استراتژی تولید و عملکرد مالی— تاثیر فناوری اطلاعات پیشرفته: سیستم های CAD/CAM

Nowadays, the business environment is characterized by great uncertainty and variability. In this environment, information technology (IT) has proved to be an important strategic ingredient for the creation of competitive advantage. This role of IT has been widely accepted during the past few years [Feeny D. Creating and sustaining competitive advantage with IT. In: Earl M, editor. Information management the strategic direction. Oxford, 1990; Ives B. Wingtip Courriers, Southern Methodist University Case Study #SMY/MIS/90-01, Edwin L. Cox School of Business, Dallas, TX, January 1990]. In the new era of production, strategic priorities rather than a cost contained focus have proved to be important for competition, namely: quality, dependability, flexibility, customer service, after sale service, supply chain management, etc. IT proved to be vital for successful competition as it can facilitate the attainment of these strategic targets. In this paper, the impact of IT on financial performance for the different types and levels of business strategy is examined. After the clustering of firms according to their strategic priorities, the effect of IT on financial performance is estimated. To do this a cross-sectional study was held in the field of Greek manufacturing firms that apply advanced IT, in order to explore which, how and in what level manufacturing priorities have been adopted. For that purpose, cluster analysis and VACOR algorithm were used, to distinguish clusters of firms and estimate the effect of IT on financial performance, for each type and level of strategic choice. Return on invested capital (ROIC) has been used as a criterion of performance in order to incorporate the effect of cost, revenues and profits. It was found that the effect of IT on financial performance was observed to be greater for firms which emphasize the higher level of flexibility strategy and the middle level of cost strategy. On the contrary, the effect of IT on performance was observed to be greater for firms which emphasize a lower level of quality and innovation strategy. Further discussion of these results and conclusions were drawn.

The qualitative saturation in demand resulted in a turnaround, from mass production to mass customization and niche market production [1], [2] and [3]. New “models” of production emerged and were named as “post-industrial”, “flexible specialization”, “neo-fordism”, “innovation-mediated production”, “lean production”, “mass customization”, etc. [4], [5], [6], [7], [8] and [9]. Until 1980 many firms targeted at high profitability and efficiency, through competition on price, which was the most important strategic target [10] and [11]. Moreover, non-saturation in demand permitted enterprises to set cost as their primary competitive objective. The characteristics of the mass production model ruled before 1970 can be summarized as follows: fixed automation and dedicated machinery, mass consumption, homogeneous products and emphasis on quantity [6], price competition and internal scale economies [3], deskilling of labor [12], vertically Integrated production, just in case logistics, and continuous production line. This mass production model was structured in a way, that prohibited innovation and quality, as both had a positive effect on cost and on the product's price. Because of this trade-off, these manufacturing priorities were superseded by cost [13] and [14]. Nevertheless nowadays, the necessity to be cost focused as well as innovative and quality oriented have altered this tradeoff. After1980 the mass production model proved highly inefficient and the cost-quality trade-off, was criticized [15]. The high levels of inventory for the sake of security in production resulted in excess capacity and increased defects. This model became obsolete because of its rigid and inflexible character [1] and [9]. The characteristics of inflexibility were: the use of hard automation (dedicated machines toward one specialized task), production for mass markets, uniformity in design, deskilling of labor through specialization, vertical integration, just in case systems and a central assembly line (further details on these production models are given in Kenney and Florida [9]). But the diversification in demand increased the need for widening the range of production. Thus, products needed to be produced in more variety and in fewer quantities. Fast changes in the design of products produced, increased the need for flexibility [1]. Scale economies were supplanted by scope economies, thus the cost of producing separately different quantities is higher than the cost of joint production: C(q1,q2)<C(q1,0)+C(0,q2)[16], [17] and [18]. Design variability and scope economies can be attained by the implementation of computer aided design systems through the widening of the range of production. In this new production model, cost was not the main strategic target, instead higher priority was given to strategies like quality, flexibility, customer service, just in time supply management, etc. A new set of management and information technology (IT) toolboxes: FMS, TQM, QFD, OWMM, GT, CIM [19], served the needs of the new production. Consequently, a need has emerged to revise manufacturing strategy and manufacturing targets so that they would be prioritized in a different way [10], [20] and [21]. The role of IT in relation to strategy, within these production models, is given by Bart et al. in Luftman's book on competing in the information age [22]. Mass customization uses IT to enhance relationships but results in task deskilling. Invention uses IT to enhance relationships and skills, mass production uses IT to de-skill tasks and focuses on processes rather than relationships and continuous improvement uses IT to enhance skills, but focuses on processes rather than relationships as