Advanced Manufacturing Technology (AMT)

1. Introduction

The market place of the twenty-first century is evolving into one of

merging national markets, fragmented consumer markets, and rapidly
changing product technologies. These changes are driving firms to
compete, simultaneously, along several different dimensions: design,
manufacturing, distribution, communication, sales and others.
Although manufacturing has not been utilized as a competitive weapon
historically, the market place of the twenty first century will demand
that manufacturing assume a crucial role in the new competitive
arena.

Progress in human society has been accomplished by the creation of

new technologies. The last few years have witnessed unparalleled
changes throughout the world. Rapid changes in the markets demand
drastically shortened product life cycles and high-quality products at
competitive prices. Customers now prefer a large variety of products.
This phenomenon has inspired manufacturing firms to look for
progressive computerized automation in various processes. Thus mass
production is being replaced by low-volume, high-variety production.
Manufacturing firms have recognized the importance of flexibility in the
manufacturing system to meet the challenges posed by the pluralistic
market. The concept of flexibility in manufacturing systems has
attained significant importance in meeting the challenges for a variety
of products of shorter lead- times, together with higher productivity
and quality. The flexibility is the underlying concept behind the
transition from traditional methods of production to the more
automated and integrated methods. They stress that firms
implementing automation projects should prioritize their needs for
different flexibilities for long-range strategic perspectives.

Intensifying global competition and rapid advancement of

manufacturing technology are two realties in today’s business
environment. These have combined to shift the business strategic
priorities toward quality, cost effectiveness and responsiveness to
marketplace changes.
The quest for lower operating costs and improved manufacturing
efficiency has forced a large number of manufacturing firms to embark
on AMTs projects of various types. Dramatic developments in AMT at
various organizational levels can be attributed to numerous benefits
that improve the competitive position of the adopting companies. AMT
impact not just manufacturing, but the whole business operations,
giving new challenges to a firm’s ability to mange both manufacturing
and information technologies.

AMT can also provide distinctive competitive advantages in cost and

process leadership. Events of the last decade, such as the US
productivity problems, Japanese manufacturing success stories and the
competitive global economy, have moved manufacturing strategy and
process technology issues from the bottom to the top of the firm’s
priority list. The issues surrounding manufacturing technologies and
their implementations have assumed greater importance in the
manufacturing strategy debate. Practitioners and researchers have
developed strong interest in how AMT can be used as a competitive
tool in the global economy. A growing number of organizations are now
adopting AMT to cope with recent phenomena in today’s competitive
environment such as fragmented mass markets, shorter product life
cycle and increased demand for customization. Although AMT can help
manufacturers compete under these challenging circumstances, they
often serve as a double-edged sword, imposing organizational
challenges while providing distinct competitive advantage when
successfully implemented.

International business strategies frequently demand the transfer of

manufacturing processes. Manufacturing process is defined as any
repetitive system for producing a product, including the people,
equipment, material inputs, procedures and software in that system.
An issue of importance in this strategic decision is whether the process
should be transferred without modification or adopted in some way for
transfer.

Owing to the intense global competition in manufacturing,

manufacturers need to increase their level of competitiveness in the
global market. Some manufacturing companies, therefore, are forced
to undergo a period of transformation in order to compete more
effectively. Under these circumstances, AMT is considered as a means
of improving competitiveness.

The term AMT refers to computer-aided technologies in design,

manufacturing, transportation and testing, etc. In general, AMT can be
categorized into two principle ways:
The classical continuum of basic manufacturing processes which
extends from make-to-order manufacturing to continuous
manufacturing ; and the level of integration of the overall
manufacturing system.

AMT provides an organization with an opportunity to successfully

combat market place dynamics and create for itself a
competitive advantage. Manufacturers and academics believe
that AMTs can reduce operating cots, provide high levels of
output by removing inconsistent human input, improve
manufacturing flexibility and lead time to market.

The literature on Advanced Manufacturing Technologies can be divided

in to different fields but all fields are interrelated and those fields are
as follows:
(i) Adoption of Advanced manufacturing technologies
(ii)Investment of AMT
(iii) Selecting and Assessment of AMT
(iv)Planning and Implementation of AMTs
(v)Historical development of AMT
(vi)Definitions and Group of AMTs
(vii)Benefits and Disadvantages of AMT

2. Definitions of AMT

Numerous definitions of AMT exist. For example, Baldwin (1995)

defines AMT as ‘a group of integrated hardware-based and software-
based technologies, which if properly implemented, monitored, and
evaluated, will lead to improving the efficiency and effectiveness of the
firm in manufacturing a product or providing a service.’ This work,
however, provides a more global definition that combines the work of
Zhao, and Zammuto and O’Connor (1995). AMT, defined broadly, is a
total socio-technical system where the adopted methodology defines
the incorporated level of technology. AMT employs a family of
manufacturing (CAM), flexible manufacturing systems (FMS),
manufacturing resource planning (MRP II), automated material
handling systems, robotics, computer-numerically controlled (CNC)
machines, computer-integrated manufacturing (CIM) systems,
optimized production technology (OPT), and just-in-time (JIT). Although
AMT places great emphasis on the use of technological innovation,
management’s role is significant since AMT systems require continual
review and readjustment.

