Effective Factors on Advanced Manufacturing Technology Implementation Performance: A Review
R. Mohd. Yusuff,
M.M.H. Megat Ahmad
This study reviews an extensive body of literature to investigate the factors effective on performance of companies implementing Advanced Manufacturing Technology (AMT). The purpose of this study is to provide a comprehensive viewpoint of issues related to successful AMT implementation and offer some directions to managers and investigators to make a company well-prepared to accept technology. The factors are grouped into three categories: technological, organizational and internal/external. The literature showed that in order to have a fruitful result from AMT investment, the organizational structure and culture, operational strategy and human resource should be organized and integrated appropriately with each other to avoid probable barriers and problems. Proposed framework can be used as a guideline for managers and investors in improving their AMT implementation process.
January 28, 2010; Accepted: March 08, 2010;
Published: June 10, 2010
A variety of pressures either locally or globally encourage manufacturers to
become more agile, responsive and flexible if they wished to survive (1994).
Firms that operate in developing, and/or newly industrialized countries face
many uncertainties when venturing into the modern global markets (Noori,
1997). Thus, it was vital for manufactures to have the ability to compete
due to the globalization in all aspects of product manufacturing such as product
variations, labor, technology and markets (Mitala and Pennathur,
2004). These included massively increased competition and globalization
of manufacturing and they served to place emphasis on a wide set of non price
factors such as design, product innovation frequency, customization and delivery
responsiveness (Bessant, 1994).
These conditions are bringing great challenges to firms, which can affect corporate
strategic directions and alter business and manufacturing strategies. In an
effort to survive under such conditions, companies are giving a strategic role
to manufacturing, from simply supporting marketing strategies to playing a major
role in strengthening a companys market position (Monge
et al., 2006). The effective implementation of advanced manufacturing
technology is considered to overcome this turbulent and hostile environment.
This option is an important solution especially for small and medium size companies
(Rosnah et al., 2003) in which lack organic structure
and inadequate level of skilled workers and engineers and are not aware of the
ways in which AMT can be helpful for them (Yusuff et
The rapid growth in both availability and range of AMT choice opens up major
opportunities not only for improving substitution innovation but also for radical
alternatives. These opportunities have never been done before and are doing
in ways which were not possible hitherto (Bessant, 1994).
Changes in communication and interaction related to AMT implementation have
been shown to result in greater satisfaction with the technology (Stock
and McDermott, 2001) and AMT adoptions appear to be a key condition for
long term competitiveness. However, many AMT projects fail to meet the expectations
of their adopters (Koc and Bozdag, 2009) and increasing
signs of difficulty began to emerge which suggested that the translation of
potential benefits into real competitive advantage was not always as simple
as signing a cheque for a new piece of equipment (Bessant,
1994). In many cases not only AMT investments have been criticized for not
yielding the desired results (Chung, 1996), but also
some researchers found a negative contribution of AMTs to the firm performance
(Boyer et al., 1997; Swamidass
and Kotha, 1998). The researchers concluded that the relationship between
AMTs and firm performance has a complex relationship (Koc
and Bozdag, 2009) and the link is influenced by other factors, some controllable
and some not controllable (Heine et al., 2003).
Thus, applying and adopting new technologies indicated that there are broader
issues that have to be considered. Management of firms that are considering
the adoption of AMT need to recognize, understand and address these issues in
order to overcome or circumvent the problems of previous installations. They
require knowing what the organizational and strategic factors are which make
a firm more competitive and adept at using AMT in improving its performance
and whether AMT's impact on company performance more pronounced if associated
with a compatible organizational design and human force and management practices.
Because of high cost and moderate-to high risk involved in AMT investment, it
is so important for any organization to know more about these the factors. Generally,
the investigated factors can be classified as technological, organizational
and internal/external. This classification is illustrated in Fig.
This study is a step in paving the way to provide an overview and guidance in AMT adoption and the right mix of strategic and important elements that leads to effective use of AMT in enhancing company performance.
Overview of AMTs:
In studying AMT implications, the choice of AMT types and their classification
is a decision of crucial importance that should be made on the basis of existing
theory and the nature of the research study to be conducted. Advanced manufacturing
technology has different meanings in different situations, but it can be broadly
defined as an automated production system of people, machines and tools
for the planning and control of the production process, including the procurement
of raw materials, parts, components and the shipment and service of finished products
(McDermott and Stock, 1999). More specifically, AMT can
be described as a group of computer-based technologies, including Computer-Aided
Design (CAD), robotics, Flexible Manufacturing Systems (FMS), Automated Materials
Handling Systems (AMHS), Computer Numerically Controlled (CNC) machine or other
automated identification techniques (Small and Yasin, 1997a).