well. Research on how these models are related to IT and the alignment model, can be found in Boynton et al. [23]. In this context the need to investigate the manufacturing strategy is increased. A first step was made by Skinner [24, p. 78, 80, 88], Swamidass and Newell [25], Adam and Swamidass [26] and Swink and Way [27]. Accordingly, the manufacturing dimensions of cost and price are no longer first in the list and manufacturing strategy cares about quality and innovation more than ever before. The priority of these strategic targets according to Skinner [28], Buffa [29] and Wheelwright [30] is: 1. Cost: The ultimate purpose is to gain advantage through price drops, via rationalization and minimization of operational and maintenance expenses, labor cost, raw and intermediate materials (cost of supplies), investment rationalization, etc. 2. Quality: Aims to gain advantage by stabilizing the quality of the product at a predetermined level according to competition, by statistical control of supplies and production, quality circles, formalization and standardization of processes (quality manuals), etc. 3. Flexibility: The purpose is to respond to demand variations fast. This target can be achieved by shortening the production lead-time, decreasing the inventory levels, fast and concurrent design targeting at specific needs [1], [19] and [31]. 4. Dependability: The target is to create tighter relation to customer through delivery speed, after sales service and products reliability, etc. 5. Innovation: The aim is to innovate techniques of production and management as well as products of premium value for the customer. Other strategic priorities are: color range, product range, design, brand image, technical support [10], [27], [32] and [33], culture [34] and finally, customer and after sale service [35], [36], [37], [38] and [39]. The order cited in the previous (priority) list was adopted by Japanese companies [40], [41] and [42]. Some studies have been focused on quality only [43] and [44] while others on productivity as a criterion of prioritizing [38], [45], [46], [47] and [48]. Certainly, this priority list and its link with IT is not a rule that every firm must follow. Instead the alignment model [22], is the best way to find the optimum relation among information technology, business structure, external environment and the other contingencies, like size of the firm, age, culture, etc. Skinner [28] contended that one of the major problems for managers implementing manufacturing strategy ideas was a proven inability of managers to step back and assess the coherence of their strategies. According to Skinner [24] these priorities integrate manufacturing and business strategy. Skinner [28] believed that the research on the process of strategy making has held back the adoption of manufacturing strategy ideas. To reach business and corporate goals, supportive cost, time, quality and flexibility goals must be developed for manufacturing [20] and [49]. These manufacturing goals are achieved and sustained by a “pattern of decisions” [21] and have to be aligned with business as well as IT strategies. Hayes and Wheelwright's pattern of decision probably has been based on Mintzberg's early work [50]. Each of the strategic priorities (strategic targets) can be connected to a set of information technologies which enable the achievement of those targets. An extended explanation and discussion about each technology's connection with strategy can be found in Theodorou [19] and [31] and Nakane and Hall [40]. Here for the sake of brevity, we can indicatively refer to the most important: cost strategy can be supported with systems like design for manufacturability and computer aided design, computer aided manufacturing, make to stock, etc. Quality strategy can be supported by the technologies of quality planning, quality function deployment, CAD/CAM, etc. Flexibility can be supported by capacity and materials requirement planning, optimized production technology, computer aided design (CAD), computer aided manufacturing (CAM), etc. Generally, integrated CAD/CAM systems can support all priorities depending upon the level of the usage and the type of the application. Successful paradigms of IT strategic impact, are reported by Ives [51] and Feeny [52] regarding Wingtip Couriers, and by Clemons and Row [53] and Stoddard [54], regarding Otis elevators. Moreover, frameworks are developed in the sense of helping managers identify IT applications that create competitive advantage, by Porter and Millar [55], Wiseman [56], Ives and Learnmonth [57], Feeny and Ives [58], Jayawardhena and Foley [59], Madnick and Wang [60]. Copeland and Mckenney [61] have traced the history of IT's competitive advantage within the applications in the airline industry, while others like Clemons and McFarlan [62] on telecommunications. In a more holistic approach, regarding the concept of strategic alignment Luftman [63] refers to the case of Bristol–Myers Squibb Co., a leader company in the pharmaceutical industry. The strategic alignment concept and how the leverage effect of IT shapes business strategy is examined by Henderson [64] who refers to the examples of Eastman Kodak and IBM, Baxter healthcare, H&R Block, Procter and Gamble and Wal-Mart Stores. A full list of summary details on empirical research in IT and business strategy formulation was made by Galliers [65]. Examples about how strategic targets facilitated by the information technology adoption can be referred by the United Service Automobile Association (USAA) and the American Express Travel Related Services. Specifically, USAA decided to support its low cost strategy (via a telemarketing service) by investing in an up-to-date document-handling system, based on electronic imaging technology. This IT solution was not provided off the shelf and it was developed by a joint venture with IBM. American Express Travel decided to