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Elements of cost-effective CIMR. LEONARD aa Total Technology Centre, UMIST, P. O. Box 88, Manchester, M60 1QD, U.K.Version of record first published: 03 Apr 2007.

To cite this article: R. LEONARD (1988): Elements of cost-effective CIM, International Journal of Computer IntegratedManufacturing, 1:1, 13-20

To link to this article: http://dx.doi.org/10.1080/09511928808944339

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INT. J. COMPUTER INTEGRATED MANUFACTURING, YOLo I, NO. I, 13-20

Elements of cost-effective ClM

R. LEONARD

Abstract. The paper initially describes the creation of aninvestment analysis program whose use enables all the factorssurrounding a CIM or AMT project to be quantified, includingsuch important 'intangible' aspects as improved manufacturingflexibility or enhanced product quality. Following an historicalreview of the constituent elements of CfM, and a projection ofthese technologies into the near future, CAD, CAM, MRP andFMS are subsequently discussed in terms of overall systemeconomics. From this base, it is shown that by analysing eachsub-set of CfM with respect to its economic impact on acompany, the appropriate level of investment for a specificsituation can be correctly determined, and it becomes possibleto predict how emerging technologies will develop. The paperconcludes by discussing a selection of future research areaswhich must he successfully investigated if CIM is to become aworking reality.

1. Introduction

Manufacturing technology has tended to develop by aprocess of trial and error, with the emphasis being on unitcost reduction. In the future, however, major investmentsshould not be looked at in isolation, but must reflect abeneficial effect on the whole organization. The objectiveshould not to be to improve individual departments, norinstall the most up-to-date technology, but rather toenhance the company's competitive position. This meansproviding customers with the products they want, at therequired specification, quality, cost and delivery. Forexample, companies normally treat quality as a cost, andefforts are aimed at reducing rework and warrantedpayments. But if the effects that good quality would haveon sales is identified, not only are the financial benefits ofquality investment much greater, but the ways thatquality can be improved will change. A NEDO Report on'Quality and Value for Money', states that productquality is the key to improved competitiveness, and thatthe customer's perception of quality is wide ranging andincludes delivery, packing, installation, product descrip­tions, instruction manuals and customer support.

Another example of how manufacturing must suit theoverall company requirements can be seen in organiz-

Author: R. Leonard, TotalTechnology Centre, UMIST. P. O. Box 88,Manchester M60 lQD, U.K.

ations which operate in volatile markets. Here the need isto respond to rapid changes in sales volume and productmix, and constantly introduce new products or enhanceexisting designs. Some improvement can be obtained bvinstalling 'islands of automation', but to achieve theoverall performance that the market demands renders itnecessary to operate the total company under a single'game plan'.

During the past two decades, the total manufacturingenvironment has been subject to a scale of change that ismore radical than has occurred since the IndustrialRevolution. The traditional drawing board has given wayto the intelligent CAD terminal; hard-wired numericalcontrol (NC), which was originally viewed as a revol­utionary new approach to component production, hasrapidly been superceeded by CNC, and now CNCmachines themselves are being replaced by flexible manu­facturing systems. Product design, material control, mar­keting, manufacture and assembly, together withfinancial control and spares/servicing, have each beensubject to intensive individual pressures for change as thecomputer finds an ever wider application in industry.Now the point has been reached where these 'depart­mental revolutions' need to be embraced within a totalcompany strategy, as industry slowly evolves towardscomputer integrated manufacture (CIM).

A great deal has been written regarding CIM, butmuch of this past work is speculative, and lacks currentpractical significance. This is reflected in the recentreport, 'Integrated Manufacture' (Ingersoll Engineers 1985),which shows that few companies have achieved anyworthwhile integration, and even the term CIM fails tofind universal acceptance, with six conflicting interpreta­tions being discussed. The report reflects the confusionthroughout industry, where flexible manufacturing sys­tems (FMS), automated assembly (AA) and even roboticsare often included in the definition of CIM. For thepurposes of this paper, the above sub-elements will not betermed CIM, as they are only advanced aids to manufac­ture, rather than overall control systems. Yet before trueCIM can eventually emerge in its own right, the technicaland economic viability of each constituent element mustbe subject to critical discussion, otherwise it is unlikelythat the overall system will approach a true optimum.

