CLASSICAL JUSTIFICATION TECHNIQUES applied to advanced technology for manufacturing, in particular, Flexible Manufacturing Systems are a major deterrent to the modernization of the industrial base of the United States. The primary problems are in the basic structure of our management and accounting philosophies and systems used in the manufacturing institution. This structure is designed to manage a manufacturing system that, in fact, is dramatically different than what the flexible system technology is. The industrial base of this country is operated on the basic tenets established in the Frederick Taylor era. These tenets are batch manufacturing in conjunction with detailed, elemental break-down of job content and high direct labor content. Flexible manufacturing concepts have the basic tenets of random, continuous part flow with little or no direct labor relationship. Therefore, we are considering an alternative manufacturing system, not a minor improvement on an existing manufacturing system. This paper will present a review of 9 Flexible Manufacturing System installations and the strategic business implications of them over and above the basic manufacturing economics.
In looking at these applications of Flexible Manufacturing Systems we will attempt to define the “real world” strategies or management problems the user was attempting to solve. What should become apparent is, that the justification of FMS technology to manufacturing problems was more the justification of a “strategy” rather than the consideration of the machine tool capital expenditure as an “investment”. The approach to justifying a strategy, such as “just-in-time” inventory, and then implementing the tools for the accomplishment of the strategy, allows a much more comprehensive analysis of benefits and costs of an alternative approach to a total manufacturing system. The “investment” approach assumes that the basic manufacturing system stays the same and that new technologies are minor improvements that will generate a return-on-investment. The “strategy” approach says that we must look at the economic implications of the strategy, determine what is required in total to accomplish that strategy and subsequently justify that strategy. The machine tools and manufacturing systems then are merely another tool required for the implementation of that manufacturing strategy.