International Journal of Information Management 20 (2000) 29}57

Managing IT for world-class manufacturing: the Indian scenario

K. B. C. Saxena*, B. S. Sahay
Management Development Institute, Mehrauli Road, Sukrali, Gurgaon 122 001, India

Abstract The success of Indian manufacturing in meeting global competition will depend on its speed to move itself from a protected domestic to a world-class global manufacturing status. This paper analyses a survey conducted for the purpose of determining world-class status of Indian manufacturing companies and identi"es important issues that need to be addressed in order to be a world-class manufacturer. The analysis compares the manufacturing intent to be an agile manufacturer and their information technology (IT) infrastructure in terms of scope of use, extent of use and integration of IT-based systems. The "ndings of the analysis are somewhat alarming as they show that most of the companies have fragmented (rather than integrated) information management systems which may not enable them to deliver superior value to their customers and lead them to world-class status. They must, therefore, align their IT initiatives towards facilitating agile manufacturing rather than introducing IT to merely automate their conventional operations. 2000 Elsevier Science Ltd. All rights reserved.
Keywords: World-class manufacturing; Information technology management; Computer-integrated manufacturing; Manufacturing strategy

1. Manufacturing: a paradigm shift Of late, the environment facing developing countries has become increasingly more turbulent, dynamic and complex. A combination of external and internal factors including population growth, weak infrastructure, foreign debt, asymmetric world relations and increasing inequalities between individuals, groups and regions has prevented many developing countries from achieving signi"cant socio-economic improvements. Some developing countries such as India have,

* Corresponding author. Tel.: #91-124-340153; fax: #91-124-341189. E-mail address: bsaxena@mdi.ac.in (K. B. C. Saxena) 0268-4012/00/$ - see front matter 2000 Elsevier Science Ltd. All rights reserved. PII: S 0 2 6 8 - 4 0 1 2 ( 9 9 ) 0 0 0 5 2 - 3

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therefore, made economic management their prime agenda. They are going through a process of restructuring their economy to emphasize competition, integration with global markets and increasing level of privatisation. Consequently, the Indian manufacturing industry has been thrust from the protected environment of the `license-permit-quotaa regime to an uncertain environment of global competition and global markets. Global competitors operating in global markets almost always tend to have world-class performance. World-class manufacturing has often been characterised by three core strategies of customer focus, quality and agility (i.e. the ability to quickly, e$ciently and e!ectively respond to change), and six supporting competencies * employee involvement, supply management, technology, product development, environmental responsibility and employee safety, and corporate citizenship (Kinni, 1996). However, we have characterised world-class manufacturing with the fact that the organisation may have presence in global markets. Thus, in order to compete in global markets, Indian manufacturing necessarily needs to acquire world-class performance. Oddly enough, countries such as India, China and Brazil themselves constitute a huge market which might attract many world class players from other countries to sell their products in these countries. Thus, even the domestic "rms are constrained to compete with the world-class players by virtue of their entry to the domestic market because of liberalisation of Indian economy. Therefore, as is clear from Fig. 1, Indian manufacturers need to acquire world class status irrespective of whether they are a domestic player or an exporter. Needless to mention, achieving world-class status is a great opportunity for those who can make it and for others, is a serious threat. Though to some extent Indian industry has realised this and risen to the challenges, its battle for survival and growth has just begun. The success of Indian manufacturing in meeting this challenge will depend on its readiness to move itself from a protected domestic to a world class global manufacturing status quickly and con"dently. In order to monitor and facilitate this transition, it is important to develop an understanding of the existing scenario of Indian manufacturing, and to assess the direction in which it is heading. In order to accomplish this we have chosen to assess the world class manufacturing readiness of Indian industry in terms of three attributes: the manufacturing intent, manufacturing practices, and the supporting IT infrastructure. The reason for choosing these three attributes is based on the simple logic that readiness depends on what the "rms want to do * their &intent', what they are doing * &practices' and what they are capable of doing * &infrastructure'. Thus, this study of the Indian manufacturing industry takes a techno-strategic perspective rather than an economic one. The paper is organised as follows. The next two sections describe the problems in the manufacturing industry and manufacturing challenges. This is followed by a description of motivation for this research, the research methodology, and the pro"le of responding companies. Next the results of the survey conducted as part of this research are described in terms of (i) manufacturing objectives and strategy, (ii) usage of management tools and technologies, (iii) manufacturing management practices, and (iv) IT infrastructure and practices. The next section describes the analysis of the survey "ndings. This analysis is carried on in subsequent sections on manufacturing

 Before liberalisation of the Indian economy, many industries were heavily regulated through licensing and permit requirements, and quotas were "xed for raw materials and "nished products by the government. Business, therefore, concentrated on getting the license for production rather than product quality and/or marketing.

