Technology Updating for Competition

If the companies continuously update the technology they can ensure they are ahead in the competition race and maintain their market share and profitability. The firms not bothered about technology may sink.

Manual technology has been the basis for measuring productivity, and throughout the period since the industrial revolution, we have measured much of the economic progress of companies, industries, and even countries based on overall output relative to labor input  that is, on output per worker hour. Yet in many instances, manual technology may be quite appropriate even in today’s high tech environment. Its advantages are low cost for low volume, perhaps custom, processes, since little or no capital is generally required, and its inherent flexibility. The combination of labor, material, and capital costs may be difficult to bear in many situations.

Flexibility, both operational and financial, is an important advantage of manual technology. The operational flexibility can be significant for one of a kind or very low volume products since variations in requirements are easily accommodated. Capacity can usually be expanded or contracted very quickly, unless high skills are required, resulting in cost and schedule flexibility not available in mechanized technologies. Since capital costs are so low, risks are low and financial flexibility is maximized.

Quality control may be more of a problem because of the human error and process variation inherent in manual processes. However, for some low volume customized products craftsman can produce quality superior to mechanized technology. Production cycles may be longer with manual technologies, affecting delivery response time.

Substitutions of machines for human labor began almost as soon as the factory system came into being at the dawn of the industrial revolution, and until a few years ago, mechanized technology was the technology of choice. Substitutions for the power requirements of processes originally supplied by labor were followed by substitutions for all kinds of physical labor inputs. General purpose machines were the first to be developed, and the distinction between general and special purpose machines is important for both mechanized and automated technologies. As the volume of standardized products grew, as occurred in the automobile industry and many others, it became more economical to design machines that were of special purposes in nature, dedicated to the production of a single part or product.

Flexibility and cost are the important differences in performance between general and special purpose technologies, and they can have an important bearing in competitive priorities. If the market in which the firm operates or its chosen niche requires flexibility of part or product design, then the firm needs to match this requirement with flexible (general purpose) process technology. If low cost is the primary requirement and product designs are stable, then special purpose technology is the likely choice. For strategic and financial reasons it is better to have general purpose machines if feasible and possible. But it is difficult to have it both ways. Quality can usually be maintained with either technology, but delivery response may be superior with special purpose technology.

Although automation is new in the sense that its principles have been applied to mechanical and assembly types of processes only relatively recently, the basic ideas are not new. Such automatic processes as the thermostatic control of room temperature have been used for many years, and the common float valve used in toilets automatically fills the tank to a given level and then shuts off. The process industries have used the principles of automation for some time to control chemical processes. But applications of robotics, NC (numerical control of machines), FMS (flexible manufacturing systems), and the coupling of computer aided design (CAD) and computer aided manufacturing (CAM) are considerably significant for productivity increases in industry.

The term hard automation means that automation is built in, just as some programs in personal computers are said to be hard wired. In hard automation, the processing sequence is determined by process and equipment design, as in transfer lines, automatic assembly lines, and some chemical plants such as oil refineries. Usually, hard automation has developed as a natural progression of mechanization as a process becomes highly integrated in the later stages of the product life cycle, and it may incorporate flexible or inflexible robots. These developments occur in the cost stimulated portion of our model for product and process innovation. Typically, changes in process are very expensive to incorporate; that is, hard automation is quite inflexible. By contrast, the programmable types of automation (robots, NC machines, FMS etc) are flexible because of the ease and the relatively low cost of changeover.