can manifest itself in various ways. Five of the six leaders in human resource practices are nonunion plants, which is consistent with the commonly held belief that it is difficult to introduce new technology in existing, unionized plants. It is noteworthy, however, that the leader in innovative human resource practices (plant M), with 20 citations in Table 3, is a unionized, greenfield plant. The 16 plants visited had been implementing ANT for varying times, though none had more than 4 years of experience with the ANT that was the focus of inquiry during the visit. Some plants were still installing equipment when committee members visited them and had just begun to use the practices cited in the report. The effectiveness of these practices, therefore, cannot yet be assessed in terms of economic results. Further, because the plants visited by committee members were selected for their differences, not their similarities, conclusions on the relative effectiveness of the prac- tices across sites are necessarily judg~ental--as opposed

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14 i s ~o _ ~ ~ ~ ~ _ ~ ~ ~ _ ~ o ~ ~ ~_ 1 ~1 ~c ~ Q. ~C o C) - "C o `: ~ Q S ~ C 1 (SI ~ ~C ~ :~: oc. ~ _ C _ _ ~ C ~ - _ 43 U]~ ~o C C ~ C o o - c o '; - ._ ~ r~ , c 01 _ c C - 0 o C _ C C o C C~ C ~ . ~ _ c _ ~ C) ~4 ~ ~: U7 _ - o, _ _ , ._ ~ _ 1 c ~ _ ~d 3 - o' c ~n O ~ U ~ _ ._ ~ _ O C c . ~_ _ ~~ ~_ ~ ~C C) ~ ~ . C _ _ ~ ~ _ - E~ - u C C ~O4 _ ~ r~ ~ r ~_ ~ C,,} ~ ~ ~S - ~ Y ~S Z O ~ a' 01 U C . - o ~ ._ U ~ _ Q ~ . _ o O ~ ~ C C 0 ~ ~ c E - O ~ CL ._ ~ C ._ - ' 1 ~ O _ ~ - _ ,4: C ' oe - C E ~ ~ c

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15 to ~tatistical--and reflect the views of both the committee and plant personnel. UNRESOLVED ISSUES Practices that are effective in one setting may not be effective in others. As a result, the committee noted three questions that it could not answer conclusively: (1) Which human resource practices are effective with which forms of AMT? (2) Did the committee observe practices that were effective at the sites visited but might cause adverse effects under other circumstances? (3) Which practices are effective with AMT while the technology is newly implemented but will be less effective or less likely to be used in the future? When describing the effectiveness of various prac- tices, the committee has noted, where possible, condi- tions that might have contributed to that effectiveness. However, because of the judgmental nature of the conclu- sions, as noted above, the committee can only suggest what those conditions might be. The apparent lack of adverse effects, such an increased job pressure or increased tension between management and unions, at the sites visited is probably due to the co~nittee's site selection criteria. The rites visited were, in general, effectively implementinq AMT and using innovative human resource practices. The committee believes it likely that the human resource practices used in the implementation of AMT at these sites were uniquely appropriate to the technology imple- mented, representing a carefully planned implementation strategy that draws on both appropriate technology and appropr late human resource practices. The changing nature of AMT and the growing experience with human resource practices used to implement and operate AMT will require further exploration. Will the AMT applications observed by the committee evolve in a way that makes the recommended human resource practicer less necessary in the future? Will the demands for active attention, diagnostic skill, and maintenance know-how decline as further automation simplifies these tanks? Will the second, third, and nth implementations of similar AMT configurations become more routine and require less extensive participation? Will it once again become more feasible to follow a path of ~deskilling. and routinizing work and moving decision levels higher in the

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16 organization? Even if companies are able to go back to more traditional organizations, will following this path make sense, considering its effect on employee commit- ment? These issues warrant attention as the technology continues to evolve.