Youssef (1992) defined advanced manufacturing technology
as a group of integrated hardware and software based technologies, which if
properly implemented, controlled and evaluated, will improve the efficiency
and effectiveness of the firm. Boyer et al. (1997)
used the term advanced manufacturing technology in their research to describe
a variety of technologies like CAD and Electronic Data Interchange (EDI) which
primarily utilize computers to control, track, or monitor manufacturing activities,
either directly or indirectly. In addition, several technologies or programs
such as bar codes or group technology which do not directly involve computers
are also considered to be AMTs since they are closely associated with other
AMT has been classified in different ways. Based on the automation and integration
of manufacturing activities, Ghani and Jayabalan (2000)
and Ghani et al. (2002) have been classified AMT
into four levels.
|| Contextual factors effective on company performance
First level includes numerically controlled machine and robots called stand-alone
machine tools or equipments that are controlled by self-contained computers.
In level 2 or manufacturing cells a grouping of machines such as group technology
and flexible manufacturing system perform a variety of tasks to produce a family
of parts. In level 3 cells in level 2 are connected to form linked islands through
network of computerized information like computer-aided design/computer-aided
manufacturing, automated storage and retrieval systems. In level 4 all the manufacturing
activities including marketing of products are integrated through information
network and formed computer-integrated manufacturing.
Waldeck (2007) classified advanced technologies in
her study by Factor analysis in two levels: first level is Basic technology
including Computer-aided design, Computer-aided manufacturing (CAM) and Direct
numerical control. Next level is Artificial intelligence or complex technologies
comprising vision systems, knowledge-based systems and decision-support systems.
Zhang et al. (2006) also classified AMTs as Design
technologies, such as CAD and CAE that support product design and engineering;
Manufacturing technologies, such as CNC, CAM and AMHS which make production
easier and faster; Planning and control activities are facilitated by the development
of MRP, MRP II, electronic data interchange and bar coding and Integration technologies
such as CIM, Local Area Networking (LAN) and enterprise-wide resource planning
that allow a flow of information and coordinated decision-making between functions
within and between the firms.
Small and Chen (1997) and Small
and Yasin (1997b) classified AMT into three levels based on complexity,
automation and integration of manufacturing activities.
Stand-alone systems include machine tools or equipment controlled by independent
computers such as (computer-aided design and computer-aided process planning
(CAPP)); Intermediate systems contain a group of machines to produce a family
of parts such as (automated guided vehicles (AGVS) and automated storage and
retrieval systems (AS/RS)); and Integrated systems which are connected to form
linked islands through computerized information network, for example (flexible
manufacturing systems and MRP). In summary, Table 1 presents
the classifications found in the literature.
It is reasonable to state that most technological advancements that have changed
the nature of manufacturing performance have taken place since 1950 (Mitala
and Pennathur, 2004). AMTs enable both economies of scale and economies
of scope to be achieved without changing the hardware and allow firms to blend
small-batch and custom-order operations with the low-cost efficiency of standardized
mass production (Efstathiades et al., 2002).
The major strategic benefits that these technologies offer are the increased
flexibility and responsiveness, enabling an organization to improve substantially
its competitiveness in the marketplace (Millen and Sohal,
1998; Efstathiades et al., 1999). AMT has
been viewed as a strategic weapon to gain competitive advantage, to improve
productivity and performance, to enhance quality of production (Zhao
and Co, 1997; Efstathiades et al., 2002)
and decrease lead-time (Preece, 1995; Ghani
and Jayabalan, 2000; Hofmann and Orr, 2005). In
effect AMT changes the external risk propensity of the firm from risk-averse
to risk-prone. That is, firms using AMT in practice create a series of call
options to enter new markets and industries in the future (Efstathiades
et al., 1999). It also was mentioned that even the benefits of advanced
techniques such as Just-In-Time can be realized with applying only a few component
of JIT and as a result companies can gradually invest in these technologies
to get the most benefit from it (Yusuff et al., 1997).
||Advanced manufacturing technology classification
Certainly, it takes some time for plants to realize the potential benefits
of an AMT investment. It can be because of the learning curve associated with
these technologies that may delay performance gains. As a fairly complicated
technology, employees need extensive training and experience to master for new
technologies. Therefore, time may act as a confounding variable in obtaining
AMT benefits (Boyer, 1999; Nahm
et al., 2006).
