IT applications have by now entered almost all the companies, but mostly in an uncoordinated way, without long-term integration plans or automation strategies. Individual departments introduced computers and purchased or developed software to support their own departmental operations. This fragmented approach divided a company into small and almost autonomous enterprises, each using a computer to make their department and its associated activities work more efficiently. Thus, many departments acquired computers, developed and installed computerized systems, as a result of the enterprise consisted of many ‘islands of automation’. It soon became clear that the smooth transfer of information between enterprise activities and even within departments was a burden, if at all possible. Consequently, the first move towards integration was made to study possibilities between the functions through networking and data sharing.
Figure 6.17: Set-Up/Changeover Time
Figure 6.18 shows the number of companies which had (a) computerized and (b) networked departments. Ironically, in India’s manufacturing industry, the departments that have been computerized to the greatest extent are finance and accounts, stores, and purchasing/vendor development. This reflects a ‘transaction processing’ mentality. Design/engineering, production planning and control (PPC), production, quality assurance and quality control (QA/Qc), are in the second tier while marketing, distribution, human resource management (HRM) and projects form the rear. Interestingly, this pattern has no correlation with the perceived importance of and usefulness of computers in managerial tasks. Also evident from Figure 6.18 is the fact that many investments have been made in IT without reaping any benefits through networking.
Figures 6.19 and 6.20 show the number of companies that used certain categories of software applications. Office automation software, which is used for information management, dominates manufacturing software.
Figure 6.18: Department-wise Extent of Computerization
Figure 6.19: Extent of Use of Office Automation Software
In the office automation area, presentation packages were the least used, with 67 per cent companies using them. In the case of manufacturing software, the applications with the largest base were materials accounting and computer aided design and drafting. Both these applications are used by approximately 58 per cent and 59 per cent respondents, respectively. MRP II and enterprise resource planning (ERP) were used by 20 per cent of the companies. The manufacturing application with the smallest base was simulation, which is widely used internationally.
Figure 6.20: Extent of Use of Manufacturing Software
MRP II produces feasible production plans to help stabilize and control manufacturing systems.
ERP is concerned with making sure that a firm’s manufacturing decisions are not made without taking into account their impact on the supply chain, both upstream and downstream. Taken further, production decisions are affected by and affect all of the other major areas in the business, including engineering, accounting and marketing to make better decisions. There is a need to take into account all these important interactions within a business. ERP software is the medium for accomplishing this integration of decision-making processes. Since nearly every department in a company could be computerized, ERP software can link and coordinate all of these computerized functions, to make them ‘talk’ to each other.
Groupware refers to software designed to help business teams’ work together across locations. It coordinates schedules, messages and workflow among group members, and usually includes modules for group analysis and decision-making, as well as group document preparation.
Similarly, an intranet is an internet-based network for use within an organisation. Figure 6.21 deals with managerial opinion on two related trends that are making waves globally today.
Groupware and intranets help companies to combine the uses of databases and electronic messages (E-mail). What results is ‘the death of distance’ as far as information sharing is concerned. Information may be simultaneously made available to managers located on different continents. Interestingly, a small number (less than l0 in each case) of the responding companies had already used intranets and/or groupware. Intranets had a slight edge here. A large number of companies (about 25) were considering both these applications. An equally large number had not considered them yet. Interest in these developments seems to be at a threshold level.
Figure 6.21: Status of Use of Groupware and intranets
Figures 6.22 through 6.25 provide interesting insights into the nature and causes of implementation of ERP software in the Indian manufacturing industry. Interest in ERP has crossed the threshold level, with about 25 per cent of responding companies’ stating that they were evaluating the available ERP packages and -about 20 per cent stating that the selection process has been completed or that implementation was in progress. 13 per cent of the responding companies had considered and rejected ERP. About 31 per cent of the respondents had not considered it yet or were not aware of it. From those responding companies that had gained some exposure to ERP, the following trends emerge:
- The deciding factor for selection of a package was its functionality. The recommendation of parent companies was the deciding factor in some cases.
- The bad news for those who position ERP software as a template for reengineering was that the major benefit from ERP was perceived to be ‘integration of different departments and easy access to data’. ‘Fundamental improvements through re-engineering and streamlining the processes of manufacturing’ was a distant second.
- ‘Lack of fit of existing processes with features provided by the package’ and ‘lack of availability of personnel for implementation and use of the package’ were the biggest problems for those going in for ERP implementation.
Figure 6. 26 shows the extent of use of electronic interchange of data across departments within companies. As shown in the figure, the use of electronic links is gaining ground, with more than half of the responding companies reporting its use between stores and purchase. Electronic links between stores and PPC, and production and PPC were also quite widely used. Such electronic links could be made possible due to the increasing interdepartmental connectivity and use of
ERP-type or groupware-type software packages.
Figure 6.22: Present Status of ERP
Figure 6.23: Selection Factor of ERP
Figure 6.24: Perceived Benefits of ERP
Figure 6.25: Problems Encountered in Implementation
Figure 6.26: Departments between Which Data Transfer in Fully Electronic
The previous section gives a summary of the survey. The figures given there present snapshots of an industry in a stage of transition, operating in one of the big emerging markets of the world- India. In addition, these findings also raise some important research issues that have been addressed briefly in the sub-sections that follow. These issues are:
- The stated manufacturing objectives of Indian organisation vis-à-vis international trends.
- Breadth of IT infrastructure with respect to the depth of IT use in manufacturing.
- The effectiveness of use of IT in integrating the components of manufacturing systems.
- Breadth versus extent of integration of IT infrastructure.