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14 R. Leonard

2. Financial evaluation

In the past, difficulty existed surrounding investmentsin advanced manufacturing technology (AMT) becausemany benefits, such as improved product quality orincreased company flexibility, were classified as "intan­giblc': Thus the need was identified at UMIST for a newapproach to investment appraisal, and techniques weredeveloped and industrially applied which overcame boththe technical and conceptual problems of appraisingAMT projects. These techniques have now been conver­ted into a commercially available program, called IVAN(Orgunization Development Ltd), which can run on mostbusiness microcomputers. The work at UMIST is the firstto prove that all the 'intangible' benefits affecting aninvestment can be redefined and quantified, and thatthese benefits arc actually greater than such traditionalsaving-s as direct labour. Many companies now use IVANas their standard method of investment appraisal, Pri­mrose and Leonard (1986a), and this fact has strongimplications for the future development of CIM tech­nolog-y. For example, CAD manufacturers use IVANwithin their organizations to help predict the economicviability of potential technological developments, whileoutside their companies, IVAN is used to justify the salesof major systems.

3. Computer aided design

J. 1 Historical perspective

l ntcractive g-raphics was first used significantly in theSAG E early warning system during the 1950s; whereoperators used light pens to point at targets on CRTscreens. The USAF also funded research during thisperiod reg-arding how high-precision components formilitary aircraft could be reliably machined, and thisresulted in t he APT programming language. At a subse­quent meeting at MIT in 1959, the idea was formulatedto extend APT to capture component geometry at thedesig-n stage (Coons 1963) and work began to createCAD. Sutherland's (1963) PhD thesis described hisSKETCHPAD 2D interactive CAD system, whichcoupled the CRT{light pen concepts from SAGE, to aMIT TX-2 mainframe computer. A bank of pushbuttonsinitiated pre-programmed commands to start a line,begin a circle or edit a previous instruction, therebyallowing a complete drawing to be built up or modified,and moving- linkages could be depicted on the screen. Inan introduction to a book, Sutherland later admitted thatCAD researchers in the early years had simply picked

problems that were capable of solution, rather than thosethat really needed solving.

The task ofevolving CAD into a practical tool was nowtaken up by industry, and in 1964, IBM and GeneralMotors announced a system which could photographexisting drawings, digitise/edit the image, and produce afirm copy (Hargreaves et al. 1964). A program for describ­ing surfaces, and then generating NC tapes for 2D millingwas devised by the Lockheed-Georgia Corporation(Chasen 1965), and this became the CADAM system nowleased by IBM. Meanwhile, MIT were researching ageneral purpose CAD system that utilized the databasetechniques of Ross and Rodrigues (1963), and Sutherlandwas developing the fast transformation and windowingmethods which have now become an important part ofstandard CAD display.

In response to Intels requirement for CAD to designLSI silicon chips, Calma entered the industry in 1968,and they were soon followed by Intergraph, Computer­vision and Applicon. In the U.K., the CAD Centre atCambridge generated a host of able researchers, some ofwhom left to form Cambridge Industrial Systems (CIS),who subsequently devised the MEDUSA software pack­age. CAD companies now took advantage of the reason­ably powerful and yet inexpensive time sharingminicomputers, such as the PDP 7 from DEC, and soonCAD systems were sold as a package which included thecomputer, its software, peripherals, support and main­tenance. Yet these systems proved to be inflexible, and itbecame clear that user development tools, such as macroprogramming languages, were needed for CAD to gainwider acceptance.

Large time shared CAD systems have now evolvedfrom 20 draughting to 3D wire frame models, and withthe introduction of the 32 bit virtual memory minicom­puter, vendors can further expand their software. Userdefined aids provide 3D solid modelling that is colourshaded for visualization, finite element mesh generation,kinematic analysis and parametric design, while softwarefor tasks such as sheet metal nesting or robot program­ming are available. But shared systems suffer from poorresponse during peak use, and can fall below Wright's(1983) half second maximum. The development of 32 bitworkstations offers the software of a mini-based systemyet with a single user response time, however, transform­ing a single workstation into a network is not just a case ofplugging in more terminals. A typical 2D CAD drawingcontains 60 Kb of data, so a network of users, eachpassing data between stations, creates a major trafficproblem. Notwithstanding this, once a workstation canbe bought for the price of a draughtsmans annual salary,and with the reliability of current time shared-systems,such workstations are likely to become the standard CADinterface.

