Impact of Is on Manufacturing

¶ … Manufacturing

The impact of IS/IT on manufacturing begins with an analysis of firm's value-chain analysis.

Well-structured information systems allow companies to integrate and coordinate information with the value-chain activities, identify significant changes and trends in the company performance and compare similar activities performed in different locations (Bashein, Markus, and Riley, 1994). These information systems also allow managers to make non-programmed manufacturing decisions, as Decision support systems and ERP systems can aid management in handling complex manufacturing decisions by providing quick and proper solutions of non-recurring manufacturing problems.

The use of IS networks are also necessary to support just-in-time (JIT) inventory management systems, which dramatically reduce inventory costs by closely coordinating suppliers' deliveries and manufacturers' production schedules. Similarly, external IT networks make it practical to improve business delivery processes. IS/IT offers an organization the ability to effectively leverage information resources for manufacturing activities (Tomasko, 1993).

Traditionally, product development processes have been characterized by sequential decision-making and little coordination between marketing, manufacturing, and research and design departments. From a socio-technical perspective of organizations, this is deemed to be highly ineffective since interdependent functional units need to engage in joint decision-making in order to reduce overall product development cycle times ((Bashein, Markus, and Riley, 1994). Electronic mail, video-conferencing, and computer-to-computer links such electronic data interchange (EDI) are important devices to support workgroups collaboration. Today, for example, it is feasible for team members to coordinate synchronously (across time zones) and geographically (across remote locations) more easily than ever before.

Computer aided design (CAD) and computer aided manufacturing (CAM) systems are also used to coordinate between designs and manufacturing groups. IT, by providing simulation and modeling capabilities, permits organizations to design and manufacture prototypes for testing their reliability and interface with other actual physical components, thus allowing them to work with more designs and products in less time.

IS/IT thus are used to shorten product development cycle times, increase the number of alternative designs considered, lower manufacturing costs, and produce higher quality products. By integrating sales and marketing with engineering and manufacturing, organizations can offer increasingly high level of services to customers. Salespeople from different sites and in the field can now easily access customer, product, and inventory databases to offer reliable information about product attributes, price, delivery, and services.

By analyzing firm's value-chain activities, an organization can identify main business entities, and standardize data-entities across different departments and locations. By sharing consistent information by different departments along the firm's value-chain activities, a corporate database can provide opportunities for comparing business performance of value-chain activities in the process (Tomasko, 1993).

Since the efficiency and reliability of a business depends not only on a firm's capabilities but also the capabilities of its partners such as suppliers, vendors, and major customers. Traditionally firms carried out most of business activities through vertical integration, but in fast dynamic environments, these kinds of hierarchical structures are inflexible and slow to respond to customers quickly. IS networks between two or more firms can allow these firms to create is a better alternative for making quick decisions.

A number of firms are using IS/IT to offer a one-stop-shopping service to customers.

The second objective is to connect customer-database systems for targeted cross selling within and across business lines. By linking to diverse databases, IS networks can find relationships between these databases and leverage the opportunities for cross selling.

A third objective is to be able to leverage its partners' such as suppliers' and vendors' systems and strengths.

Although for a majority of firms, IS/IT has been an integral part of conducting businesses since the early 1980s (Davenport, 1993). Traditional communications were mostly conducted through secure private proprietary standards between a customer and its major suppliers, however, with the pervasiveness of open standards, it has become much easier even for the small firms to collaborate with other firms through the Internet and other electronic connections. In fact, connectivity, open-standards, and scalability in information systems have become major constituents to facilitate e-business (Davenport, 1993).

In general IT and telecommunications are helping firms to overcome problems of coordination and control and thus help in restructuring interorganizational relationships, especially over time and space. Although these technologies can be used to create e-markets, as can be seen on the Internet with e-shopping mall, and e-hierarchies as is the case with bi-lateral EDI, the main advantages of these networks lie in the development and maintenance of network organizations. Network organizations have become increasingly more flexible because of the developments in IT and communication networks.

One of the other advantages of these communication technologies is that they are able to provide efficient and reliable information across the channel quickly. The results may be that network organizations combine the advantages of vertical integration (hierarchies), such as better control and coordination of actors, economies of scale with the advantages of small independent companies and are more closer to the markets thus tend to be flexible (Boar, 1994).

By extracting value from information, an organization becomes better equipped to efficiently carryout most of its business activities efficiently, besides offering personalized and value-added services to the customers. Moreover, the use of the Internet provides firms the opportunities to develop products and services that can be customized by the customers through their interactions (Tomasko, 1993).