Computers Lick Pesky Inflation?

By Koprowski, Gene | Insight on the News, April 7, 1997 | Go to article overview
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Computers Lick Pesky Inflation?


Koprowski, Gene, Insight on the News


After two decades using PCs, entrepreneurs and economists can point to real benefits.

The Federal Reserve has had a potent but unheralded ally in its fight to contain inflation: the personal computer. According to economists and executives, computers have enabled plant managers to eliminate the guesswork involved in planning for manufacturing and inventory levels. As a consequence, productivity has increased from 1 percent to 3 percent per year.

Retailers are making smaller buys "and for manufacturers, that smooths out blips in demand," explains Henry Bruce, vice president of Industri-Matematik International Corp., a Stockholm-based maker of industrial automation systems whose clients include Campbell's Soup, Kellogg's and Dannon Yogurt. "The blips to tool up and produce goods are what caused inflation. But you see less of that in a real-time, on-line environment."

What's more, there is a greater coordination between industrial suppliers and manufacturers, facilitated by electronic-data interchange. "This shortens the time between acceptance of an order and delivery," says John Lischefska, vice president of business development at SynQuest, an Atlanta software-manufacturing company "It also speeds up the time that companies pay their bills."

Miller SQA, a furniture manufacturer based in Michigan, installed SynQuest software that allows it to precisely calculate capacity schedules. According to Bill Bundy, vice president for operations, the company has eliminated the need to keep raw materials such as wood and metal in inventory and has cut the delivery time for finished products to two days for 25 percent of its orders -- a fivefold increase.

Computer-related productivity enhancements have had another impact on the economy, notes Joe Lehman, director of the Mackinac Institute of Public Policy, a think tank in Midland Mich.

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