IT and Manufacturing Competitiveness Fouad Mrad ESCWA Technology Centre

1. IT and Manufacturing CompetitivenessFouad MradESCWA Technology Centre

2. The Global Competitiveness Report 2010–2011World 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.

3. 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

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

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

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

7. 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) System Attributes

8. 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.

9. 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.

10. 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

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

12. 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

13. Acquisition Issues • High perceived risk • Inadequacy of Traditional capital budgeting techniques

14. High Perceived Risk 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

15. 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)

16. 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

17. 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

18. E-Manufacturing Areas Internet E-Manufacturing Business Planning ERP Finance Marketing B2B Distribution E-Procurement Corporate Services ORGANIZATIONAL OPERATIONAL CAE CAM CAD CAQ “ “ “ CNC Robot PLC Test Acquisition “ “

19. 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

20. 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

21. 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)

22. 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!