An Empirical Investigation of the Contribution of Information Systems to Productivity

By Gupta, Uma G. | Industrial Management, March/April 1994 | Go to article overview

An Empirical Investigation of the Contribution of Information Systems to Productivity


Gupta, Uma G., Industrial Management


Over the last two decades, investments in shop floor systems and technologies has continued to increase. Unfortunately, many companies that once adopted a piecemeal, quick-fix solution to daunting production and process problems are realizing that unplanned automation has in fact resulted in productivity declines and cost overruns. Although there is an inherent tendency to assume that automation increases productivity and efficiency, there is little empirical evidence to support this hypothesis. Quite to the contrary, automation has frequently resulted in complex and fragmented environments that, in turn, prove detrimental to cost reduction and quality enhancement efforts. The lack of a strong measurable relationship between information systems and shop floor productivity has led top management and manufacturing personnel to view such systems as cost centers that have a negative impact on bottom-line results. Automation has created serious bottlenecks in designing flexible environments and reducing the lead time to deliver quality products to the market place. This research provides empirical evidence on the contribution of information systems (IS) to manufacturing productivity, identifies some leading causes for the under-utilization of information systems in the shop floor and explores the impact of information systems on the organization.

RESEARCH METHODOLOGY AND RESULTS

Surveys were mailed to members of the Electronic Segment Division of American Production and Inventory Control Society. A total of 117 usable surveys were returned and results were evaluated on four key issues:

* Causes of under utilization of information systems;

* Contribution of IS to manufacturing;

* Contribution of IS to organizational effectiveness; and

* Evaluation of IS personnel by shop floor managers.

The company profile of respondents varied in terms of annual gross sales, manufacturing environments and manufacturing technologies (CAD, CAM etc.). In Figures 1 through 4 ,the information is summarized. (Figure 1 through 4 omitted)

CAUSES OF UNDER UTILIZATION OF IS

Respondents were asked to identify some of the leading causes for under-utilization of information systems in the shop floor. They were also provided with 13 causes frequently cited in the literature as factors that undermined the value of computers and information systems in manufacturing environments. Respondents were also asked to rank these reasons on a scale of one to four; one indicating "very important" and four indicating "not important."

The number one cause for the ineffective use of shop floor information systems was the lack of coordination and cooperation among different departments within the organization. Other reasons are lack of integration among different applications, poorly trained employees and managers, misallocation of resources and lack of systematic process improvements. Over-engineering and over-spending on technology were cited as the least significant reasons for under-utilization of information systems. The top five reasons for the under-utilization of information systems and the percentage of respondents who rated it as very significant to moderately significant is shown in Figure 5. (Figure 5 omitted)

Respondents were then asked to identify and rank the significance of the contributions of IS to manufacturing. We provided a list of 12 functional areas and asked respondents to rank them on a scale of one to five, where 1 meant "great extent" (IS contributed a great extent to this function) and five meant "None at all" (IS contributed nothing to this function).

The most significant contribution of IS to shop floor activities appears to be in the area of scheduling. Seventy-nine percent of the respondents indicated that IS played somewhere between great to moderate role, in achieving better scheduling. Other areas where the contribution of IS appears to be moderately significant is reducing inventory, providing right information at the right place and right time, reducing lead times and enhancing productivity. …

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