In a study, co-authored with Paul Swamidass, we examined what top management thinks about the benefits from hard and soft technologies. Hard technologies are defined as the complex bundle of equipment, computer hardware and software, for example: CNC, CAD, CAM, computer-integrated manufacturing (CIM), local area network (LAN), automated inspection, robots, automated guided vehicles (AGVs), and FMS. Meanwhile, soft technologies are manufacturing techniques and know-how such as JIT, TQM, MRP I, MRP II, manufacturing cells, and SQC—equipments and computers are not essential to their successful use but can enhance their effectiveness.
The following six hypotheses are tested:
H1: Hard
technology is significantly associated with product line breadth.
H2: Soft
technology is significantly associated with product line breadth.
H3: Hard
technology is significantly related to enhanced shop floor performance.
H4: Soft
technology is significantly related to enhanced shop floor performance.
H5: Hard
technology is significantly related to growth and profitability.
H6: Soft
technology is significantly related to growth and profitability.
There were three notable findings from the study:
1) technology use has a tangible and measurable effect on growth and profitability;
2) soft technologies have an effect on shop floor performance, product line breadth, and growth and profitability, whereas hard technologies have negligible effect on the three performance
variables considered;
3) skilled use of technology provides explanation for the variance in shop floor performance, and growth and profitability.
In the research investigation, soft technologies emerge as a strong performance enhancing tool at the shop floor level, as well as at the business level, where growth and profitability are important measures. The term “manufacturing technology” is often associated with hard technologies. Therefore, a study such as this was an eye-opener. The lesson here is that, while hard technologies are appropriate for attaining certain limited goals, soft technologies have a much broader impact on the manufacturing plant.
Implications for investment decisions:
The evidence that soft technologies have a more significant effect on shop floor performance, product line breadth, and growth and profitability does not mean we must tilt technology investments toward soft technologies at the expense of hard technologies. In the plants we studied, both hard and soft technologies were used simultaneously. For localized benefits in manufacturing operations, investments in hard technologies may have no substitutes. For factory-wide impact, sof technologies seem to be essential. To the practitioner, the important lesson here is that investments in hard technologies may be improper when investment in soft technologies is the need of the hour, or when investments in both are needed. For factory-wide improvements in performance measures, evidence shows that soft technologies must be a part of the investment.
The importance of the skilled use of technologies should not be ignored in investment decisions. There can be no skilled use of technologies without skilled employees who are trained and retrained. While enhancing the skilled use of existing investment may yield unrealized benefits from technologies already in use, the shortage of skilled workers may hold back manufacturers from realizing all the benefits of technology use.
Investment in manufacturing technology is very expensive. Often manufacturing firms are criticized for not investing in manufacturing technologies. One of the reasons for manufacturers’ reluctance to invest in manufacturing technologies is that the link between investments and benefits is tenuous at best. Researchers have found it a challenge to establish a link between manufacturing technology use and plant performance metrics. This study has found that, in the opinion of top management in manufacturing firms, soft technologies have an impact on 1) shop floor performance; 2) product line breadth; and (3) growth and profitability. These finding should make the investment in soft technologies easier to justify. If top management controls the purse, and if it sees a link between investment in soft technology and tangible benefits in these three areas, getting top management to invest in soft technology should be easier. The evidence in our study underscores the importance of soft technologies and the skilled use of technologies.
Implications for public policy:
Policy makers have made tangible policies backed by budget appropriations to help manufacturers become more competitive through investments in manufacturing technologies. Certain governmenta programs established through the NIST and the NSF channel funds to state and federally funded technology centers for enhancing the use of manufacturing technology in small plants. Many state and other programs target employee training to enhance the skill level of
manufacturing employees. Our findings about the benefits of the skilled use of technologies lend support to these policies.
The citation for the paper is as follows:
Swamidass, Paul M. and Nair, Anand. 2004. What Top Management Thinks About the Benefits of Hard and Soft Manufacturing Technologies. IEEE Transactions on Engineering Management, 51(4), pp. 462-471