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Elements of cost-effective ClM 15

3.2 The future

Most CAD vendors now specify raster screens, andwith 3D modelling finding increasing application, termin­als which store vectors locally are becoming morecommon. At the high performance end, real time anima­tion of shaded models will expand display intelligence,custom-chip design will decrease processing time andenhanced memory capacity will increase screen resol­ution. Foundyller (1984) suggests that by 1990, a termi­nal will consist of a 600 x 1200 mm flat 2048 x 4096 pixelcolour screen, with a 100 Mb display memory and multi­ple windows for display control. He further summizesthat standard features will include programmable func­tion keys, on-line access to colour electrostatic plotters,and dedicated processors with 100 Gb.

The retrieval of drawings, NC tape files and jigs can bean overwhelming task, therefore as CAD becomes part ofCIM, databases will grow in importance and an auto­mated coding system is an important need for the future.A single database, feeding many users, would create anunacceptable response delay. Thus a hierarchicalapproach is favoured, with local disc storage at eachworkstation and a central database at a higher level.Brentano (1984) concludes that all levels in the hierarchywill have to grow to embrace this increase in communi­cation and data base workload, and that the design ofsuch systems will be fraught with difficulties.

3.3 Financial appraisal

Companies normally justify CAD in terms of drawingoffice (DO) savings, and Senker (1983) showed that of 34UK companies, 25 had exclusively projected laboursavings to justify the CAD investment, five had notcarried out any financial analysis, while the remaindergave no reason for their purchase decision. Estimates ofproductivity improvements from CAD range from 2: I to4: I, thereby implying that at least half the draughtsmenwill not be needed once a system becomes operational.The chances of CAD getting an enthusiastic welcomeunder these circumstances are low, and the full potentialof a system is unlikely to be achieved. Yet the cost ofrunning the DO is typically less than I % of the cost ofsales, so if CAD can increase sales even slightly, the extraprofit will exceed any savings which might be expectedfrom the DO.

A low cost option opened up for CAD vendors in thelate 1970s, with the advent of the microprocessor. Yetdespite their sustained growth, Palframan (1984) pointsout that current micro-based CAD systems are restrictedto single users, they cannot share data with other com­puters, they lack any practical means of achieving

genuine integration, and once a database outgrows themicrocomputer, it may not be possible to transfer this to alarger machine. Companies who have installed CAD,acknowledge that major gains COme from faster quo­tations and better parts lists, while other benefits stemfrom component standardization, and the speed that newproducts can be introduced. It therefore follows that if themajor financial benefits of CAD come from factors such asquotations and parts lists, the emphasis when selecting asystem must be on data processing capability, rather thandraughting efficiency. Thus large minicomputer basedsystems, with data processing facilities, become easier tojustify than micro-based alternatives, Primrose andLeonard (1986b).

3.4 CAD/CAM

Although it appears attractive to extend CAD toincorporate CNC tape preparation, the costs can beconsiderably higher than the alternative of buying adedicated CNC tape system. Thus the benefits must becompared with the costs of the additional terminals andcomputer power needed to avoid degrading the responsetime, and the reduced machine tool productivity that willresult if the post-processor does not fully exploit the CNCmachine. In the final analysis, the savings from linkingCAD/CAM depend upon the application. A companymanufacturing complex components that are subject tofrequent design changes, will obtain major benefits fromreduced throughput times, together with avoiding theneed for component geometry to be inputted into multiplecomputer systems. But these savings will be small formost companies, resulting in the statement thatCAD/CAM must show significant improvements beforeit becomes a better investment than CAD plus adedicated CAM system.

4. Manufacturing systems

Numerical control (NC) was first demonstrated byJ. T. Parsons to the US Air Force in 1948, subsequentlyMIT developed a control system for a milling machine,and later the APT part programming language. EarlyNC systems incorporated a punched paper tape, a readerand a machine tool controller, and these elements are stillin evidence today, although recent developments meanthat some features can be truncated or enhanced. Sincethe early days, computers have been added to themachine tool, leading to the emergence of computernumerical control (CNC). Groover and Zimmers (1984)identify seven generations of controller hardware.

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4. J Flexible manufacturing

Early systems. In the late 1960s, Cincinnati developed aFMS called 'Variable Mission'. While in the UK, Molins

Concurrent with the development of NC during the1960s/70s, a new approach to manufacturing organiz­ation began to gain ground, namely group technology(GT). GT is based on the principle that groups ofcomponents display certain family features with respect tosize, shape and machining characteristics. Therefore, ifthese parts can be produced within dedicated cells, theycan be machined efficiently, and not be subject to thecircuitous flow paths that traditionally occur withinmachine shops. After considerable early promise, it wassubsequently found that GT was not a panacea for allmanufacturing situations, and indeed severe limitationsexist with respect to cell balancing, caused by fluctuationsin the company product mix (Rathmill and Leonard1977). Much of the GT research was sound, however,and many of the principles then derived (Thornley 1971)have subsequently found application within CAD (classif­cation and coding) and flexible manufacturing (familymachining and standardized tooling).