Advanced Manufacturing technology (AMT) represents a wide variety of

mainly computer-based systems, which provide adopting firms with the
potential to improve manufacturing operations greatly. It is generally
expected that the resultant improvement in operational performance
will enhance the firm’s ability to reap the underlying marketing,
strategic and business benefits for which the systems were adopted.
Another definition is AMT refers to a family of technologies that include
computer-aided design (CAD) and engineering systems, materials
resource planning systems, automated materials handling systems,
robotics, computer controlled machines, flexible manufacturing
systems, electronic data interchange and computer-integrated
manufacturing systems.

AMT represents a wide variety of modern computer-based systems

devoted to the improvement of manufacturing operations and thereby
enhancement of firm competitiveness.

Global competition continues to drive the adoption of advanced

manufacturing technology (AMT) to date, the literature AMT on the
introduction of AMT new technology is based primarily on case studies
and expert opinions.

AMT has been described as programmable machinery or a system of

programmed machines that can produce a variety of products or parts
with virtually no time lost for changes. The process of introducing AMT
is generally evolutionary but in some settings the pace is quickening.
As innovations spill over into practical application there is a
simultaneous change in the mix and range of elements generally
labeled as AMT. The machines, computer control and linkages, as well
as the human operator involvement, appear to be on a windy route
from islands of technology towards some far wider degree of computer
integration, referred to as computer integrated manufacturing (CIM).
AMT represents a wide variety of modern computer-based or numerical
control- based systems devoted to the improvement of manufacturing
operations. AMT is 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 and components and the shipment and service of finished
products. The properties of AMT overcome the limitations of
conventional technology in enabling small firms to develop economies
of scope based on low volume and low cost production. Specifically,
AMT facilitates customization and reduces lead times through the
productions of variety, frequent design changeovers, and rapid
processing of design, assembly, materials handling and market
information.
In general, AMT typically involves (a) a computer-aided design system
(CAD) that develops designs, displays them and stores them for future
reference: (b) a computer-aided manufacturing system (CAM) that
translates CAD information for production and further controls machine
tools, material flow, and testing; (c) an automotive storage and
retrieval system for delivery or pack up of parts between machines and
storage: and (d) a supervisory computer that integrates all of the
above (CIM).

AMTs refer to a family of technologies that include computer-aided

design (CAD) and engineering systems, materials resource planning
systems, automated materials handling systems, robotics, computer-
controlled machines, flexible manufacturing systems, electronic data
interchange and computer-integrated manufacturing systems.

2.1 Group of AMT

Advanced manufacturing Technologies involve the application of

computers to various facets of the production process. The 22
manufacturing technologies are grouped into six functional categories,
each capturing a different aspect of the process-fabrication and
assembly, automated materials handling systems, design and
engineering, inspection and communications, manufacturing
information systems, or integration and control. Table 1 presents the
technologies and groups used in Canadian Manufacturing Survey
(1995).

There are 26 AMTs listed in Baldwin’s (1995) survey. The list is

obtained from Statistics Canada in 1995. The 26 technologies belong to
six functional technology groups-design and engineering; processing,
fabrication, and assembly, automated material handling, inspection,
network communications, and integration and control.

Advanced manufacturing technologies (AMTs) involve new

manufacturing techniques and machines combined with the application
of information technology, microelectronics and new organizational
practices within the manufacturing process. These hardware
technologies have found wide acceptance in discrete manufacturing
and in resource and processing sectors. Computer numeric controls
have been applied to systems for machining, forming, cutting and
molding. The accuracy, speed and control of robots have improved
significantly and, as a result, they are used extensively in welding,
painting, material handling and an enormous number of unique
assembly applications. Vision systems provide, in real time, monitoring
for precision machining and high- speed printing and remote
handling of mining equipment used thousands of
Metrecs underground. Computer-aided design (CAD) and rapid
prototyping have substantially shortened the development time for
new products. Computer- integrated manufacturing (CIM) is applied in
machine shops for tool building, the production of engines and body
assemblies for passenger cars, the manufacture of airplane landing
gear and the production of hypodermic needles for the medical
devices sector.