A synopsis of performance measurement:
Evaluating the performance of AMTs relies on defining what success means (Burgess
et al., 1997). For a company, performance is a measure of where it
is; how far it has achieved its per-specified plans and more importantly, how
it can efficiently use its capacity to improve its performance compared with its
competitors (Agarwal, 1997).
At the beginning of the 1980s, AMT was seen only as a panacea to solve the
financial problems in manufacturing companies. Managers concentrated only on
the financial measures (Kidd, 1990) such as sales
growth, market share and return on investment to justify the AMTs. Later on,
the researchers found that such criteria do not capture the information that
is required to judge the true effectiveness and outcomes of the new technologies.
They found that the use of AMTs has substantial impacts to both individual and
process requirements as the processes are reconfigured through computerization.
They focused on operational measurement like the productivity and flexibility
to justify the purchase of equipment to upper management. Organizational
measures include other companys performance criteria like workflows, communication,
integration of work and managerial control, also were considered as a new measurement
system for AMT outcomes (McDermott and Stock, 1999;
Efstathiades et al., 2002). Those measurement criteria were not enough
to assure a manger whether his company got all possible benefits from AMT or
not. AMTs are in relation with increased job responsibilities and the creation
of new roles for employees. These technologies might enlarge employee control,
even though such control may be limited to task design as opposed to task execution
(Siegel et al., 1997). Therefore, human resource
benefits relate to human force such as operator autonomy and the use of
work teams were introduced (Chung, 1996; Mitala
and Pennathur, 2004; Waldeck and Leffakis, 2007).
EFFECTIVE FACTORS ON AMT IMPLEMENTATION PERFORMANCE TECHNOLOGICAL CHANGE
One of the greatest advantages associated with AMTs is that of integration. Theoretically,
by using the abilities of computers to electronically connect different machines
and workstations together, a single integrated system will be formed to control
all of the activities of a given firm starting with raw materials and finishing
with finished goods ready to deliver to the final customer (Boyer,
1994). Integration either realized through computer-integrated transactions
between functions, for example between marketing, engineering, production and
maintenance, or between processes, such as linked between product design (e.g.,
CAD) with Process Planning (e.g., CAPP), manufacturing (like CNC), or production
planning (e.g., MRP II) (Jonsson, 2000). Much of the attraction
of AMTs has always been the potential to integrate different systems to create
a complete system in which information and production can be controlled by computer,
without the need for considerable human intervention (Boyer,
From an organizational perspective, Nemetz and Fry (1988)
and Parthasarthy and Sethi (1992) argued that integration
have resulted from using AMTs. Boyer et al. (1996),
Diaz et al. (2003) and Melnyk
and Narasimhan (1992) believed that more investment of AMTs leads to heavier
integration between processes. Jonsson (2000) showed
that the level of investment in AMT and the integration between processes/functions
affect the performance of companies. It is concluded that technology integration
offers more benefits than the automation of individual processes (Boyer,
Obviously the first decision any firm considering in AMTs adoption is whether
such an investment would be wise (Boyer, 1994). The high
costs of hardware and software of many of the advanced manufacturing technologies
and the complexities of the operational and organizational problems related to
adopting these systems, make justification a necessary but difficult proposition
(Small, 1993). Generally justification methods has been
classified into three categories of approaches: economic, analytic and
strategic approaches (Suresh and Meredith, 1985).
Economic methods justify based on the cost reduction or capacity expansion (Mcdaniel,
1989; Small, 1993). The Analytic methods frequently
consider uncertainty, flexibility, risk and non-economic benefits of AMTs (Meredith
and Suresh, 1986; Mcdaniel, 1989; Chan
et al., 2001). The strategic approaches tend to be less quantitative
than either the economic or analytic techniques and typically involve subjective
estimates of the key indicators or surrogate measures related to strategic objectives
(Mohanty and Deshmukh, 1998; Chan
et al., 2001). It is demonstrated that most companies are using only
one method, most probably simple economic method or using hybrid evaluation approaches
(i.e., strategic and economic or economic and analytic) (Meredith
and Suresh, 1986; Chadwell-Hatfield et al.,1996;
Stuart, 2002) for AMT investment decision but Small
and Chen (1997) showed that companies utilizing hybrid method attained higher
levels of success from their AMT projects than plants that used only one method.