Another development during this period was theemergence of robotics as a practical technology, and thiswas actively pioneered by Engleberger in the USA, andby Heginbotham in the U.K. Robots have greatly pro­gressed since the early' pick and place' prototypes gainedacceptance on the shop floor, and now robots areemployed worldwide on a diverse variety of tasks. Yeteven today, there is considerable disagreement on how totable the investment case for robot purchase. Engleberger(1980) states that' Robots are machines which can replacepeople, therefore the prime issue in justifying a robot islabour displacement'. Ayres and Miller (1983) confirmthis approach when they say 'only labour savings arequantifiable and arguments about improving quality orincreasing flexibility carry little weight with accountants'.It is even suggested thai the method to justify a robot is tocalculate an 'equivalent wage' and if this is less than ahuman wage, the robot is 'hired'. The research atU M [ST has resulted in an extensive list of costsjbenefitsfor robots, Primrose and Leonard (1984a) and this con­cludes that the major gains relate to lower material costs,reduced stocks and increased flexibility/sales.

16

I. Vacuum tubes2. Electromechanical relays3. Discrete semiconductors4. Integrated circuits5. Direct numerical control6. Computer numerical control7. Microprocessors and microcomputers

circa 1952circa 1955circa 1960circa 1965circa 1968circa 1970circa 1975

R. Leonard

devised 'System 24', but a complete system was neveractually built and the constituent machine tools were latersold off separately. A number of famous showcase FMSwere created worldwide around 1980, yet these have notproved typical of current FMS and should be regarded asprototypes. The 600 Group's SCAMP (Six hundredComputer Aided Manufacturing Project) was the resultof a Department of Industry invitation to devise a systemaimed at automating small batch production. The systemwas based on lathes and robots, and it was estimated thatparts produced on SCAMP were three times more expen­sive than from conventional machines. The project tookseven years to complete, it cost £3m, and included ninemachine tools.

Yamazaki's machine tool factory at Minakamo inJapan is far larger than SCAMP, with 43 machines, 17robots and six automated guided vehicles (AGVs). Theaim was to take the concept of unmanned operation toseemingly its ultimate limit. Visitors to the factory arespoken to by a computer receptionist, and then taken onan unmanned tour of the plant in an AGV, with com­mentary in their own language! These early systems werecreated with little regard for financial justification, butcurrent FMS are now built on 'turnkey principles', andare usually purchased from one key supplier. In a detailedsurvey of seven systems in 1982, Ingersoll Engineers(1982) found that the average investment was $12.5m,and 10 machines were included in each system. Since thatsurvey, many more firms have invested in FMS, andaccording to the manufacturer, Fitz Werner, the numberof machines per system has dropped to four.

4.2 Financial appraisal

Flexible modules. At the single machine level, FMMsconsist of units based on CNC technology but which canrun independently of an operator. They thus provide analternative to CNC and, like CNC, do not normallyinfluence the way a factory is operated. Because FMMsare currently based on CNC designs, the benefits ofmachining efficiency (i.e. improved metal removal rates,tool positioning and combining operations) can beachieved at the lower cost of CNC. An FMM can workindependently of the operator, however, and therebyachieve an improvement in utilization. When activitydiagrams are considered for the machine and theoperator, the maximum utilization is achieved when thediagrams are unconnected. The fact that an FMM costsaround 50% more than the equivalent CNC, is thus offsetby the FMM doing the work of 1.5 CNC machines,Primrose and Leonard (1984b).

Flexible systems. An FMS comprises a number of FMMs,

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Elements of cosl-effective elM 17

integrated with a management control computer and aworkpiece}tooling transport system. Because of load bal­ancing difficulties, and losses caused by breakdowns, theoutput of an FMS will be less than that of the samenumber of FMMs when operated as individual machines,yet the capital cost of a FMS may be 50% more than thatof separate FMMs. The main benefit of an FMS derivesfrom the ability to schedule work as if the FMS was atransfer line, thereby gaining the advantages of reliabledelivery times, reduced levels of finished stock and thecapacity to introduce new products speedily. Thus whileFM is justified at the single module level in terms ofproduction savings, full systems must be viewed in acompany-wide context.