Complementary to the hardware technologies of AMTs is a wide range

of ‘soft’ manufacturing process technologies. Just-in-time (JIT)
manufacturing, total quality management (TQM) and supply chain
management are but a few of the many ‘soft’ AMTs adopted by
manufacturers and processors globally.

The nature of competition in manufacturing has changed. High-quality

and highly customized goods are demanded. There is a premium for
being the first to market with a product. This has created a demand for
‘hard’ and ‘soft’ technologies that help shorten design and production
cycles. Freer trade has increased the breadth of geographical
competition, making it easy for foreign manufacturers to enter the Sri
Lankan market and for Sri Lankan firms to enter foreign markets. The
source of this competition varies, some of it from low-wage areas and
some of it from very technologically sophisticated countries.

Manufacturing practices and processes have come under increased

pressure from global competition. Demands for improved customer
service, breadth of product line, improved quality, quick response and
a much shortened time-to- market for new product introduction cannot
be ignored by firms. In the face of these intense pressures, Sri Lankan
and other manufacturers around the world are moving away from mass
production manufacturing processes. They are turning to greater
flexibility and speed in manufacturing practices. These practices have
become the foundation for ‘Best in Class’ manufacturers and
processors.

Manufacturing has been influenced by trade liberalization, global

competition, market fragmentation, technological innovation and the
demands of more sophisticated consumers. In response to these
pressures, manufacturers are incorporating more flexibility and
technology in their production practices. These features have become
a trademark of world-class corporations. AMTs are a key enabler for
firms attempting to meet world-class performance targets.
Table 1. Type of Advanced Manufacturing Technologies

Functional Group Technology

Processing, Fabrication Flexible manufacturing cells or

and Assembly systems (FMC/FMS)
Programmable logic control machines or
processes (CNC and NC)
Lasers used in materials
processing Robots with sensing
capabilities Robots without
sensing capabilities Rapid
Prototyping systems
High speed machining
Near net shape technologies

Automated Material Part identification for manufacturing

Handling automation (bar coding)
Automated storage and Retrieval system
(AS/RS) Automated Guided Vehicle Systems
(AGVS)

Design and Engineering Computer-aided design and

engineering (CAD/CAE)
Computer-Aided Design/Manufacturing
CAD/CAM Modeling or simulation Technologies
Electronic exchange of CAD files
Digital representation of CAD
output

Inspection and Automated Vision-based systems used

Communications for inspection/testing of inputs/or
final products
Other automated sensor-based systems
used for inspection/testing of inputs

Manufacturing Manufacturing Resource Planning (MRP)

Information Systems Manufacturing Resource Planning (MRP11)

Integration and Control Supervisory Control & Data Acquisition

(SCADA) Artificial Intelligence/Expert
Systems (AI) Computer Integrated
Manufacturing (CIM)
The functional groups and their constituent technologies, along with a
brief description of each, are provided in Table 1. AMT is a generic
term for a group of manufacturing technologies, which combine both
scope and scale capabilities in a manufacturing environment.
Manufacturing strategy has become more sophisticated. As a result,
AMT can play a crucial role in making it possible for firms to compete
on ‘traditionally’ contradictory competitive priorities simultaneously.

Baldwin (1995) suggests two subgroups of technologies within AMT:

the traditional hardware technology consisting of systems, devices and
stations (SDS): and a second group of technologies, often in software
form, which perform integrative and managerial functions-integrative
and managerial systems (IMS).

Typical examples of systems, devices, and stations (SDS) include

automated identification station, automated inspection stations,
automated material handling devices, computer aided design
workstations, computerized numerical control machine tools, numerical
control machine tools, programmable production controllers, robots,
shop-floor control systems.

Examples of integrated and managerial systems (IMS) include

computer aided manufacturing, computer-aided engineering, statistical
process control, production planning/inventory management software,
engineering data management, computer aided process planning, local
area networks, group technology.

Both SDS and IMS technologies can be used individually or in

combination with other technologies to achieve desired economies of
scale and scope. When taken together SDC and IMS constitute AMT.

AMT represents a wide variety of mainly computer-based systems that

provide adopting firms with the potential to improve manufacturing
operations greatly. It is generally expected that the resultant
improvement in operational performance will enhance the firm’s
ability to reap the underlying marketing, strategic and business
benefits for which the systems were adopted. Some of the benefits
attributed to these technologies are improving market share, gaining
earlier entrance to market share, responding more quickly to changing
customer needs and the quality to offer products with improved quality
and reliability.