It seems that inappropriateness of one criterion might be partly balanced by the
use of the other methods. It is unlikely that any single justification method
will lead companies to all or even a wide range of AMT benefits and improve performance.
Thus, integrated approaches (i.e. using strategic, economic and analytic methods
in parallel) were recommended to quantify the tangible and intangible benefits
throughout the technology investment (Small and Chen, 1995).
Successful implementation of AMT involves the mutual adaptation of both the new
technology to the organization and the organization to the technology (Frohlich,
1998). In fact the adjustment of technology to the organization and vice versa
can ease the accomplishment of new technologies and avoid management problems
associated with AMTs (Yusuff et al., 2004a). This
importance embraces structure, culture and strategy of any organization.
It has been argued that manufacturing companies that adopt AMTs without first
redesigning organizational structures and processes, encountering high difficulties
(Millen and Sohal, 1998). Along with AMTs emergence, industrial
organizations have deeply changed their manufacturing processes through the acquisition
of computerized technologies. This evolvement is frequently viewed as the basis
for a new industrial revolution-the arrival of the factory of the future- and
new form of organizational structure (Dean et al.,
1992). Generally, structure of an organization is the formal system of working
relationships that share and harmonize the tasks of multiple people and groups
to serve a common purpose. Centralization, formalization and complexity are the
three dimensions often use in research and practice to describe structure. Centralization
in the organization refers to the delegation of power among the jobs. The less
power delegated in an organization the greater the centralization in the organization
and vice versa. Formalization refers to the extent to which expectations regarding
the aims and objectives of work are specified and written. Highly formalized organization
structures recommend what each individual should act based on rules and procedures
that are obtainable. Last dimension, Complexity, refers to the number of distinctly
different job titles or occupational groupings and the number of definitely dissimilar
units/departments, in a group/organization (Gibson et al.,
The structure of the organization has been considered as the key factor to
successfully implementing AMT in various literatures (Dalton
et al., 1980; Kotha, 1991; Dean
et al., 1992; Belassi and Fadlalla, 1998;
Ghani et al., 2002; Jin-Bo
et al., 2006; Song et al., 2007; Sun
et al., 2007). It is theorized that the correct organizational structure
is in place, a company will be more successful in implementing advanced manufacturing
technologies (Boyer, 1994; Anderson,
1998). Boyer et al. (1996) stated that the
multiple levels of authority involved with hierarchical organizations often
represent an obstacle to the effective implementation of AMTs and streamlining
the organization with fewer level of authority brings a greater ability to integrate
AMTs. They concluded that rigid, bureaucratic organizational structure which
has been associated with highly automated, but non-computerized manufacturing
systems such as assembly lines, is not appropriate for more flexible technologies.
Gupta et al. (1997) also indicated that only
decentralization with fewer rules and more employee involvement were positively
relate to technology whereas formalization and mechanistic structure interacted
negatively with AMT. The result of this study emphasized that irrespective of
the technology type, a firm needs to be as least mechanistic as possible to
be effective. In examining the relationship between structure and AMT Ghani
et al. (2002) found that, at high proactive level, the mechanistic
structure of AMT plants has been found to change into an organic structure.
In fact organizations with many different types of jobs and departments generate
more complicated managerial and organizational problems than those with fewer
jobs and units. Flatter, less complex structures with maximum administrative
decentralization, are more likely toward creating a potential for improved attitudes,
more effective supervision, greater individual responsibility and company performance
(Belassi and Fadlalla, 1998; Malhotra
et al., 2001; Chang and Lung, 2002).
Successful implementation of AMT often requires dissimilar types of organization
and or management practices than are found in more traditional environments (Zammuto
and O'Connor, 1992). This is because new technologies directly challenge established
norms and strategic options. Organizational culture referred to a holistic construct
that describes the complex set of knowledge structures which organization members
use to perform tasks and generate social behavior. This construct is affected
by and impacts many aspects of organization such as structure, role expectations
and job description. Culture defines how to act on the job, who makes decision
in various situations and how to think and behave toward coworkers, supervisors,
industry norms and practices. This view of culture includes the organizations
internal system of power including formal authority structures, control systems,
task structures and organization rules (Bates et al.,
1995). In other word, culture is to the organization what personality is to
the individual, a hidden, yet unifying topic that provides meaning, direction
and mobilization (Belassi and Fadlalla, 1998).