5. Manufacturing controls

Buffa (1980) stated that the .modern era of productioncontrol started in the 1950s with the use of computers inindustry. Many of the operations research (OR) tech­niques developed during the Second World War wereapplied to manufacturing practices, and this resulted in aproliferation of methods for ordering/batching com­ponents, work scheduling and forecasting. Pritchard andEagle (1965) extended Wilson's basic order point modelto produce complex calculations of statistical order pointsand economic batch quantities. Yet because such tech­niques were based on marginal costs and historic usage,they inevitably produced mismatched sets of componentsfor assembly. Similarly, considerable research wasapplied to the m machines/n jobs scheduling problem,with a view to maximizing the output of direct productionresources (Cheng 1985) but these routines were based onfinite loading algorithms, and could not encompass real­istic values of nand m, thus they were applied in isolationfrom the total company objectives, Plossl and Wight(1973).

Although a proliferation of OR techniques continuedto emerge, an integrated approach to production controlonly became possible during the late 1960s. Plossl andWight (1967) recognized the interrelationship of man­agement decisions and they concluded that individualsystem elements could only be optimized within aframework that incorporated the total production controlsystem. Orlicky's dependent demand principle (1975),was first perceived as a superior ordering technique, but itrapidly evolved into a 'total company system', nowknown collectively as MRP. Material requirements plan­ning (MRP) and manufacturing resources planning(MRPII) are different in scale, but can be similarlytreated for financial evaluation, thus the term MRP will

subsequently be used for both systems. MRP is essen­tially an arithmetic process which takes in three datainputs; the master production schedule (MPS), bills ofmaterials (BOM), and inventory records (IR) todetermine both current and future item requirements,and is described concisely by New (1973).

MRP continued to evolve as enhancements were madeto routines. So that by the mid-1970s, it was realized thatplanning priorities and component scheduling could notbe achieved unless valid operating schedules were com­municated to both suppliers and the machine shops.Schedules had to be derived from the plans formulated bysales, marketing, manufacturing, design, finance andpurchasing, and needed to reflect the resources requiredto achieve them. Vollman et al. (1984) correctly statedthe principles of master production scheduling and cap­acity requirements planning (CRP), while recent devel­opments promote the merging of the manufacturing andfinancial operating systems, to provide a company 'gameplan'. Here the aim is to control the company bysimulating the effects of the business plan on the totalresources (Wight 1981).

MRP has been increasingly adopted by WesternIndustry, but it has not always proved successful, partlybecause of the difficulties of implementation, manage­ment commitment and the need to educate employees(Knipp 1984). Furthermore, because the capacity plan­ning routines are based on infinite loading procedures,they cannot plan priorities and capacity simultaneously.To correct these deficiencies, an innovative technique hasrecently emerged, known as optimized production tech­nology (OPT), and this adopts a two stage approach forgenerating schedules. An infinite loading routineidentifies critical (bottleneck) work centres, then OPTfinite loading is used to develop feasible schedules forthese critical resources, whereas other work centres areloaded to infinite capacity. Commercial secrecy sur­rounds the proprietary software used for these tasks, andalthough this might prove a barrier to OPT's widespreadacceptance, jacobs (1984) concludes that the OPT con­cepts are relevant to many companies, and can be appliedwithout using OPT software.

The challenge to Western markets from japan has leadto a detailed scrutiny of japanese manufacturing prac­tices, and just-in-time (JIT) production, incorporatingtotal quality control (TQC) has been adopted in both theUSA and Europe since the mid-1980s. Recently there hasbeen sustained debate as to whether com panies shouldadopt MRP or JIT. It now appears that certain pre­requisites exist for the introduction of jlT (Goddard1983) and these essentially relate to repetitive manufac­turing environments. Conversely, MRP has been shownto have a broad range of application, and it is this breadthof appeal that is likely to ultimately prove conclusive.

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18 R. Leonard

Economic appraisal

MRP is not normally perceived as an investmentdecision, with Boxx (1978) suggesting that top manage­ment often accept MRP as being 'inevitable'; while Halland Holden (1973) similarly report that MRP is usuallyperceived as a 'justifiable act of faith'. This attitude canresult in a lack of adequate facilities for MRP implemen­tation, or the absence of measurable objectives. The workat UMIST (Hoey el al. 1985) has shown that data systemscan be treated like any other capital project, with costsand benefits being identified prior to the DCF returnbeing calculated. The benefits of MRP fall within fourbroad categories:

I. reduced paperwork and improved control systems2. reduced disruption of production3. controlled stock levels, and4. shorter and more reliable lead times.