These technologies have been classified as stand-alone systems,

intermediate systems and integrated systems. Technologies such as
computer aided design (CAD) and computer numerical control
machines (CNC) are typically categorized as standalone systems.
Automated material handling systems (AMHS) and automated
inspection and testing systems (AITS) are classified as intermediated
systems. Integrated technologies can be categorized as either
integrated process technologies (e.g. computer manufacturing systems
(CIM) and flexible manufacturing systems (FMS) or integrated
information/logistic technologies (e.g. just-in-time production (JIT) and
manufacturing resources planning (MRPII). The general trend in the
…
AMT research literature has been to examine technology adoption and
any resultant change in firm performance on the basis of the
implementation of individual technologies or in terms of
implementation of specific technology classifications such as those
presented above.
 AMTs refer to a family of technologies that include computer-aided
design (CAD) and engineering systems, materials resource planning
systems, automated materials handling systems, robotics, computer
controlled machines, flexible manufacturing systems, electronic data
interchange and computer-integrated manufacturing systems
(Zammuto and O’Connor, 1992). Numerous studies have emphasized
the potential strategic benefits of flexibility, responsiveness, improved
quality and improved productivity through purposeful investment in
AMTs. Such benefits are increasingly important in the current global
manufacturing environment, which has been described as hyper
competitive, high-velocity and characterized by fragmenting markets,
shorter product life cycles, and increasing consumer demand for
customization (Zammuto and O’Connor, 1992). Thus, AMTs have, and
will continue to have, a key strategic role in improving
competitiveness by utilizing the manufacturing function more
effectively in overall business strategy.

AMT includes a group of integrated hardware-based and software-

based technologies which, when properly implemented, monitored and
evaluated, can improve the operating efficiency and effectiveness of
the adopting firms. They encompass a broad range of computer-based
technological innovations, which include numerical control (NC)
machine tools, cellular manufacturing, machining (CAD/CAM) systems,
and automated storage and retrieval systems (AS/RS). These islands of
automation are integrated manufacturing (CIM). AMT has the potential
to improve operating performance dramatically and create vital
business opportunities for companies, which are capable of
successfully implementing and managing them.

AMT can also provide distinctive competitive advantages in cost and

process leadership. Events of the last decade, such as the US
productivity problems, Japanese manufacturing success stories and the
competitive global economy, have moved manufacturing strategy and
process technology issues from the bottom to the top of the firm’s
priority list.

The AMTs are broadly classified into seven sub-groups. The

classification scheme adopted here is similar to the US Department of
Commerce Survey of Manufacturing Technology. The findings of some
researchers show that the technologies are cross categorized as stand-
alone systems and integrated systems. This classification scheme links
technologies that have similar benefits and costs. The 14 technologies
are classified into three main groups, and seven sub-groups are further
divided as shown in Table 2.

Table 2. Classification of AMT

Stand-alone systems
1. Design and engineering
technologies Computer-
aided design (CAD)
Computer-aided process planning (CAPP)
2. Fabricating/machine and assembly
technologies NC/CNC or DNC
machines
… Materials working laser
(MWL) Pick-and –place
robots Other robots
Intermediate systems
3. Automated material handling technologies
Automatic storage and retrieval systems (AS/RS)
Automated material handling systems (AMHS)
4. Automated inspection and testing systems
Automated Inspection and testing equipment (AITE)
Integrated systems
5. Flexible manufacturing technologies
Flexible manufacturing cells/systems (FMC/FMS)
6. Computer-integrated manufacturing
systems Computer-integrated
manufacturing (CIM)
7. Logistic related systems
Just-in-time (JIT)
Material requirements planning
Manufacturing resources planning
(MRPII)

Companies must ascertain which technologies can fulfill their

objectives and identify the selected technologies belonging to a
system, since it will affect the following justification methods chosen.
For stand-alone systems where the purpose is the straightforward
replacement of old equipment, even if some economic benefits not
usually considered are obtained, the standard economic justification
approaches can be used.

There is another grouping method based on the amount or type of

investment. Nature of the AMT investment can be divided into three-
section computer hardware, computer software and plant and
equipment.
(1)AMT related hard ware:
LAN (local area
networks) Micros (PC
Computers) Graphics
hardware:
Mainframe
Online process instrumentation
Shop floor data capture
WAN (wide area networks)
(2)AMT related Software:
CAD/CAM
Data base management systems
MRPII (Manufacturing Resource planning I and II)
(3)QC software
MRP
Expert
systems OPT
MAP
(4)AMT related plant and
equipment: CNC M/Cs
Automatic testing equipment
Computer-controlled testing
equipment Flexible manufacturing
cells
Automatic assembly
Flexible assembly
systems Robots
Laser cutting
Automated warehousing/order
picking AGVs
Laser measuring
Generic Advanced Manufacturing Technologies and Practices is another
AMT grouping. Generic AMT represent the different generations and
different capabilities that crosscut most industries.
(1)Multi-axes machining center
(2)High speed machining center
(3)Cellular manufacturing or group layout
(4)Computerized production planning system
(5)Product modeling and simulation
(6)Electronic exchange of product design and process data
(7)Automated parts identification devices
(8)Rapid set tooling and fixturing
(9)Rapid prototyping
(10) Computerized process planning system
(11) Product data management system
(12) Process simulation
(13) Knowledge-based systems
(14) On-line intelligent process control