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Fig. 1. World-class manufacturing.

strategic intent, strategic use of IT in Indian manufacturing, and breadth and integration of IT infrastructure. The next section proposes a framework linking manufacturing strategy, world-class status and IT use followed by the conclusion.

2. Problems in the manufacturing industry Today the manufacturing industry still strives for stability of its production system as a major organisational goal (Sahay, Saxena & Kumar, 1997). Therefore, in most organisations management of change is not yet considered a permanent objective. Information processing is still very much fragmented even in computerised applications (Sahay et al., 1997). This is due to past bottom-up generation of computer applications, to the use of multi-vendor hardware and software platforms and to the functional boundaries in the companies as well. Therefore, the decision-making process in the companies is still based on traditional information processing}information gathering with &paper and pencil' and from inconsistent sources. This process is at the least very time consuming and may yield only insu$cient or even unreliable information. In addition, the companies are not organised for fast decision-making processes (Sahay et al., 1997). Departments are still managed according to their own sub-goals rather than to real enterprise goals. The responsibilities are still structured in one-dimension hierarchies that mix responsibilities for enterprise assets with those for enterprise operations. Matrix organisation is still more or less a theoretical concept.

3. Manufacturing challenge in the 21st century 3.1. Time-based competition In the new manufacturing environment, time is the primary competitive motive of business in the 1990s. This does not mean, however, that other motives such as cost, quality and service can be

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Fig. 2. Changing business goals in changing environment.

ignored. In fact, these are pre-requisites to sustain competitiveness. But the winning factor is provided by time and enhancement to the basic products (Stalk & Hout, 1990). In the manufacturing environment, time-based competition becomes the highest priority to gain responsiveness and #exibility (Fig. 2) (Meyer, 1990). Responsiveness and #exibility have several important dimensions (Table 1). One is product-mix, the need to support maximum variety in end products with minimal disruption to the manufacturing operations. Others relate to upgrading of plant and equipment in order to be able to produce quickly. The driving force behind this priority setting is the need and the wish to respond to virtually any customer request just-in-time. Flexibility, on the other hand, is the response of a system to environmental uncertainties (&the unknown customer'). Thus, in the next millennium, an information culture will be needed to manage uncertainties; this culture will no longer be pushed forward by technology but will be controlled by information feedback. This leads us to the second challenge industries are facing today: how to manage knowledge. 3.2. Managing knowledge In the next millennium, the productivity and, even more important, the e!ectiveness of managers and white-collar workers will become critical to long-term survival. The e!ectiveness of these

Table 1 Flexible manufacturing parameters for meeting business objectives Business objectives Product innovation Product diversity Customer requirement Market share Meeting delivery dates Flexibility Product technology Product mix Design Volume Routing, sequencing

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experts depends on their smooth integration into the organisation. Therefore, in the era of advanced specialisation, integration of dispersed knowledge will become progressively more di$cult to accomplish and more costly to achieve.

4. Motivation for this research India ranks 45 out of 53 countries in global competitiveness, according to the 1997 Global Competitiveness Report as summarised in Business Today (August 7}21, 1997). Is India on the right track to becoming a world-class manufacturer? Addressing this basic question is at the heart of this research. According to Gunn (1987), there are three pillars to support worldclass manufacturing: computer-integrated manufacturing (CIM), total quality control (TQC), and just-in-time (JIT) production methods. This research focuses on CIM, as covering all the three aspects would have made it unwieldy and too broad to be meaningful. The objectives of the research are: E To explore the current status of IT applications and management practices in Indian manufacturing. E To examine discrepancies with world-class practices in these areas, and the nature and extent of interactions between them. E To identify strategically important areas in manufacturing management which need to be improved by exploiting IT.

