Academic journal article Journal of Small Business Management

Strategic Implications Facing Small Manufacturers: The Linkage between Robotization, Computerization, Automation and Performance

Academic journal article Journal of Small Business Management

Strategic Implications Facing Small Manufacturers: The Linkage between Robotization, Computerization, Automation and Performance

Article excerpt

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The United States has a long tradition of entrepreneurship in manufacturing by small and medium-sized businesses. This tradition is often associated with the "rugged individual's common sense" approach to business and enterprise, which has been paraphrased as, "If it ain't broke, don't fix it." Whether this reactive type of management was ever appropriate is doubtful, but in the present era many U.S. business owners are being compelled to take a much more proactive stance in manufacturing and operations control. This study will look at the technological adaptations of small businesses and how these relate to the manager's evaluation of firm performance and barriers to greater technology use.

Small manufacturers in the United States face new technological challenges which are forcing them to consider more cost-effective production systems and operations. This forced implementation of new technologies is due to recent computer advances, greater domestic and international competition, and increased labor costs, all of which are requiring small manufacturers to focus on methods to reduce manufacturing costs, control overhead, improve productivity, and increase product and service quality.

One of the first major technological changes to influence small businesses was the introduction of numerical control, which enables firms to use coded instructions to control and operate machines. In addition to the linkage of numerical codes and computers, a revolution in computer hardware technology is taking place with the advent of microcomputers. The microcomputer, a smaller, easier to use, and less costly alternative than the mainframe computer, is strongly linked to the growing trend that Lincoln and Warberg describe as small businesses entering the "high-tech world." However, even in small businesses where microcomputer software and hardware have been been purchased, the predominant use has been for processing transactions (i.e., listing customer names and addresses, items purchased, date of sale, marketing costs) rather than as a decision-making tool in the operations and manufacturing areas (i.e., analyzing inventory levels or sales effectiveness.)

Experts predict that new technology, as it develops, will create new uses and applications for small businesses. Currently, this situation exists with CAD-CAM(computer-aided design/computer-aided manufacturing). With the development of a common database and three-dimensional graphics, small businesses will be able to apply CADCAM technologies to materials handling, automatic assembly, new product innovation, and office automation.3

Increased competition (both domestic and international) is the second factor which is spurring small and mediumsized businesses toward greater computerization of tools and machine technology.

As large manufacturers employ industrial robots more extensively, small entrepreneurial firms are buying robots to compete with larger firms. In addition to the need to deal more ef fectively with competition, stronger financial performance has encouraged small business owners into more extensive utilization of computerized processes and systems.

A few empirical studies have been done which show at least a tentative linkage between the use of technology and performance. Small firms which used computerized systems for forecasting and aggregate planning, for example, financially outperformed those firms not employing such techniques. Some activities critical to better financial performance are analyzing changes in target customers, making sales projections, and preparing a monthly cash now analysis. Small business can be greatly aided in these planning functions by the use of computers. It seems, then, that the interest in information processing tools, computerized systems, and robotization is justified from a number of standpoints. These systems allow small businesses to reduce costs and improve the efficiency of their operations because they can bring about better materials management, smoother customer relationships, tighter control of finances, and greater overall planning for the future of the firm. …

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