Advanced manufacturing technologies: evidences from Indian automobile companies

This research reports the findings of a exploratory survey on Advanced Manufacturing Technologies (AMT) administered in Indian automobile companies. The objective of the survey is to assess the status of advanced manufacturing technologies, Identify advanced manufacturing technologies relevant to Indian automobile sector companies, Identify competitive priorities, assess the degree of investment in advanced manufacturing technologies. Responses from 68 companies are analyzed and presented. INTRODUCTION Manufacturing has been evolving over the years as different needs and technologies arise. The customer of the twenty first century, demands products and services that are fast, right, cheap and easy (Dangayach & Deshmukh 2001). The rapid growth in applications of information technology has resulted in intensive use of advanced manufacturing technologies. Advanced manufacturing technologies have been heralded as a new way for manufacturing companies to gain a competitive advantage (Pagell et al. 2000). Evaluating capital investments for the Installation of advanced manufacturing technologies is a critical task faced by manufacturing management due to the high capital investment and the high degree of uncertainty involved in these investments. What makes the justification process challenging is the lack of frameworks that incorporate both tangible and intangible benefits expected from such investments. The automobile industry world over, has been an important component of industrial and economic progress and its development has characterized global competitiveness of leading industrialized economies. The automobile industry is fairly developed one, and involves huge investments in research and development and advanced manufacturing technologies and is seen as an indicator of the economic progress of the country. An understanding of the automobile industry in some of the developed countries enables one to study the emerging trends in the developing countries (Choudhary and Goyal 1997). Indian automobile industry has witnessed entry of global players such as Ford, General Motors, Suzuki, Honda, Mercedes, Daewoo, Santro etc. in four wheeler segment, whereas Piaggio, Suzuki, Honda, Yamaha, Kawasaki etc. in two wheeler segment. The Indian market for two wheelers is the second largest in the world after China (Kumar 1998). Due to the robust growth of rural market, Indian automobile sector is experiencing a growth. A series of favorable climatic conditions for agricultural commodities have increased the purchasing power of rural customers. Today the rural market of over six lakhs Indian villages contributes about 35% of two wheeler sales (Kumar 1998). The objective of this research is to assess the status of advanced manufacturing technologies, Identify advanced manufacturing technologies relevant to Indian automobile sector companies, Identify competitive priorities, and assess the degree of investment in advanced manufacturing technologies. ADVANCED MANUFACTURING TECHNOLOGIES Advanced manufacturing technologies (AMT) is a term that covers a broad spectrum of computer-controlled automated process technologies. AMT is an umbrella term used to describe a wide range of automation and related technologies, which have emerged during the past two decades as a consequence of developments in information technology (Bessant 1991). More specifically, AMT can be described as a group of computer-based technologies, including computer-aided design (CAD), computer numerical control (CNC) machines, direct numerical control (DNC) machines, robotics (RO), flexible manufacturing systems (FMS), automated storage and retrieval system (AS/RS), automated material handling systems (AMHS), automated guided vehicles (AGV), bar coding (BC), rapid prototyping (RP), material requirement planning (MRP), statistical process control (SPC), manufacturing resource planning (MRPII), enterprise resource planning (ERP), activity based costing (ABC), and office automation (OA) (Beaumont et al. 2002). Figure 1 shows evolution of various technologies according time. In this paper we categorize AMT in three types i.e. direct, indirect, and administrative AMT. • Direct AMT: Technology used on the factory floor to cut, join, reshape, transport, store or modify materials e.g. CNC, DNC, robotics, FMS, AS/RS, AMHS, AGV, RP etc. • Indirect AMT: Technology used to design products and schedule production e.g. CAD, MRP, SPC, BC, MRPII etc. • Administrative AMT: Technology used to give administrative support to the factory and integrate its operations with the rest of the organization e.g. ERP, ABC, OA etc. METHODOLOGY The “Survey on Advanced Manufacturing Technologies” questionnaire was distributed in 314 Indian automobile companies (manufacturing two wheeler, four wheeler vehicles and automotive components) through postal mail in the first quarter of 2002. A database of these 314 companies was created from “Confederation of Indian Industry (CII) Directory-2001”. The questionnaire included questions on details of companies, AMT investment, planning, and implementation issues on five point Likert scale. To assess content validity few questionnaires were pilot tested with leading practitioners, consultant and academicians. Based on their feedback the present form has been evolved and final version of the questionnaire was sent to the CEOs of 314 Indian automobile manufacturing companies. 68 valid responses in the form of filled questionnaire have been received. The response rate is 21.7%, which seems good in Indian context. Figure 2 shows distribution of companies as per employees. Inter-item analysis is used to check the scales for internal consistency or reliability. Chronbach's coefficient alpha is calculated for each scale, as recommended for empirical research in operations management (Flynn et al. 1990, Malhotra and Grover 1998, Forza 2002). Table 1 shows Cronbach’s Alpha values calculated for scales used. Cronbach's alpha values for each scale is more than 0.5, which is considered adequate for exploratory research (Nunally 1978). Table 1. Cronbach’s Alpha for Scales Used Scales Used Cronbach’s Alpha Competitive Priorities 0.70 AMT implementation Steps 0.89