5. Research methodology A comprehensive questionnaire was designed for identifying the contingency task structure, manufacturers' expectation from IT-based systems, the extent of usage, problems encountered and ways of organising systems deployment e!orts. The survey questionnaire was designed keeping in view the available previous survey questionnaires and in consultation with practicing managers (Chung Walter, Tam Migar, Saxena & Yung, 1993; Sahay, Prem Vrat & Jain, 1996). The survey questionnaire was validated with a sample survey. In addition to the questionnaire survey, personal visits to companies were made to get "rst-hand information. Survey data was analysed to get a snapshot view of IT. Out of 982 questionnaires mailed to Chief Executives/Managing Directors, 83 responses were received in-time out of which 78 were found usable. The remaining "ve responses were incomplete and therefore not considered. 21 responses were received much later (after the dead-line set for returning the questionnaire), and were therefore not considered. This gives us a response rate of 8%, which is considered adequate for this type of survey in India. The responding companies had a total turnover of Rs.905.51 billions in the "nancial year 1995}1996. The questionnaires were mainly "lled out by Vice-Presidents and General Managers/Deputy General Managers (70.5%). However, it is interesting to note that about 9% of Chief Executive O$cers (CEOs) also "lled in the questionnaires. This "nding seems to be in contrast to the popular belief that top management focuses mainly on strategic business issues rather than manufacturing.

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6. Pro5le of responding companies The distribution of responding companies in terms of region, industry and size shows that a wide spectrum of industrial activity was covered (Table 2). The respondents can, therefore, be viewed as a representative sample of the Indian manufacturing industry. In terms of regional distribution, the respondents were evenly divided among the four regions, except the East (12%). This might be because the eastern region has fewer states, and relatively less industry concentration. The responses were markedly better from public limited companies which constituted nearly three-fourths (77%) of the total sample, followed by private limited (13%) and public sector (10%) organisations. Of the 90% responses from private and public limited companies, 17% responses were received from multi-national companies (MNCs). The responding companies were distributed over a large number of industries including steel, engineering, automobile, petroleum, electronics, fertilisers, cement, chemicals, telecommunications, textiles, consumers, agro-industry, pharmaceuticals and others. Engineering and automobiles were the biggest segment (24.3 and 23.1%), respectively.

7. Manufacturing objectives and strategy Manufacturing strategy is concerned with setting broad policies and plans for using the production resources of the "rm to best support the "rm's long-term business strategy (Skinner, 1985). Respondents were asked to rate the strategic objectives of manufacturing listed in the questionnaire on a 5-point scale, with a score of 1 indicating `not importanta and a score of 5 indicating `very importanta. Quality, delivery, inventory reduction and capacity utilisation were identi"ed as the important objectives by the participants. Manufacturing lead-time reduction and linking manufacturing and corporate strategy were considered slightly less important (Fig. 3). Volume, mix and design #exibility (necessary for faster product development) should be considered important objectives in a competitive environment. Instead #exibility was considered relatively less important by the participants. In contrast, according to the International Manufacturing Futures Survey (Miller, DeMeyer & Nakane, 1992), linking manufacturing strategy to business strategy was the top priority in Western countries, while faster product development was top priority in Japan in the early 1990s.

Table 2 Regional distribution of respondents Region East North South West States included West Bengal, Bihar, Orissa Punjab, Haryana, Himachal Pradesh, Uttar Pradesh, Tamil Nadu, Karnataka, Kerala, Andhra Pradesh Maharashtra, Gujarat, Rajasthan, Madhya Pradesh, Goa % Response 12 32 27 29

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Fig. 3. Manufacturing objectives in Indian industry (Mean scores on a 5-point scale).

Again, the high rating given to capacity utilisation should be a cause of worry to Indian managers with a global mindset. Under the concept of world-class manufacturing, capacity utilisation is viewed as a function of the current demand for the company's products, and not as a strategic objective.

8. Usage of management tools and technologies A number of manufacturing management tools such as CIM, CAD, CAM, benchmarking, etc. is being used internationally. Respondents were asked to rate these tools on a 5-point scale in terms of their perceived usability, according to the following scores: Score 1 2 3 4 5 Signi"cance Not aware of this Not being considered Being considered In use for up to 1 year In use for more than 1 year

The one tool which makes it well past the threshold mean score of 3 is total quality management (TQM) closely followed by total productive maintenance (TPM) (Fig. 4). Interestingly, Indian

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Fig. 4. Usage of management tools and technologies.

managers seem to be very hesitant to admit that they are not aware of these tools. Very few managers ticked 1 against any tool!

