IT and Manufacturing Competitiveness Fouad Mrad ESCWA Technology Centre

The Global Competitiveness Report 2010–2011 World Economic Forum competitiveness as the set of institutions, policies, and factors that determine the level of productivity of a country (12 pillars) Ninth pillar: Technological readiness Technology has increasingly become an important element for firms to compete and prosper. The technological readiness pillar measures the agility with which an economy adopts existing technologies to enhance the productivity of its industries, with specific emphasis on its capacity to fully leverage information and communication technologies (ICT) in daily activities and production processes for increased efficiency and competitiveness. ICT has evolved into the “general purpose technology” of our time, given the critical spillovers to the other economic sectors and their role as industry-wide enabling infrastructure. Whether the technology used has or has not been developed within national borders is irrelevant for its ability to enhance productivity. The central point is that the firms operating in the country have access to advanced products and blueprints and the ability to use them.

What is Technology? “Technology” as defined by Encarta Dictionary: –Application of tools and methods; the study, development, and application of devices, machines, and techniques for manufacturing and productive processes, or –Method of applying technical knowledge; or

Knowledge is the Industrial raw material TRANSFORMATION INPUTS Factors of Production Production Objects (Materials) Productive Labor Production Means: Production facilities Production Information Production Process Multistage conversion processes Productivity (output, input) OUTPUTS UTILITY Produced Goods Tangible (products) Intangible (services) Production & Manufacturing: Knowledge System

PROGRESS OF MANUFACTURING INDUSTRY Cottage Industries Mechanization Centralized Industry Process Industries Manufacturing Industries Cellular production Networks Transistors IC’s, computers Automation Integrated Workshops Stand-alone automated CNC Machines/ Robots/Computers E-Manufacturing 2000s 1700s 1800s 1900s WHENINDUSTRYINNOVATION Internet

Market requirements Low price Better features Better performance Short delivery time Higher Reliability/Support Wide product line Custom made product Variable order size E-Marketing/procurement

System Attributes Low direct labor Low WIP inventory High throughput rate High machine utilization Low setup time Low tool change time Process flexibility Quick design modifications Accessible designs and material (Documentation)

Manufacturing Productivity Strategies Specialization of operations: extreme efficiency Combined operations at the same machine Simultaneous operations at multiple machines Increased flexibility with programming and tool changing Automated material handling and storage: inventory control, parts, raw material, fixtures, products.

Manufacturing Productivity Strategies cont. Automated inspection allowing correction & lowering scrap Process control and optimization reducing cycle times and costs and improving product quality Plant operations control: planning, scheduling, floor and quality control Computer integrated: design, plan, process control, and business marketing and procurement.

Why IT in Manufacturing Technology is not new to manufacturing Technology created immense amount of information Should be communicated for use in the rest of the Enterprise Information has become the fourth largest factor of production - as important as –raw materials, –Labor, and –capital

Why IT In Manufacturing? Increase Sale: revenue from better market position Increase in flexibility: Retooling, Produce to order Reduction of work-in-Process: Inventory Control Reduction of time to market Improved Quality: Better reporting and Tracing Saving in materials: Less Scrap and rework High cost of not using IT: Find and terminate non competitive suppliers Reduction of Labor Cost: Reduce Human Touches Increase in productivity

E-Manufacturing costs I. Acquisition / Deployment /Maintenance Costs 1) Purchase of equipment 2) Installation and Interfacing 3) Plant layout modification (if needed) 5) Hiring/Outsourcing of skilled workers 6) Retraining of workers

Acquisition Issues High perceived risk Inadequacy of Traditional capital budgeting techniques

1) Capital investment 2) Unproven technology 3) Performance of early installed systems 4) Rapidly developing technology 5) Availability of experienced personnel 6) Rapid job retraining 7) Communication standards High Perceived Risk

Capital Budgeting Techniques Quantification of strategic and qualitative benefits: Quality Flexibility Delivery reliability Fast response to market demands, etc Asset management (people, material, equipment, etc)

The Hierarchical Evaluation Approach: Strategic Evaluation 1. Choosing the competitive strategy 2. Specifying the market requirements 3. Specifying the manufacturing system requirements 4. Choosing the manufacturing system configuration 5. Identifying the organizational constraints 6. Iterative strategic evaluation if needed

e-Manufacturing Roadmap “It is not enough that people want to do their best. They must know what to do!” Dr. W.E. Deming. “Plant Floor Meet the World.”  No need for complete redesign of a plant floor  Elements in place for a good starting point  Competencies: Design, Operate, Maintain, & Synchronize  Enablers: Integrated control and information, Integration of business and production systems, Asset management and reliability-centered maintenance

E-Manufacturing Areas Internet E-Manufacturing Business Planning ERP Finance Marketing B2B Distribution E-Procurement Corporate Services ORGANIZATIONALOPERATIONAL CAECAM CAD CAQ “ CNC Robot PLC Test Acquisition “

E-Manufacturing Strategies A way of thinking about deriving operations excellence out of an organization Take advantage of IT Leveraging the Internet to achieve results Selective and Justified It is not an all-or-nothing proposition Use modular, scalable applications Use commercially available IT tools

Opportunities Easy to install/integrate with existing systems It does not require redesign of a plant floor Elements in place for a good starting point Computer based plant-floor controls generate a wealth of information about productivity, product design, quality, and delivery. E-Manufacturing is key in unleashing this information in a cost-effective manner

Recommendations Join an industry cluster and/or strategic alliance Must be flexible in design and production Need innovation leading to productive processes and products Increased Product Technological / Creativity Edge (Niche: Innovation, Design, Software) Higher Production rates: Improved Production Technology (Management, Systems, Quality, Automation)

IT is NOT all Rosy ! IT provides strong competition tools The customer really does rule-and with an iron hand controlling a mouse Power to the consumer given by Internet as a buying tool and information source Get help from an expert: Outsourcing!