Advanced manufacturing technologies refer to a family of technologies

used in all facets of manufacture including design, control, fabrication
and assembly. AMTs have taken on many forms of acronyms, including
computer-aided design (CAD), computer aided engineering (CAE),
manufacturing resource planning (MRPII), automated materials
handling system, electronic data interchange (EDI), computer
integrated manufacturing (CIM) systems and flexible manufacturing
cell (FMC).

2.2 Empirical Evidence of Productivity increases of the firm

Sufficient evidence exists that computer aided technologies can

increase productivity as well as quality and production flexibility. In a
study of 14 organizations that have deployed computer-aided
manufacturing technologies, Voss found that 12 had experienced
increases in productivity. Increased product quality, reduced lead-
times, and greater flexibility occurred in 8 of them. On the other hand,
a pioneer study by Jaikumar (1986) found that deployment of
computer-aided technologies in some firms only boosted machine up
time and productivity or lead-times. Jaikumar concluded that these
organizations did not realize increase in quality and flexibility because
they superimposed the new technologies on existing structured
organizations. Gaining the inherent flexibility and quality advantages of
computer-aided technologies requires a more integrated and flexible
work organization with decentralized control structures.

Computer-aided technologies are similar to earlier conventional non-

programmable fixed-cycle technologies because of their ability to
increase machine up time and produce high volume products. Scale
economies needed to be competitive in mass markets can thus be
reaped with computer-aided technologies. Nonetheless, these new
technologies differ from conventional machines because they have the
capacity to produce a wide array of low volume, high quality,
customized parts or products needed for a highly segregated market
(Zammuto and O’Connor, 1992).
The issues surrounding manufacturing technologies and their
implementations have assumed greater importance in the
manufacturing strategy debate. Practitioners and researchers have
developed strong interest in how AMT can be used as a competitive
tool in global economy. A growing number of organizations are now
adopting AMT to cope with recent phenomena in today’s competitive
environment such as fragmented mass markets, shorter product life
cycle and increased demand for customization. AMT can help serve as
a double-edged sword, imposing organizational challenges while
providing distinct competitive advantage when successfully
implemented.

2.3 History of AMT

Historically, manufacturing organizations made improvements in their

productions processes primarily through investments in physical
capital. Advices in mechanization, for example, enabled manufacturing
firms to enhance efficiency in production while actually lowering the
required skills and capabilities of employees. As a result, many firms
actually took the tactic of deskilling their workforces to reduce labor
expenses, thereby diminishing the necessary level of investments in
human capital with the hope of increasing profits.

In contrast to this perspective, advocates of the cotemporary

manufacturing paradigm argue for a dramatically different orientation
toward employees. These post-industrial theorists propose that
compared to the deskilling tactics of traditional manufacturing, more
advanced systems require a set of complementary practices for
upskilling the workforce. Indeed, some studies have suggested that
modern manufacturing systems demand more enhanced technical,
conceptual, analytic and problem solving skills than typically were
required in traditional manufacturing environments.

In the manufacturing sector, the new technological advances have

revolved around machine tools and equipment. Advances in
automation of machine tools began about 30 years ago with the first
generation of programmable machine tools-the numerical controlled
machine tools (NC). The NC did not become widely used until the
1970s. The second generation, computerized numerical control
machine (CNC), was introduced in the late 1970s. These new machine
tools have the capacity to produce the high volume standardized parts
and products necessary for competitive success in undifferentiated
markets.

The first AMT technologies were introduced in the 1950s, but it was not
until the 1970s that the adoption of AMTs took off and the 1980s that
their use became widespread. Today, nearly all currently produced
manufacturing equipment incorporates some electronics element and
thus fits the definitions for AMTs.

There are three types of manufacturing systems: crafts shops;

dedicated manufacturing systems (DMS); and advanced manufacturing
technology –based systems (AMT). Their research is based on Teece
conceptualization of long- linked versus intensive technologies. Using
their classification scheme, DMS are considered long-linked industrial
systems employing hard automation whereas AMT are post-industrial
enterprises employing flexible resources.

