Technological Innovation and Commercial Changes - Essay Example

Assessment Brief and Feedback Higher Programmes Section General Details Programme: Foundation Degree In Design (Mechanical) Unit Title: Case Studies & Project Assessment Title: Case Study 1 Student: Assessor: B.Corker Internal Verifier: G. Potts Submission Dates: Re-submission Dates: Date Due: Date In: Date Back: Date Due: Date In: Date Back: Assessment Topic Negotiate learning outcomes as a basis for preparation of a Portfolio of Competence Access information from literature and other sources Interpret information and draw conclusions Assemble the above information into clear concise, well argued and detailed reports Section 2 - Results and Feedback Grade Achieved () Pass Refer Summary of Performance and any Agreed Actions: Student Comments: Confirmation of Achievement: Signed (Assessor): Date: Signed (Student): Date: Signed (IV): Date: Technological Innovation and Commercial Changes Case Study Foundation Degree in Manufacturing Engineering (Mechanical) Tutor Brian Corker 1.0 Introduction "Man lives with the tools he has developed; he depends on them for his livelihood" (). Technology may be defined as the organisation of knowledge for the achievement of some purpose or purposes ().Every industry has felt the impact of technological advance. In recent times the pace at which the changes have come poses a major challenge for organisations to adapt to these changes and use the benefits to improve productive use of available resources. The challenges and opportunities also bring possibilities of failure for industry and companies who can not foresee the changes and take timely action. Changes in technology may be broadly grouped into those that are industry specific and those that have an impact across all business. The development of Information and Communication Technology is a part of the latter. The electric motor rewinding industry is a traditional industry and usually operates at small scales, being limited by the availability of motors to rewind. Yet it is a specialised industry that requires its own skills especially in the case of motors of large capacity and sophistication. The generally small dimensions of these companies, makes them less inclined to incorporate new technologies into their business. Added to this, the limited importance of the sector as a whole, in comparison to other manufacturing industries means the availability of new technological advances is not the same as in other sectors. The development of new engineering techniques are few and far in between. Despite this, the motor rewinding sector has not remained immune to the general trend of the last few decades where technological innovation and renovation have become the norm. We have become used to living with such terms as "society of communication", "computer revolution", etc. In the widest sense of the term new technologies can be better understood from the point of view of the impact they have on our organisations. A broad classification, based on the differential levels of impact on the organisation might be: Management enabling technologies Automation and industry specific technological advances Environment friendly technologies Improvement of health and safety in the workplace Globalisation through the opening of trade and tariff barriers, uniform legislation, improved communication and shipment infrastructure have made it possible for companies, all over the world, to compete for every business opportunity. The impact of cheap labour combined with availability of skills in the developing economies like China and India is being felt in the West and many businesses are finding it very difficult to compete. It is, today, cheaper to buy a new motor of a rating of up to 2.5KW manufactured in these countries than to get it rewound! And the new motor is also of excellent quality, and likely to be more dependable and give better service! 2.0 Technological Advances 2.1 Management Enabling Technologies These comprise the basic tools that developments in information technology have provided business. They are very varied, and on the whole, it cannot be said that they affect the motor rewinding industry any differently than other completely unrelated sectors. Some of the major examples of these technologies and their impact on the working of industry are described briefly below: 1. Communication: Makes internal and external communications easier and faster and helps economise through reduction of the need to travel, immediate access to information and work instructions. 2. The Internet: Direct access to sources of materials and clients helping to open up new markets and reducing time in customer care. 3. Computerised Production Planning: This helps to increase efficiencies while reducing inventories through de-bottlenecking reduce planning time and optimisation of work loads. However, this presumes the availability of regular work and accurate forecasts, two of the factors that are the most difficult to predict in the specific industry. 4. Computerised control of attendance: Helps in control of personnel and thus production costs through control of working times, absenteeism. Incorporation of this technology needs no great skills and has been adapted by almost everyone. The above basically impact fundamental changes through improvement in management and place a reliance on external services (basically the suppliers of software). They result in overall reduction in the personnel and changes in their skill-profiles which need to be strengthened on the computer user aspect. They do not involve large financial outlays and cost are usually recovered very quickly, provided that the investment decision was logical and based on sound management understanding of the cost-benefit impact. 