The first two benefits relate to productivity and produc­tion costs, and it is these that are normally consideredwhen MRP is seen purely as a production control system.When quantifying the benefits, however, improving thesales performance and reducing the level of finished stockusually outweigh any direct production savings, and it isin these areas that MRP offers the greatest returns. Thusas research moves towards computer integrated manufac­ture (CIM), MRP is likely to assume its rightful role asthe hub of the enterprise (Fox 1984)

6. Computer integrated manufacturing - Linkingand integration

Two or more modules are linked when data transfer ispossible from a specific module to subsequent modules.This usually involves the transmission of data in someneutral format (ASCII code), and software is needed toconvert the data in the sending module, and then tore-convert this information in the receiving module. Sucha link may enable the transmission of parts lists, in apredetermined format from CAD to MRP, when thecomputers involved are individually incompatible. Or adesigner might access the CAM module tool files to avoidcreating a need for special tooling, but this requires thedesigner to understand the conceptual and technicalneeds of the planning department and they, in turn, mustappreciate the disciplines of the design process. Integr­ation is a much broader concept than linking, sincetwo-way communication is required between modules.

Companies will not pursue integration for its own sake,rather they arc forced along this path by increasingcompetition. Yet while the path to integration may be

different for each enterprise, it will follow the evolution­ary process of linking existing modules. For systems toultimately behave in the way required for CIM, however,two-way communication must exist between companycomputers, and this is strongly affected by the availabilityof sophisticated data transmission networks and advancedcontrol systems, both of which are just emerging.

ISO is developing the Open System Interconnectionmodel (OSI 1981), but this has only recently beensupported by computer manufacturers, and IBMannounced its co-operation as late as 1985. The OSImodel outlines seven layers of protocols to organizetransmission and resource sharing between computers. Ahierarchal structure allows each layer to be served by thelayer below and serve the layer above. Local area net­works, such as Ethernet, are the nearest standard, and yetEthernet itself is restricted to the bottom two layers of theOSI model, and although the seven layers have beendefined, most of the standards have not been agreed.

Yet the author contends that it will not be technicalconstraints that ultimately limits the widespread applica­tion ofCIM, but rather a lack of human resources. In thispaper it has been argued that 'quality' should be regardedas a precious company asset, but no asset will match thatof the highly trained technical manager, who has a flairfor effectively applying advanced technology. Thesepeople are already at a premium, the universities andindustry have yet to devise effective ways to educate andtrain such people, and the advance of technology is dailyaccelerating! In the future there will be no substitute forhaving a CIM literate workforce in a company, for CAD,CAM and FMS are no more that expensive toys withoutthe people necessary to fully utilize their inherent capa­bilities. Properly educate, train and integrate people,then CIM will become a reality.

Although it will be a long time before true integrationbecomes widespread, existing technology can be adaptedto obtain the major financial benefits that would resultfrom an integrated factory. A company using CAD toproduce quotations, can automatically generate a partslist, and this can be transmitted in ASCII code to anMRPII system (even if the computers are incompatible),where the list is converted into shop floor documentation.The MRPII system can then transmit instructions to anautomated storage and material handling system, con­trolled by another incompatible computer, to transportmaterials to the manufacturing workstations, which mayoperate under their own control systems but with thework sequencing being directed by commands fromMRPII. What is really being transmitted by such asystem is management control information, and thebenefits which result from organizational improvementsenhance the overall competitive position of the entirecompany.

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Elements of cost-effectiue elM 19

7. Conclusions

Research into the economics of CAD systems at

UMIST has shown that when the 'intangible' benefits are

correctly included in an investment appraisal, not only is

CAD a more attractive investment than was previously

believed but the main financial advantages are external to

the drawing office. In the same way, when FMS and

MRP are viewed in the context of fmancial viability, the

prime gains are in areas not directly related to the

technology itself, but to the company's ability to compete

in the market place. This suggests that major benefits will

accrue when integration becomes technically and eco­

nomically feasible, but in the intervening years, compan­

ies are advised to examine the merits of providing

working links between modules. Significant time is spentconverting customer orders into manufacturing instruc­tions, therefore the ability to quote a reduced delivery

time is a major selling advantage, and sustained attempts

should be made to truncate the order period.

Acknowledgments

The author would like to thank the SERC for funding

his current FMS research, all his past and present

students for contributing to the programme, and toJudith Prendergast for her dedication to the preparation

of this manuscript.

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