support its dependability strategy (quick approval of purchase) also by IT applications. The ultimate purpose was to decrease the lead time for the approval process on a credit card charge. That lead time was vital for the creation of competitive advantage as customers switch to competitors for faster transaction. To accommodate that strategic target an expert system application was developed (further details are given in Henderson [64]). A model describing how to choose specific IT applications in order to support strategic targets is presented by Theodorou1in a case study of a Greek supply chain. Further extension of examples is out of this research purpose as there are numerous paradigms in various sources like the one mentioned previously. Strategic targets as well as practices differentiate across countries. Many countries have been the subject of study and we can mention Horte et al. [66] and [67] who explored Sweden, Gelders et al. [68] Belgium, Singapore by Ward's et al. [69], Japan by Nakane [41], and more recently India by Nagabhushana and Shah [70]. Very interesting is the integrative work of De Meyer [71] for the manufacturing priorities and action plans in Europe held on a long-term horizon of 10 years. Some of the studies have made interesting comparisons of manufacturing practices across countries like the work of Reitspergen and Daniel [72] for the USA and Japan, Vastag and Whybark [73] for the USA and Europe, Hall and Nakane [34] for the USA and Japan. Above all, Miller et al. [74] have done an exhaustive comparison of the manufacturing priorities and action programs of firms in American, European and Pacific Rim countries. Finally an attempt has been made in international manufacturing to identify various barriers to the management of international operations [75] and [76]. Unfortunately, as far as Greece was concerned, nothing has been reported yet. In this study, an attempt has been made to fill in the gap and investigate the manufacturing priorities of Greek firms and within each priority the effect of IT on performance. A clustering of firms is made and for each cluster the relation of IT with financial performance is estimated.

Variations in customer preferences and opportunities through the capabilities of Information technology to accommodate them seem to change the strategic direction of the firms. The strategic portfolio of the firm, as well as the relation among strategic priorities changed significantly. Firms can increase performance if information technology and business strategy fit. In this research the IT's impact on performance was examined under different types and levels of strategy, using the criterion of return on invested capital (ROIC). This criterion is an important financial ratio for the long term growth of the firm (especially in relation to WACC) and ‘weights’ revenues and cost in relation to invested capital. Through cluster analysis firms separated according to the intense and content of their strategic target. In each strategic cluster the effect of IT on performance was estimated. Generally, it was found that in all of the strategic clusters performance was increased by the adoption of advanced information technology. Specifically, the Greek manufacturing firms that apply advanced IT technology when they focus on a portfolio of flexibility and cost strategy have a higher effect on performance. Information technology generally decreases the cost of various processes but greater effect on performance is noticed when it is related with flexibility strategy. For many firms, acceptance of small quantity orders and production for small and niche markets is unattainable, because this strategic priorities increase dramatically the various types of costs as well as the time to market. Information technology made the adoption of flexibility targets easier while concurrently it leads to cost decreases. Specifically, the impact of IT on performance is higher for the moderate implementation of cost strategy. Generally, a steady increasing impact was observed only in the case of flexibility. The higher the adoption and implementation of flexibility strategy, the higher the impact of IT on performance. That effect was not observed in the rest of the strategic priorities. In the case of cost strategy the higher impact was observed in the moderate class because high cost cluster inhibit the adoption of the rest of the strategic priorities and IT was not used as a cost and labor saving technology. In the case of innovation and quality, a greater effect of IT on performance was observed in the low level (of those strategies) indicating the trade-off with cost. Also, the quality strategy is probably incompatible with the flexibility strategy and the character of information technology, due to standardization and formalization effect which quality systems require. This effect can be affirmed by the examination of business structure, but this can be done in a future research. A dynamic analysis is required in order to examine the effect of structural change by inserting the time effect. Furthermore, investment in advanced (CAD/CAM) systems has a high fixed cost which moderates the effect on return on invested capital. Thus, usually a short-run increase in cost is expected when the company starts to focus on quality and innovation strategy. Probably, a longer period should be taken after IT implementation in order to examine the strategies of quality and innovation more carefully. Finally, this research opens the ground for further analysis which should include other important variables of the alignment model like: business structure, uncertainty of the environment and contingencies like: age and size of the firm, etc. Moreover, results might be validated by increasing the number of the firms and including firms from different branches and extending the time period of the study applying a dynamic systems approach.