Generally the culture was picture into two main dimensions as flexibility and
control (Zammuto and O'Connor, 1992; Denison
and Mishra, 1995). Flexibility-oriented culture is based on norms and values
related to the affiliation. It focuses on the development of human resources
and values member involvement in decision making. In this culture, individuals
are encouraged by the significant or ideological appeal of the task being undertaken.
On the other hand, control-oriented culture is penetrated by assumptions of
achievement such as planning, productivity and efficiency. More specifically,
assumptions of stability are the foundation of this culture and individuals
respect to the organizational mandates because roles are formally announced
and enforced through rules and regulations.
Regarding to the effect of culture on company performance,
Zammuto and O'Connor (1992) hypothesized that the control-oriented approach
may well lead to increased productivity, but can hinder AMTs implementation,
because centralization of responsibilities diminishes opportunities for organizational
learning, which, in turn, can make more difficulties to get an AMT up and running
reliably. They concluded that flexibility-oriented values will gain AMTs' productivity
and flexibility benefits. McDermott and Stock (1999)
examined how organizational culture is related to outcomes associated with advanced
manufacturing technology implementation, such as, operational benefits, organizational
or managerial benefits, competitive benefits and satisfaction. They found that
implementation effects that may take longer to happen, such as overall satisfaction
or competitive performance, did depend on the cultural flexibility. Chang
(2000) tried to find the relationship between organizational culture and
successful implementation of AMTs in Taiwan. Analysis showed that the control-oriented
culture did result in reduced AMT implementation success while good internal
process, rational goals and horizontal coordination have positive effect. Results
demonstrated that companies with a history of successful AMT implementation
preferred a flexibility-oriented culture in a more conducive environment to
ease the AMT implementation (Yusuff et al., 2008).
Basically, the importance of manufacturing strategy to the overall success of
the corporation has received considerable attention as Skinner published his
landmark article in 1969, manufacturing-missing link in corporate strategy (Mcdaniel,
1989). According to the new approach to manufacturing strategy, managers
should think about investments more in their capacity to build new capabilities
that provide enduring sources of competitive advantage and are usually built
over time through a series of investments in facilities, human capital and knowledge.
The early approach to manufacturing strategy led top managers to focus their
companies' operations around specific competitive priorities that tended to
make them vulnerable to strategic shifts. A good manufacturing strategy was
one that defended a company's position through a narrowly focused set of capabilities
(Hayes and Pisano, 1994). In other words, strategy was
denoted as actions or patterns of actions intended for the achievement of goals.
The term strategy covers more than just intended or planned strategy in an organizational
setting; it also contains the sequence of decision that exhibit a posteriori
consistencies in decisional behavior (Swamidass and Newell,
There is general agreement that a firms operations/manufacturing strategy
is comprised of four key competitive priorities: cost, quality, flexibility
and dependability/delivery (Nemetz and Fry, 1988; Dangayach
and Deshmukh, 2003). Cost strategy is based on the production and distribution
of product at lower cost. It is a measure of the manufacturing function's efficiency
and traditionally it has been associated with high volume/mass production. Quality
strategy is associated with a firm's ability to provide superior products or
services, often at higher prices. Dependability/Delivery strategy is defined
with on-time delivery schedules and quickly response to customer orders. Flexibility
is a measure of a firm's ability to react to market demands by switching
from one product to another through matched policies and actions and react to
changes in production and product mix, modifications in design, fluctuations
in materials and changes in sequence. The effectiveness of a companys
operations strategy is the function of degree of linkage or consistency between
the competitive priorities that are emphasized on the corresponding decisions
regarding the structure and infrastructure of operations (Hayes
and Wheelwright, 1984; Boyer and Pagell, 2000; Stock
and McDermott, 2001). The emphasis placed on these priorities varies by
firms, depending on a large number of factors including availability of resources,
business strategy, existing capability, managerial behavior, nature and intensity
of competition and environmental condition (Agarwal, 1997).