There are many distinctions between craft shops and DMS. While craft
shops employ skilled artisans who use various hand tools, DMS deploy
special-purpose machinery operated by unskilled manual laborers. In a
craft shop, workers are organized into task-oriented work groups.
Work is functionally specialized and
used usually a single task is assigned to a worker in a DMS. In a craft
shop, performance measures are based on customs and other
craftsmen evaluate the work. DMS are controlled through a hierarchical
structure. In addition to the above characteristics, DMS are product-
oriented, concerned with efficiency and productivity. An information
system controls task execution and co-ordinates sequential activities
within a DMS.

2.4 Adoption of AMT

The study of the adoption and dissemination of technologies is one of

the key components of innovation and technological development.
Indeed, it is through the adoption of newer, more advanced
technologies that industries can increase their production capabilities,
improve their productivity, and expand their lines of new products and
services. Adoption of new technologies is a key element to a firm’s
success. Therefore, this report outlines the extent to which
establishments in the Canadian manufacturing sector use advanced
technologies. It investigates the extent to which advanced technology
is used - both at the individual technology level and at the functional
technology group level, where functional group refers to collections of
technologies that serve a common purpose. Not all firms adopt
advanced technologies because of the costs associated with their
adoption. Adoption occurs when the benefits from adopting the new
technology outweigh the costs.

Michael Proter (1986) argues that there are two roads to competitive
advantage: lower cost or product differentiation. Developing countries
are able to again a foothold in international markets for their industries
by translating their relatively cheap labor costs into lower-cost goods.
For industrialized countries such as the US, where the cost of labor is
relatively high, the introduction of such cost competition has undercut
many traditional industries, and forced many firms to slash costs in
order to remain competitive. In the long run, such strategies cannot
pay off for industrialized countries. The competitive advantage of low
cost production will always lie with less developed countries.

According to Porter (1986), the road to competitive advantage for

industrialized countries that wishes to keep wages relatively high must
be product differentiation. Firms must become able to produce goods
that cannot easily be transferred to lower cost locations, allowing them
to maintain reasonable operating margins while paying higher wages.

Global competition continues to drive the adoption of AMT. To date, the

literature AMT on the introduction of AMT new technology is based
primarily on case studies and expert opinions.
Global and domestic firms have different objectives for adopting AMT
as a means to effectively compete in their respective markets.
Whatever the objectives may be, the adoption of any new technology
involves uncertainty about achieving the objectives.

In addition to the inherent human resistance to change and innovation,

at least two other types of uncertainty are present when adopting
manufacturing innovations: technological uncertainty (whether the
adoption of the technology will be profitable): and strategic
uncertainty (how the decisions of competing firms will be adversely
impact a decision to adopt a new technology). Generally, the
effects of technological uncertainty can be reduced by research and
testing. In contrast, strategic uncertainty is more difficult and
problematic to evaluate, frequently relying on speculative efforts to
anticipate the decisions of rival firms. Adopting AMT involves both
types of uncertainty.

Baldwin (1995) suggests that firms, which export a large portion of

their production, adopt a greater variety of AMT than domestic
competitors. He cites the reorientation to exporting by the Japanese as
their motivation to adopt AMT. If this is the case, US exporting firms
would be expected to adopt a greater variety of AMT than non-
exporting firms.

The adoption of AMT involves major investment and a high degree of

uncertainty and, hence, warrants considerable attention within
manufacturing firms at the strategic level. As a result, issues involving
selection and justification procedures assume greater importance.
Baldwin further states that companies can attain significant
competitive advantages through AMT such as flexible manufacturing
systems (FMSs), computer-aided design and robotic systems. He also
observes that many companies are reluctant to install these
technologies because:
(1) Those which have frequently do not reap the advantages these
technologies can offer.
(2)There are difficulties in implementing the expensive, complex systems.
(3)There are insufficient internal skills.
(4)There is a multiplicity of implementation paths.
(5)AMT involves incremental skill building
(6)AMT requires different support infrastructure

Implementing AMT is one of the lengthiest, expensive and complex

tasks a firm can undertake.