9. Manufacturing management practices The set of manufacturing management tasks listed in the Fig. 5 was evaluated with respect to: E importance to top management in the short term E importance to top management in the long term E perceived usefulness of computers for the task 5-point scales were used for rating importance and usefulness. A score of 1 indicated `not importanta or `not usefula, while a score of 5 indicated `very importanta or `very usefula. The results should be interesting for IT managers who want to prioritise their spending due to resource constraints. An interesting "nding is that the following tasks have scores of more than 4 on all three criteria: E E E E E E E working capital management quality assurance production planning materials planning purchasing production "nished goods distribution.

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Fig. 5. Importance of management tasks and the perceived usefulness of IT for them.

Product design is one task in which strategic use of IT has made a major impact globally (e.g. in the case of Boeing). In India, this task is not viewed as important because very few companies have indigenous product development capabilities (Fig. 6). Less than 25% of their product range is designed in-house, according to 51% of respondents. Only 8% companies go in for in-house design from 51 to 75% of their product range. More than one-fourth of respondents stated that no e!ort is made for the interaction of their design department with production engineering. This might

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Fig. 6. Percentage of product range designed in-house.

indicate poor practice of design for manufacturability (i.e. designing products that can be manufactured more easily). Indian production planners seem to bear the brunt of the dictum that a forecast is always wrong! The consensus seems to be that varying sales forecasts `frequentlya make it di$cult to make feasible plans (Fig. 7). Some respondents say that this happens `very oftena, and there are also cases where it happens `almost alwaysa. The problems of forecasting are probably compounded by the longer manufacturing cycle times, which make it necessary to forecast for longer time horizons. The other factors that are commonly perceived as causes for concern for production planners * invalid standards (e.g. BOMs) and inventory data * are not viewed as serious problems. The biggest obstacles in achieving production targets are lack of timely supplies of materials from vendors and absenteeism (Fig. 8). The other factors * equipment breakdowns and power cuts * are lesser problems. Power cuts are external variables, which can only be controlled through captive power generation facilities. The problems with supplies re#ect on Indian industry's weakness in purchasing management. Less than half of the responding companies (about 40%)

Fig. 7. Factors creating problems for production planning.

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Fig. 8. Factors preventing achievement of production plans.

have automated shop scheduling and loading systems. Such systems, whether in-house or purchased, can greatly increase productivity and e!ectiveness on the shop #oor. Fig. 9 shows the number of companies that use various planning mechanisms. Many companies reported that they use material requirements planning (MRP) in conjunction with shortage lists. This implies that the use of MRP has not been completely e!ective because MRP use should ideally eliminate the need for shortage lists. We also found that many managers call their material planning process MRP even if it is not the standard MRP procedure. In summary, MRP is the most common planning mechanism but shortage lists continue to be used, while pull systems are at an early stage of use. The inventory "gures shown in Figs. 10}12 are representative averages for the respondents. High capital costs not withstanding, Indian industry continues to operate in high-inventory mode. Though more than 15 companies have achieved more than 100 "nished goods inventory turns per year, many of these companies are dedicated ancillary units or companies that produce heavy equipment to order. Most of the respondents carry more than 3 days of "nished goods inventory, more than 1 week of WIP inventory and more than 2 weeks of raw material inventory. Many respondents did not have "gures available on their WIP inventory. The pipeline (Fig. 13) inventory level varies across industries and respondents. It also depends on the size of the market serviced. Most of the respondents (83%) stated that their sta! helps vendors to improve their processes. Similarly, formal vendor rating systems are used by four-"fths of the respondents whereas only one-"fth replied in a$rmative that components/materials supplied directly to the shop #oor without any incoming inspection. However, it is interesting to note that 69% of the companies have break-downs of their vendor's cost for important items. However, having cost data implies a level of trust, and is a requisite for joint cost-reduction e!orts, the bene"ts of which are shared by the company with the vendor.

 The horizontal axes in Figs. 10}19 and 21}25 show the number of responding companies.

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Fig. 9. Basic production and materials planning mechanism used.

Fig. 10. Raw material inventory held.

Fig. 11. WIP inventory held.

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Fig. 12. Finished goods inventory held.