One of company's most important variables for coping with environmental uncertainty
is flexibility that is particularly relevant to the rapidly changing conditions
affecting manufacturing organizations (Nemetz and Fry, 1988).
This is nowhere more truly than for AMT, which provides the biggest source of
flexibility in any manufacturing organization (Boyer and
Pagell, 2000; Stock and McDermott, 2001). It has been noted that although
AMT creates a world of opportunities, they will not be converted to advantage
unless the adopting firm uses a strategic planning approach (Small
and Yasin, 1997b). Swamidass and Newell (1987) conducted
an empirical study to find the relationship between operational strategy and
performance. They found that environmental uncertainty such as manufacturing
flexibility and the role of manufacturing managers in strategic decision making
influenced manufacturing strategy and among different dimension of manufacturing
strategy, flexibility has a strong relationship with business performance. Efstathiades
et al. (1999) declared that AMT implementation is more related to
quality and delivery strategy. Results from Lewis and Boyer
(2002) showed that among the two groups in their sample (high performers
and low performers) in applying AMTs during the last 3 years, high performers
generally were more likely to stress on flexibility, quality and delivery strategy
than cost strategy and specifically the most dramatic difference appeared with
regard to quality strategy between the two groups. Other researchers believed
that all four manufacturing strategy dimensions are important in implementing
new technologies and gaining related benefits (Ferdows and
De Meyer, 1990; David et al., 1996) and focusing
on one dimension does not relate directly to AMT performance. The simultaneous
achievement of cost, quality, delivery and flexibility by many Japanese companies
has highlighted this new possibility that can be realized by adopting advanced
process technologies and management techniques (Agarwal, 1997).
Human resource and management practices:
Along with technology development, the human resource is an asset for any organization,
without which the use and development of technology will not happen (Efstathiades
et al., 2000) and has significant impact on strategic success (Malhotra
et al., 2001). Human resources qualities, attitudes and behavior
can provide the firm with a source of competitive advantage with respect to
its rivals (Bidanda and Cleland, 1995; Bayo-Moriones
and De Cerio, 2004). Researchers emphasize the importance of providing appropriate
workforce development activities such as socialization ability (Chen
et al., 2008) and managers involvement in R and D projects (Liu
and Tsai, 2007) to improve skills and relational requirements resulting
from modifications in technology and new production processes in enhancing company
performance. Inherently, all AMTs will increase worker requirements as workers
are given more autonomy over issues including planning and problem solving (Waldeck,
2007). Evidence from the literature suggested that planning and implementation
activities aimed at preparing workers for AMT adoption, play a critical role
in guaranteeing an exploitation of the system benefits (Small
and Yasin, 1997a, b). Thus, a major challenge for
future successful implementations lies in addressing the needs imposed by AMT
on the human elements.
In order to turn workers into key elements for building a competitive edge,
people have to be managed in a distinctive way (Bayo-Moriones
and De Cerio, 2004) and being more capable in terms of knowledge, skills,
attitudes and responsibility (Bidanda and Cleland, 1995;
Waldeck, 2007). As a result, providing workers with
opportunities to improve their inherent motivation and job satisfaction by means
of employee-involvement practices could be deemed an acceptable policy to ally
the goals of employees with the firms using AMTs (Bessant,
1994; Bayo-Moriones and De Cerio, 2004;
Waldeck, 2007). Education and training are also crucial to the successful
implementation of AMT. Experience has shown that between 25 to 40% of the total
cost of an extensive successful automation project should be spent on education
and training (Zhao and Co, 1997). Firms with successful
AMT implementations also enlist champions. These individuals support
a continual driving force throughout the initiative (Millen
and Sohal, 1998). The effect of these three practices beside the other seven
factors were tested on ERP systems in some Malaysian companies and the results
showed their importance in real situations (Jafari et al.,
2009). Widening of the marketplace, increasing importance of technology
and imperative of innovation and focusing on cross-functional groups, are appropriate
ways to develop viable business solutions (Doolen et
al., 2003). Because of the importance of the management personal characteristics,
experience and background on their decisions, any change has to start with the
managers on the top and in the middle, then the organization of workers on the
shop floor (Sun and Gertsen, 1995). Besides, to facilitate
the psychological, physical and cultural change resulting from AMT implementation,
management must build trust and co-operation (Cook and Cook,
1994). These practices can grantee the achievement of technology investment
An important feature of the optimistic climate common in the 1980s was
a strong faith placed by government relate to AMT affecting manufacturing industry.