An issue of importance in this strategic decision is whether the process

should be transferred without modification or adapted in some way for
transfer, cloning a manufacturing process can maintain commonality
throughout a global network of operations, and avoid re-engineering
costs. Cloning, however, requires ‘robustness’ to the recipient’s local
conditions and may not allow the exploitation of benefits from local
factors of production. The alternative is to adapt some aspect or
aspects of the manufacturing process, through adoption; the transferor
(the home) can take advantage of local characteristics and can
facilitate the transfer process. Manufacturing process which receives
significant inputs from the local economy, such as skilled labor,
repairmen, reliable power, spare parts, industrial materials processed
according to exacting specifications and so on, are less appropriate to
the less-developed areas than those which do not have such
requirements. Vernon concluded that firms would either vertically
integrate to overcome such supply problems, or choose products which
were more transferable, such as those which did not require the local
conditions mentioned above. Taking a largely economic perspective,
he identified the variables affecting technology choice for transfer as:
market size and growth, labor and capital costs, range of technology
available and prospect of technology obsolescence. In these examples,
the author has listed both host-dependent and host-independent
issues. To attempt a comprehensive assessment of the factors coming
to bear during the transfer it is necessary to differentiate between
those characteristics of the process that pertain to fit with host
conditions (such as labor costs and market) and those that affect the
activity of transferring the process (such as dependence on difficult-to-
transfer knowledge).
Literature on ‘technology appropriateness typically suggests factors
influencing adaptation to improve fit with host characteristics and
socio-economic objectives. Pakes (1984), for example, focuses on labor
substitution, identifying appropriate technology as that which
maximizes output and employment simultaneously. This approach to
appropriateness is too narrow to be of much value to transfer
practitioners assessing a manufacturing process or choosing a location.
A wide view of appropriateness should draw in all the factors that have
some impact on the operation of a manufacturing process in its new
location.

Implicitly so far, adoption and adaptation of manufacturing

philosophies by less developed countries (LDCs) provides useful
material for the search for factors adaptation. The simplicity of
Japanese techniques and their low capital investment requirement
makes them ideal for LDCs, requiring only training. However, they do
mention caveats, for example: workers in LDCs often lack inherent
housekeeping tendencies, capability in tool making and quality
measurement, and individuals for troubleshooting. More adaptation
influencing factors are suggested by authors in LDCs, namely,
employee and supplier participation (cultural and infrastructure),
educational level, labor costs, unionization, and firms’ size.

Factual evidence of the factors affecting manufacturing process

adaptation is uncommon, but a number of empirical studies have
identified a lack of host managerial know-how, lack of infrastructure,
poor IPR protection, governmental requirements and commercial
habits as barriers to transfer. Different manufacturing processes will be
affected by these factors to a greater or lesser extent. The sensitivity
of a process to any of these factors gives an indication of its
robustness. If a process was not, for example, climate specific, then it
could be considered robust to climate. In this case it would be
appropriate, regardless of differences between the home and host
climates. The more general case would be where although the process
was affected by climate, the home and host climates were sufficiently
similar so that the manufacturing process was appropriate for that
host.

Adoption of new technologies is a key element to a firm’s success.

Therefore, most of the researchers outline the extent to which
establishments in the Canadian manufacturing sector use advanced
technologies. It investigates the extent to which advanced technology
is being used-both at the individual technology level and at the
functional technology group level, where functional group refers to
collections of technologies that serve a common purpose. Not all firms
adopt AMT because of the costs associated with their adoption.
Adoption occurs when the benefits from adopting the new technology
outweighs the costs. Adoption rates, alone, are insufficient for
attempting to understand the complex nature of technological change.
Thus, some surveys investigate the benefits and effects that
manufacturing establishments receive as the results of adopting AMT.

Moreover, some manufacturers hold the view that the adoption of AMT
involves a high level of investment, and its payback period is usually
longer than that traditionally required by business enterprises.

The top five obstacles to more rapid adoption of AMT, as stated by

these executives, are:
(1).Lack of necessary funding
(2).Lack of in-house technical expertise
(3).Failure of top management to grasp the benefits of AMT
(4).Inadequate planning or lack of vision
(5).Inadequate cost-justification methods

2.5 Benefits of Advanced Manufacturing Technology

The literature identifies a variety of technical and strategic factors that

include AMT adoption: reduced product development time, labor costs
savings, material costs savings, a need to remain competitive, tax
incentives, financing availability, a need for product change flexibility,
environmental, safety or health concerns, increased profitability or
plant performance and customer requirements. These factors have a
broad, strategic impact on the firm and affect virtually every major
element of a firm’s operating environment.

AMT represents a wide variety of modern computer-based systems

devoted to the improvement of manufacturing operations and thereby
enhancement of the firm competitiveness. AMT, in its varying forms,
has been credited with the potential to bestow, among other things,
earlier entrance to market, faster responses to changing customer
needs, and higher quality products with improved consistency and
reliability, However, results of several empirical studies indicate that,
while most firms achieve some benefits, many of them are not fully
exploiting their AMTs touted capabilities.

Since the technical capabilities of AMT are well proven, failure to

achieve the potential benefits has been attributed to infrastructure
problems such as inadequate organizational planning and preparation
for the adoption of the AMT or defines a life-cycle implementation
process which consists of the following three phases: pre-installation
(planning and justification), installation and commissioning (monitoring
and evaluation). Implementation is typically viewed as a combination
of the actions in the installation and commissioning and post-
commissioning phases.

