New Technology at Wallace - Case Study Example

Titus R Manickam Order No. 173247 09 June 2007 Business to Business Innovation - New Technology at Wallace The Wallace Company's business consists almost entirely of the design, manufacture and sale of specialised equipment for the plastics industry. Specialised equipment, by their very nature, requires expert handling and touch. Innovation is constant. So there is no question of going back on the commitment to upgrade technology. This is due to competition in business, and if an existing manufacturer is not constantly and continuously providing his customers the best available technology, there is every chance that someone else will. Executive Summary Wallace must embark on the new technology of computer aided designing and manufacture. A huge and important industry like the plastic industry stands to gain from the tremendous potential and opportunities in store, by upgrading to the new digital technology. There are normal risks such as teething problems as it will take time for the staff to comfortably operate the new system. The operation in the initial stages will have to be put under high alert with round-the-clock supervision by skilled personnel to undertake troubleshooting and rectify errors. Wallace has not been manufacturing moulds, so the project of manufacturing moulds will present new challenges and risks. The software must be guarded against hackers and virus attacks. Reactions to the changeover to the new technology could be expected from customers and competitors. Most customers are already aware of the great strides the new technology is making into every strata of economy the world over. The competitors too have no alternative except to follow suit. Innovation will be costly. Not only the hardware and software, but training and recruitment of trainers and engineers, training of staff on the new technology will call for proper planning and budgeting. The company has to work out the best source and mode of funding the transition. 1. Introduction The purpose of this report is to provide information to the company management about the new innovation to enable the chairman decide whether to go for it. The company has not been able to secure higher profits from its equipment for several years. Obviously, the equipment currently in use are either outdated or on the verge of obsolescence. Hence, the company has been correct in working on a development in the area of production automation that it believes would provide considerable value to its customers. Customers currently buy complete moulds, which are handmade, from specialized suppliers. They are expensive and late delivery and teething troubles often lead to major delays for the plastics producers. Under the new innovation, Wallace would produce the moulds for use on its machines. Its customers would be provided with software that would enable them to specify the mould and transmit the specification to Wallace. Wallace would then produce the mould to the customer's design and deliver it by courier. This innovation is geared to reduce costs and increase the speed with which the company could respond to each order from its customers. Moreover, it would enable them to increase the variety and sophistication of product shapes that they manufacture. 2. Should Wallace embark on the new innovation Every industry has turned over, or is on the verge of turning over, to the new technology of computer aided designing and manufacture. The plastic industry is an important industry of mass production. With its colossal usage the world over, and its tremendous resource in terms of finance as well as raw material, it has the wherewithal to garner the needed resource to find ways and means to incorporate cutting edge technology to boost its efficiency and output. Wallace is no exception. 3. What are the risks involved The technology is still in its infancy stage and is likely to be expensive. It also involves Wallace from simply supplying equipment to selling moulds on a continuing basis. The new moulds could involve modifications to the chemicals that the plastics producers use as their raw materials. Wallace has not previously been involved in the design of moulds. But there are bigger challenges in the digital technology. In the words of Carlo de Benedetti, chairman of Olivetti SpA, head of the G7 Business Round Table, "We can't just sit back and observe the success of new technology. Change must always be governed and guided. If the digital revolution is obstructed or allowed to develop in a spontaneous but random manner, many of the benefits that the information society can offer, under certain conditions, will fail to materialize. All these major benefits can emerge as we move from the old industrial society to the new model of the information society. But this transition is not an automatic process. A number of not insignificant risks exist. For instance, computers have accelerated the globalization of our financial markets; they enable us to transfer capital from one corner of the earth to another in real time; they infinitely magnify visibility on financial opportunities and risks; they offer savers access to a broad range of investment alternatives. But there's another side to globalization. We all know about the market instability generated by the enormous mobility of capital. The stock exchange crises of 1987 and 1989 and this year's (1993) financial crisis in Mexico, certainly amplified by computerized capital transfers." (http://www.iht.com)1 The risk posed by the digital revolution is as enormous as its awesome benefits. Generally, they involve protecting the privacy and confidentiality of information; guaranteeing security against hackers who could be operating from terminals anywhere in the world; safeguarding intellectual property rights. Specifically to Wallace, it would mean protecting and safeguarding software of the new innovation from hackers, piracy and virus attacks. Normally, with digital technology, the risks are: Teething problems due to its innovation. Staff and customers are expected to face operational problems in the initial stages. Frequency of breakdown likely to increase if not properly supervised round-the-clock by highly skilled hardware/software engineers and technicians. The Internet: it's an extraordinary communication tool, a mine of information for everyone; but also for terrorists, drug pushers and so on. How do you make knowledge available to everyone and simultaneously prevent information from being used for illegal, criminal or otherwise socially negative purpose. (http://www.iht.com)2 Digital software is susceptible to attacks by hackers and malignant viruses. Without adequate protection and backup, they could cause breakdown, loss of data, and theft of important, confidential information. Although the idea is to make things simpler for the plastics producer, it would involve Wallace in providing continuing advice and it would have to produce moulds on a continuous basis. The new moulds would probably involve modifications to the chemicals that the plastics producers use as their raw materials. Wallace has not previously been involved in the design of moulds. Means of managing risks: Much potential harm can be managed and their likelihood reduced through systematic scientific research, regulation and institutional capacity. When these capacities are strong, companies are far more able to ensure that technological change becomes a positive force for development. (http://hdr.undp.org)3. Information technology is a novel and unique medium, with a tremendous