2.2 Automation Technologies These technologies might be considered to include only mechanical processes and the transport and handling of materials. These may help convert mechanical processes to higher levels of machine use in areas traditionally dependant on manual skills. In the motor rewinding industry these may range from simple conductor straightening to automatic spraying and drying of protective and insulating varnishes to the actual placement of the conductors in the right sequence and alignment. These technological advances usually involve larger financial outlays and may not be economically viable unless the scale of operations justify such investments. These technologies, generally speaking, allow for an increase in productivity and a decrease in production costs, as well as increasing the regularity of the product and ensuring quality of the finished product. Corresponding decrease in the number of staff employed in the process is a part of automation. Skill levels of existing personnel need to be raised to enable the successful absorption of the new technologies, raising the need for additional training and education. Reliance may also shift to outside agencies for maintenance and timely availability of spares and services. The actual performance of innovation introduced by firms is strongly influenced by the specific characteristics of the economic system in which the firm operates (Antonelli, 2002, p66). 2.3 Environment Friendly Technologies Technological advances in the identification and safe disposal of potentially hazardous and non degradable wastes need to be incorporated in order to minimise negative impact on the environment as well as to comply with the ever more stringent legislation that governs industry. These technologies, while expensive to incorporate into existing manufacturing processes offer no alternative to management as there is no choice, since non compliance threatens the very existence of the business. While the motor rewinding industry does not generate any liquid or gaseous wastes it does not pose any threat to the environment through air and water pollution. What little wastes are there can be easily collected and treated easily to conform to the laid down standards. However, the industry does generate substantial quantities of solid wastes which need careful disposal with the consent of the concerned authorities and agencies. This aspect of technological improvement impacts the commercial competitiveness of the industry, with no increase productivity or profitability, especially when compared with similar industries in less advanced nations, and further discussed in conclusions/ discussions in this paper. The new labour requirements, caused by the need for greater control in the process and by the management of residues and effluents, mean that the internal structuring of the company needs to be rearranged, which is both non-productive and requires highly-skilled professionals. Furthermore, new external dependencies are created: the introduction of new processes, advice on the waste treatment process, the external management of solid residues, etc. 2.4 Improvement of health and safety in the workplace These are usually good practices rather than new technologies. A number of important changes to improve health and safety of employees can be made by the prudent use of good engineering principles at the work place. Such changes, especially if they involve the employees through techniques such as 5S and TPS, not only are inexpensive but also help increase motivation levels and engender a feeling of involvement and belonging in the organisation. Simultaneous increases in productivity characterise such activities. Use of latest theory of organisation and management also qualifies to be included in any description of technological advance. Incorporation of new machinery and modifications to existing ones, in a process of upgrading technology as described in earlier sections also requires careful consideration of increase in risk of injury to personnel while they operate the new equipment. These efforts can also lead to the reduction of workers, especially in unskilled or less skilled categories and requires retraining or multi-skill development of existing personnel. Incorporation of new technology and new machinery brings a risk of under utilisation. Unless market predictions support the new capacities created through use of better technology and all bottlenecks in the production line are addressed simultaneously such efforts may not result in an increase of production capacities, in fact may even result in reducing them. This can also mean that an operator has to familiarise him/her-self with new machines and processes, producing the double effect of failing to take full advantage of the production capacity of the machine and diminish the workers' specialisation in the process in question. A possible future consequence of this is the increased specialisation of small companies in specific operations. 3.0 Impact of Globalisation The electric motor rewinding industry faces an impact of globalisation that is slightly removed from the normal perception of such change. Rewinding of electric motors is economically efficient only when the time-to-market is short. Companies in distant places are not in a position to meet this essential requirement. This unique situation leads to a no-competition situation in the motor rewinding industry. However, the competition comes in the form of availability of cheap new motors which make rewinding an expensive proposition in the case of small motors up to 2.2 KW. This is caused by the availability of cheap labour and materials in the developing countries. Copper conductors, the main component of rewinding materials cost, are also cheaper in these countries. While copper in itself is an internationally traded commodity and global prices are fixed, processing of the metal to draw conductors, is much cheaper in the developing countries making the conductors much cheaper. A large proportion of the copper used is sourced from re-melting and refining of scrap - a process that again is more economical in those countries. Other materials required for the construction of new motors also contribute to this difference. There seems to be immediate solution to this difference and the industry must learn to live with it. However, the technology required for construction of larger motors and efficient