It is generally recognized that some measure of state support for innovation
is necessary in order to preserve a position of international competitiveness.
During this period, governments of most advanced industrial economies proposed
a range of programs designed to smooth the progress of advanced manufacturing
technologies adoption (Bessant and Rush, 1993). Approximately,
the increase in interventionist-technology policy-making has been the outcome
of increasing government awareness of the extent that innovation is joined to
economic growth and with the recognition of the strategic role of technologies
in the evolvement of new industries and markets (Vickery and
Blau, 1989; Hilpert, 1991). Government support programs
was introduced to compensate for deficiencies in economic/industrial environment,
to strengthen the technological infrastructure that facilitates the convey of
technology from the developer or supplier to the user, to tackle specific firm-level
obstacles of technology diffusion and to increase the supply of technical and
managerial personnel (Bessant and Rush, 1993). It is
argued that end-users of AMT, mostly private firms in the manufacturing sector,
are competing in the global market with leading foreign companies and hence
in need of up-to-date AMT. Beside, domestic and AMT suppliers and R and D institutes
lack the native capability to meet the complex demands. It is not unusual that
technology developers and technology users are separated from each other. Meanwhile,
governments programs coordinate these diverse and even contradictory demands
in developing national policy of AMT (Park, 2000). Lay
(1993) analyzed how subsidized firms have been planning and implementing
their technology (CIM, in that case) and whether AMT projects in subsidized
firms differ, from those in non-subsidized firms. For about two-thirds of supported
firms, public support for a technology project showed the effect of extending
or speeding up the finalizing of the project already planned to take place at
that time. A group of firms stated that they would not have embarked on the
project at all, or not at that time, without public support. In other words,
these programs including direct financial support, information/consultancy support
and so on, affect the competitiveness of firms in promoting their market share,
open up significant new opportunities and allow firms to deal with strategic
challenges in their environment (Lay, 1993).
By the mid-1980s the diffusion of AMT, as measured by adoption rates, was high
amongst large firms and trickling down to the small and medium sized companies.
However increasing signs of difficulty began to emerge which suggested that
the translation of potential benefits into real competitive advantage was not
always as simple as signing the check for a new piece of equipment (Bessant,
1994). Successful implementation of AMT projects needed persistent efforts
to integrate operating and organizational systems to support these operations
(Small, 1993). The introduction of a new technology can
reduce performance when the organization initially struggles to acquire the
requisite skills and knowledge; i.e., there may be an substantial lag between
installing new technology and getting benefits from it (Beaumont
and Schroder, 1997).
Beatty and Gordon (1990) list three classifications
of barriers to implementation: structural, related to organizational infrastructure
and justification difficulties; human, related to uncertainty and workers
resistance; and technical, related to the incompatibility of systems. Adler
(1988) suggests that in the decisive majority of cases, the human resource
management issues are the major stumbling blocks in implementing the new technologies.
Meredith (1987) notes that in the early stages of FMS
implementation, human and organizational infrastructure and worker education
were major difficulties. Bessant (1994) concluded that
AMT investment was unlikely to succeed unless it was located within a coherent
business strategy and accompanied by relevant parallel organizational change.
Sambasivarao and Deshmukh (1995) showed that adoption
of AMTs involves major investment and a high degree of uncertainty and hence,
warrants significant consideration within a manufacturing firm at the strategic
level. In a survey among Malaysian small and medium size companies, Yusuff
et al. (2004b) identified that lack of understanding of technologies
and inappropriate planning are the biggest obstacles in obtaining the strategic
benefits of AMT implementation. Shortage of suitable man power (Cook
and Cook, 1994; Zhao and Co, 1997; Shepherd
et al., 2000), inadequate organizational planning and preparation
for the adoption of the AMT (Small and Yasin, 1997a,
b), failure to balance investments in technological
systems with investments in the infrastructure to support these systems (Boyer
et al., 1997), inadequate cost-justification methods (Cook
and Cook, 1994), technology mania, lack of top managements continued
support, financial limitation (Ratnasingam et al.,
2009) and inadequate managerial training for AMT projects (Marri
et al., 2007) are other major problems hindering the success of factory
automation. In summary Table 2 illustrates all explored factors
and their dimension and related references.
||A summary on effective factors
The interaction effect of variables:
Research has indicated that the application of AMT can be successful if only designing
technology, organization and people are base on the principle of reinforcing each
other and their integration (Sun et al., 2007;
Waldeck, 2007). As employees need higher knowledge/skill
and organizations adopt teamwork gradually, decentralization among organization
occurs (Gupta et al., 1997). In new AMT environments,
employees are not only single operators, but would be coordinators or decision-makers.