potential for application and research, touching almost every sphere of life. Having advanced to unimaginable levels, there is no way for it to backtrack, but continue its excellent performance and achievements. However, along with its success, it also has its share of risks and challenges. The government has a major responsibility in ensuring that the new technology is not misused by malevolent elements which could be counterproductive to every strata of society. The risks must be minimized not only through sound technology but also appropriate legislations and regulations. The risks are both internal and external to government; they include organizational barriers, complexity of the technology, changes in the legislative and economic environment, and impacts on public servants. Both management and employees have a responsibility to do their part. It is obligatory on the part of the government and every other authority involved that while the benefits of information technology to successfully utilized, the risks are appropriately addressed and managed. (http://oag-bvg.gc.ca)4 4. What are the possible reactions of other companies in the network to the new innovation Basically, there are two categories of companies in the network who are expected to react - the customers and the competitors. Seeing the tremendous potential, the customer base of Wallace will swell. The competitors will follow suit and go digital. The whole industry will undergo a sea-change. 5. Are there any other approaches that Wallace should consider for this innovation Transition to the new digital innovation has been successfully tried and incorporated by other industries. Technically, Wallace does not have any feasible alternative to consider for this innovation. Nevertheless, transition to the new technology must be made as smooth as possible. There must not be any attempt to rush into it. 6. What alternative strategies are open to Wallace The alternatives may be in the form of strategies for business expansion. Digital innovation offers a tremendous opportunity to boost sales and the customer base. The new technology is poised to increase the capacity of moulds production manifold. Therefore, the existing base of a hundred customers is woefully meager to enable Wallace achieve total capacity utilization. Wallace can adopt the twin strategy of increasing the customer base by means of advertisements as also taking orders from competitors who wish to avail the benefits of Wallace's new technology. SWOT The use of digital technology has the following four strengths, weaknesses, opportunities, and threats: Strength 1) Its performance is quick. 2) It involves software which facilitates strict adherence to specifications and minimum margin of error. 3) It is user friendly. 4) It could be quickly adapted for purpose of presentation, or any other use. Weakness 1) It requires handling by highly skilled personnel who are trained and updated with its latest advancements. 2) The system could break down on account of virus or poor maintenance. It requires round the clock supervision. 3) If not adequately safeguarded, it could be hacked into and confidential information could get stolen. 4) Being a new technology, Wallace will have to revamp its workforce and working conditions which may take some time getting used to by the present workforce. Opportunities 1) The digital technology is a multi-dimensional medium which boosts the capacity and capabilities of an organization manifold. 2) With quicker input of specifications and production of moulds, Wallace could use its increased capacity to widen its customer base to a very great extent. 3) Wallace could explore its capabilities to diversify its activities to other business areas viz. business process outsourcing, etc. 4) There are opportunities to merge with or take over rivals in the market. Threats 1) Virus attacks could immobilize the system and cause loss of data. 2) If not properly safeguarded, hackers could break into the system and cause damage or steal important, confidential information. 3) Must be made operational after thorough trial runs and reruns and training of staff. Haphazard implementations could result in severe loss of time and money due to the user's mishandling of the system.The system must be reinforced with proper backup to avoid irretrievable loss of data. 4) Loss due to lack of skilled engineers and technical supervisors, and incompatible environment, could be immense as the system is vulnerable to constant breakdowns in the absence of proper maintenance. Limitations and Recommendations The six limitations and recommendations are: Limitations 1) The high expectations from the new technology may backfire if the staff and customers come back with a disappointing feedback. 2) The new technology is looked at as a miracle cure which hampers its real utility which is capable of high performance subject to certain environmental and technological conditions. 3) Even after complete training the staff may experience teething problems in the initial stages which have to be addressed by availability of skilled technical personnel at all times. 4) The new system can only perform within its limited configuration. It may not cater to every customer's needs if software is unable to accommodate certain specification. 5) The system may be rendered useless in case some skilled employees decide to leave the organization. 6) It can only link up with customers who are knowledgeable and comfortable with digital technology. Recommendations 1) The company must undertake a thorough research and development of the new system, even if it requires additional time, to minimize the chances of unmanageable breakdown later on. 2) Wallace must send their engineers to the best institutes of technology to obtain the latest inputs. 3) Some customers must be involved in the trial runs and reruns to get feedback on problems. 4) Chemical engineers must be involved for consultations on the modifications required in the design of the moulds where raw material could react chemically with the moulds. 5) There must be coordination with the marketing department on the increase in size of the business the new technology is capable of catering to. 6) The company must stick to the best business ethics and practices upon its successful implementation of the new technology in view of the tremendous advantage it will gain over its rivals and competitors. Conclusion Under the existing arrangement, the moulds are expensive and late delivery and teething troubles often lead to major delays for the plastics producers. The new technology is in the development stage and is likely to be expensive to bring to market. But the technology is capable of taking the industry into its fold. The new dispensation, although challenging, is promising and full of prospects to grow and achieve substantial profits. It has the potential for a win-win situation both for the industry as well as the customer. Wastage is minimized, and there is no room for complacency. The competition ensures survival only to the fittest. One must be prepared to shape up or ship out. . Sources 1(http://www.iht.com - Managing the Risks and Promise of New Technology, by Carlo De Benedetti, 03 October 1993 edition, 08 June 2007) 2(http://www.iht.com - Managing the Risks and Promise of New Technology, by Carlo De Benedetti, 03 October 1993 edition, 08 June 2007) 3(http://hdr.undp.org/reports/global/2001/en/pdf/chapterthree.pdf, 09 June 2007) 4(http://oag-bvg.gc.ca - 1994 Report of the Audit General of Canada - Chapter 8 - Main Points, 09 June 2007). Read More