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WCM/U4 Topic 7 Breadth and Integration of IT Infrastructure

The needs and skills required to manage today’s businesses in a global environment are far different than what they were just a decade ago. Clearly we need a new way of looking at manufacturing, for the way we have considered it in the past is no longer sufficient. With rapid changes in IT and manufacturing technology, firms are getting increasingly interested in managing the strategy-technology connection to develop new ways of achieving competitive advantage (Applegate et al. 1996). Firms are attempting to link manufacturing strategy with business strategy (Skinner 1985; Wheel right 1981; Luftman 1996), to examine the strategic impact of rapidly changing manufacturing and information technology (Jelinek and Goldhar

1983; Kantrow 1980), and to find new ways of viewing manufacturing as a competitive weapon (Skinner 1985; Hayes and Wheel right 1984; Jelinek and Goldhar, 1983). Information technology is a key ingredient in this emerging trend of getting competitive advantage through manufacturing.

Today’s emphasis on competing through manufacturing may stimulate firms to reassess their alignment of IT strategy with business strategy. New ideas concerning how IT can change the way firms compete are being explored (Applegate et al. 1996; Callon 1996; Jelassi 1994).

However, computer integrated manufacturing (CIM), which blends recent developments in manufacturing and IT to achieve competitive advantage, can provide full strategic benefits only if there exists a broadened partnership of top management as well as engineering, marketing, manufacturing and IT executives, all of whom share a common vision of how CIM makes possible new approaches to designing business systems. But, as is evident from the analysis given above, most companies have focused on ‘stand-alone’ applications of CIM component technologies, such as computer numerical control (CNC) machines, computerized bill-ofmaterials and turnkey CAD systems that improve engineering design productivity.

Obviously it will be somewhat premature to discuss strategic use of IT (i.e. CIM) in such a ‘stand-alone’ applications environment. Hence, what has been done here is to develop taxonomy of IT applications role and use it to define the breadth and depth of IT infrastructure.

Scheer (1994) had proposed an ‘Architecture of Integrated Information Systems’ (ARIS). ARIS is used here as a conceptual framework for visualizing the roles that IT applications can play in running a business as opposed to the functions performed by them. As shown in the Figure 6.28, these range from operative systems, which essentially record quantities, to long-term decision support systems. The higher the level of IT applications in the ARIS classification, the more is the likelihood of using IT strategically. The outlined portion of the diagram represents the thrust areas for IT use for most Indian manufacturers (the bases for this conclusion are the findings in

Figures 6.18, 6.19 and 6.20). Unfortunately this usage profile precludes the use of IT for sophisticated tasks such as planning and decision support. The emphasis on accounting systems indicates a ‘data processing’ mentality. Even the data-processing’ capabilities are not fully harnessed because of lack of integration.

7.1

Figure 6.28: Usage of IT in Indian Manufacturing Architecture of Information System

The important implication for managers, however, is that a companywide, integrated IT infrastructure should be viewed only as a prerequisite towards the ultimate stage of using information leading to decision support for strategic planning. For example, IT -generated inputs could be used to speed up the accounts receivable process instead of just tracking sales and performing credit checks. This would be a transition to a controlling role. At a higher level, the analysis reveals that the benefits from this step could be used to reduce prices. This would be a strategic role.

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