2.6 Disadvantages of AMT

Companies have identified some of the issues and problems arising

from implementing an AMT project and discuss the following issues,
namely scope of AMT projects, simulation modeling, cell design, cell
operational logistics, and labor issues in AMT.

Traditionally there has been little awareness of the need to link

technology issues with human resource management issues.
Technologies have been deployed to improve firm performance
independent of programs and practices that involve workers in
decision-making. Firms implement new technologies to improve their
competitiveness. Reductions in labor costs are made possible by new
automated machines and equipment which take over decisions about
production and perform at accelerated rates operations formerly
performed by humans. Faster performing technologies permit
increased production using the same fewer, or less skilled employees.
The impediments that were investigated by Baldwin can be divided
into five groups. The first includes a set of general cost-related
problems associated with AMT adoption, including the cost of capital,
the cost of technology acquisition,
the cost of related equipment acquisition, the cost of related software
development, and increased maintenance expenses.
Four other areas were also identified-impediments that arise from
government policy (Institutional-related problems), from labor market
imperfections, from internal organization problems and from
imperfections in the market for information. Each of these also
increases the costs of adopting AMT-but the causes are somewhat
more narrowly focused than the general cost-related items that are
included in the first category.

Labor-related problems include difficulties that arise because new

technologies and innovation generally need higher skill levels. In the
face of these needs, a firm may encounter impediments to adoption if
there is a shortage of skills available on the market, or if it faces
training difficulties in overcoming deficiencies, or if its labor contracts
act to constrain its ability to substitute labor across tasks.

Organizational problems are those associated with difficulties in

implementing the types of internal change in a firm that are required
for the adoption of AMTs. The first of these is the difficulty in
introducing important changes to the organization. For example, the
introduction of computer-aided design may require new structure that
link engineering development with the production department so that
the advantages of concurrent engineering practices can be fully
exploited. Other organizational problems stem from a poor attitude of
senior management towards new technologies, or worker resistance.

Institution-related problems are those associated with tax regimes

(both the R&D tax credit and capital cost allowances) and with
government regulations and standards. Information-related problems
arise if markets for knowledge are imperfect.

They include lack of scientific and technical information, technological

services, and technical supports from vendors. Table 3 reports the
percentage of plant managers who reported that these problems
impeded the adoption of AMT according to the Baldwin (1995) survey.
Table 3 - Problems Impeded the Adoption of AMT
Types of Impediment Percentage
Cost-related 79.1
Institution-related 15.5
Labor-related 37.2
Organization-related 34.1
Information-related 24.9

2.7 Role of AMT in India

Almost all developing countries that were British colonies for a

considerable length of time inherited the British Education system.
During the early years of the colonial period, British investors set up
most of the sizable businesses in these countries. The managerial
personnel, including Production Managers, for these enterprise were
generally brought from the UK. I n d i a w a s t h e British colony for
long time.

131 Kennedy D Gunawardana

Colonies inherited their education system and practice almost entirely
from the British systems.

Various attributes are addressed and used by researchers for

procedures involving adoption, classification, selection, and
justification of AMT. In this review, a comprehensive list of studies have
been identified and classified under many categories. The literature
also observes common difficulties in implementing AMT such as lack of
technical skills, managerial problems, lack of confidence to implement
automated systems, lack of clear-cut policy direction towards
automation, resistance to adapt automation and systematic evaluation
methods. Economic issues alone are inadequate to justify new
manufacturing systems because traditional evaluation methods are
inadequate for the purpose. Non economic benefits could not be
included in the justification procedure, which offer a large number of
intangible benefits. The problem lies not in the level of technology, but
rather with its implementation. It is important to note that, instead of
rushing to invest in AMT, a manufacturing company must reassess its
direction, strengths and weaknesses, and develop a strategy for
successful implementation accordingly. The entire literature review
and classification scheme suggested have brought several elements to
the fore. These can be summarized as follows:
 AMT adoption factors and adaptation and
implementation problem by focusing on issues of
specific interest.
 AMT involves a set of quantifiable and non-quantifiable
attributes.
 AMT definition has changed from time to time. It starts
from broad definition and ends up with a much
computer related field.
 AMT includes many issues, especially human issue and
mechanical issues.
 Advantages and disadvantages related to AMT studies
are common in the literature.

3. Conclusion

The properties inherent in Advanced Manufacturing Technology (AMT)

create new opportunities for firms, and in particular small firms in the
local context. The capability of this technology to modify production
specifications quickly and accurately means that firms can customize
their products and attain economics of scope based on low volume
and low cost production. While traditionally technology has been
perceived merely as a tool in implementing business strategy, AMT has
the potential to directly affect the firm’s strategy choices. To date,
however, AMT literature suggests that adoption of AMT offers firms the
potential to pursue new innovative strategies.
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