The role of organizations can not be a single task-distributor and coordinator
anymore, but it would promote employees' enthusiasm and independence through multifold
manners to bring them into the most potential (Sun et al.,
2007). Fewer complexities in a flatter organization are helpful to encourage
employees to apply AMT and enhance their responsibility. Less formalization could
stimulate employees, awake their sense of responsibility and improve working efficiency
of employees and implementation effects of AMT (Song et
al., 2007). Consequently, organic structure with less complexity will
be the feature of decentralized management, minimal organization levels and more
teamwork enterprises that must reduce organization levels to make fast transfer
of information and communication (Sun et al., 2007).
Less formal delegation of authority in flexibility-oriented culture allows top
management to provide the general strategic direction. Lower level management
is then free to work and innovate under the assumption that its efforts will lead
the organization towards the desired, top management imposed (Gupta
et al., 1997).
In addition, effective cooperation between process change and factors of organizational
change is good to the achievement of performances of AMT (Song
et al., 2007). Manufacturing strategy is best implemented when plant
personnel understand the strategic aims and direction of the plant and can exercise
appropriate judgments in less formalized organization. Once again it is impossible
to speculate about casualty but this association may indicate that processes
of strategic goal orientation and decentralized decision making reinforce each
other over time (Bates et al., 1995). Well aligned
and implemented manufacturing strategy was found to coexist with a flexible-oriented
organizational culture. It is indicated that a well arranged strategy, which
includes informal planning processes, communication strategy and contribution
to all four dimension of competitive priorities, coexist with- a clan oriented
culture characterized by the use of group and teams, low emphasis on hierarchy
and high level of loyalty and shared plant-wide philosophy. +Consequently, contribution
of these factors leads companies materializing their wish by applying new advanced
But the performance story does not end to this point. By applying performance
appraisal to measure the performance of the employees and the organization,
firms are capable of checking the progress towards the desired goals and aims
(Badawy, 2007). The history of performance appraisal
can be dated back to the 20th century and then to the second world war when
the merit rating was used for the first time. An employer evaluating their employees
is a very old concept. Performance appraisals are an indispensable part of performance
|| A framework of investigated factors and their relationship
with company performance
It takes into account the past performance of the organization and focuses
on the improvement of the future performance of the organization. The performance
appraisal process provides an opportunity for introducing organizational change.
It facilitates the process of change in the organizational culture/structure.
The interactive sessions between the management and the employees, the mutual
goal setting and the efforts towards the career development of the employees
help the organization to become a learning organization that can solve the obstacles
better than the past (Gloet and Terziovski, 2004). Conducting
performance appraisals on a regular basis helps it to become an ongoing part
of everyday practice and helps employees to take the responsibility of their
work and boosts their professional development and as a result, company productivity.
Totally Fig. 2 shows a framework containing all investigated
elements and their relationship with the company performance.
Today, technological capabilities can be strategically used to achieve sustainable
competitive advantage and the implementation of these technology is an organizational
transformation process, in which people's value, organizational culture, competition
strategy and arrangement of people all will change to well-matched with each
other (Zhao et al., 1992). The key to successful
AMT implementation appears to be the collaboration of appropriate factors and
their integration that will offer maximum benefits from AMT implementation.
The meaning of this research is to provide a comprehensive study on that systematically builds upon past researches in order to guide investigation into the successful AMT implementation and to determine those most critical organizational and strategic elements which if present can make a firm able to use AMT in enhancing performance. The framework presents the intra/inter-relationship among the variables influencing company performance in parallel with technology utilization that can be analyzed and offers testable propositions. This literature suggests that utilization of AMT will not also ipso facto guarantee performance but will further require appropriate changes in the firms structure and infrastructure and continue with performance appraisal to improve company capability. In conclusion, the proposed framework can be used as a guideline for managers and engineers in improving their AMT implementation process. The offered framework is in the hope that it will stimulate empirical and practical investigations that will in turn generate the empirical evidence on which more adequate and strong hypothesis can be built.
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