rewinding is still out of the reach of the developing countries and this is where local industry must look to strengthen its position through technological innovation and improved productivity on all fronts. Managements must look at increasing emphasis on higher skills in labour and knowledge functions as well as higher value added industry. These dynamics, if they can be maintained, will play an important part in helping survival (Gugler, 2004, p 113-4). In addition a rewound motor is no longer as energy efficient as a new one. The cost of rewinding a motor is often substantially less than the cost of a new motor but can lower their efficiency (Turner et al, 2002, p 415). In present times where every industry is facing the challenges of global competition the efficient use of energy has become a key factor and industries are reluctant to get motors rewound. Technological innovation and research is the key to the war on this front. The rewinding industry must look to find ways that used and damaged motors are reconditioned in ways that make certain that them as good as new motors or at least to close the gap to a negligible factor. Electricians working in the area motor rewinding need additional skills and form a distinct employment group (WEB Research et al, 2004). In the UK public and private sector has recruited healthcare, IT, and teaching personnel from many developing countries (Smith and Debrah, 2001). This has not only helped them to meet shortages of skilled personnel but also to reduce costs. This line of thinking and operations can also help the motor rewinding industry by providing an avenue for reduction in cost and thus improving their competitiveness. Outsourcing is another method employed by many industries to reduce operational costs - this, however, is not a viable preposition for this industry since time of turnaround of the motor, the costs of transportation and logistics requirements make this a non-starter. Yet, outsourcing of materials requirements is definitely a consideration that must be taken into account. The industry needs to develop dependable sources for the materials used that can deliver quality and just-in-time inventories. A prime requirement for this to be able to accurately predict the requirements of these materials, and it is here that the application of IT can be of great assistance. 4.0 Conclusions and Recommendations E-business is an innovation that brings with it new ways of dealing with customers and business partners, new revenue streams, new ways of processing information, new organization structures, new skill sets, electronic supply chains, new standards and policies, new collaborations, the need for adaptable business strategies and effective management of associated changes (Singh, M & Waddel, D, 2003) The incorporation of new technologies whether directly related to the field of operations or not influences the organisational setup of the company and the quality and quantity of the work produced. The most important effects of the introduction of new technologies would include: The appearance of new job profiles, progressively of a higher skill-level and an overall reduction in the number of employees. The need for continuous training from the lowest levels to management. Possible changes in process times, which might require the reorganisation of shifts. Improved work conditions and a reduction of risks in the workplace. Technology enhancement has other consequences, also as we have seen, and these are: Increase the complexity of the company (additional process such as environmental management) Need for substantial investments. Tendency to increase productive capacity, resulting in greater sales capacity, but at the same time an increase in the need for buying. Improved overall quality, which may allow new more select markets to be conquered adding more value and prestige. Greater dependency on external suppliers. Companies in industry such as motor rewinding in the west face a double edged problem. On the one hand they must improve technology to retain present business, much less grow it, as also to face problems of competition from East European and Asian competitors who have access to cheaper labour, cheaper materials and can afford to use lower end technologies. In such a scenario the industry is left with no alternative but to: Raise skill and competence levels in rewinding and repair of larger motors where the competition is less fierce and emphasis on quality of workmanship is much heavier. In other words create niche markets for themselves and gear their organisations to meet demand from such markets. Increase customer base to include customers in the developing countries and become players on the global scale themselves. Outsource the purchase of materials required for rewinding and also look for recruitment of skilled workers from developing countries. Outsource some of the work to cheaper sources to remain competitive and reduce the number of competitors. Join hands with others in the field to strategise offering of quality in quick time and use logistical advantages to reduce prices and competition among themselves. Technology must be raised to levels that help obviate the problems from competition or the companies shall have to face closure in the very near future. References Antonelli, C.: The Economics of Innovation, New Technologies and Structural Change, 2002, Routledge, UK. ISBN: 0415296544 Gugler, J.P.: World Cities Beyond the West: Globalisation, Development and Inequality, 2004, Cambridge University Press, UK, ISBN: 0521536855. Singh, M & Waddel, D.: E-Business Innovation and Change Management, 2003, Idea Group Inc (IGI) ISBN: 1591401380 Smith, I.G., Debrah, Y.A.: Globalisation, Employment and the Workplace, 2001, Routledge, UK, ISBN: 0415252415 Turner, W.C., Kennedy, W.J. and Capehart, B.L.: Guide to Energy Management (Fourth Edition), 2002. WEB Research Ltd., Competencies International Ltd., and Marlyn Davis & Associates: Future Skills Report, accessed on August 29, 2006 from: http://www.etito.co.nz/resources/Documents/future_skills_report_april_04.pdf Read More