The ultimate goal of vendor development is realised when the vendor reaches a stage of zero defects in quality and delivery. This enables the vendor to ship materials or components directly to the buyer's shop #oor, cutting out a lot of waste from the system. This stage has been reached by less than one-fourth of the responding companies. Though product quality improvement is stated to be the top most strategic objective in manufacturing (Fig. 3) and TQM is the most widely used management tool (Fig. 4), it is ironic to see that the results of the quality movement are only beginning to show on the shop #oor. About 50% of the responding companies state that they have defect rates, before rework, of up to 1%. A major chunk of the responding companies have stated defect rates of 1}3%, which is far from global standards of parts per million (PPM), which would imply defect rates on the order of 0.0001%. Companies have also reported defect rates of more than 5%. The redeeming factor here is that the pro"le of defect rates would probably have been much worse had a similar survey been carried out "ve years ago. Also on the positive side, 10 companies have reported defect rates of less than 0.1% (Fig. 14).

Fig. 13. Average pipeline inventory in the "nished goods distribution system.

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Fig. 14. Average percent defect rate (before rework).

Fig. 15. Average downtime percentage.

The use of TPM (Fig. 4) has not resulted in world-class maintenance practices. Perhaps, as in the case of quality, the need for signi"cant improvement in this area has been felt only in the last "ve years. Only  of the respondents have reported downtime percentages of less than 2%. Unlike zero  defects, which many experts agree is a long-term goal, near-zero downtime should de"nitely be achievable (Fig. 15).

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The disquieting "nding here is that none of the respondents have switched to predominantly cellular layouts, which are generally considered one of the foundations for world-class manufacturing in the discrete manufacturing sector. The remaining types of layouts were in keeping with the conventional trends. Generally speaking, product layouts are used when the scale of production favours dedicated production facilities, process layouts in the case of batch production and "xed position layouts are used in heavy industries where the `joba does not move and equipment is moved around it. Setup/changeover time is the key to `leana production in any plant that processes multiple materials on the same equipment. Large setup times (Fig. 16) force longer production runs and result in larger inventories, longer cycle times and slower response to the market. This was the realisation that led to the development of the Single Minute Exchange of Dies (SMED) concept by Shigeo Shingo in the 1950s in Japan. SMED refers to setup times in `singlea minutes, i.e. less than 10 min. The concept is not restricted to press shops. Only two responding companies have reached this stage, while 11 companies are close to it. They make up about 15% of our sample.

10. Information technology infrastructure and practices IT applications have by now entered almost all the companies but mostly in an uncoordinated way without long-term integration plans or automation strategies. Individual departments introduced computers and purchased or developed software to support their own department operations. This fragmented approach divided a company into small and almost autonomous enterprises, each with the goal to deploy the computer to make their department and its associated activities work more e$ciently. Thus, many departments acquired computers, developed and installed computerised systems, the net result of which was that the enterprise consisted of many

Fig. 16. Setup/changeover time.

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`islands of automationa. It soon became clear that smooth transfer of information between enterprise activities and even within departments was a burden, if at all possible. Consequently, the "rst move towards integration was made to study integration possibilities between the functions through networking and data sharing. Fig. 17 shows the number of companies which had (a) computerised and (b) networked the departments listed. Ironically, in India's manufacturing industry, the departments that are computerised to the greatest extent are "nance and accounts, stores, and purchasing/vendor development. This re#ects a `transaction processinga mentality. Design/engineering, production planning and control (PPC), production, quality assurance and quality control (QA/QC), are in the second tier while marketing, distribution, human resource management (HRM) and projects bring up the rear. Interestingly, this pattern has no correlation with the perceived importance of and usefulness of computers in managerial tasks. Also evident from Fig. 17 is the fact that many investments have been made in IT without reaping any bene"ts through networking. Figs. 18 and 19 show the number of companies that used certain categories of software applications. O$ce automation software, which is used for information management in o$ces,

Fig. 17. Department-wise extent of computerisation.

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Fig. 18. Extent of use of o$ce automation software.

Fig. 19. Extent of use of manufacturing software.

dominates manufacturing software. In the o$ce automation area, presentation packages were the least used, with 67% companies using them. In the case of manufacturing software, the applications with the largest base were materials accounting and computer-aided design and drafting. Both these applications are used by approximately 58 and 59%, respectively. MRP II and enterprise resource planning (ERP) are used by 20% of the companies. The manufacturing application with the smallest base is simulation, which is widely used internationally.

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MRP II produces feasible production plans to help stabilise and control manufacturing systems. ERP is concerned with making sure that a "rm's manufacturing decisions are not made without taking into account their impact on the supply chain, both upstream and downstream. Taken further, production decisions are a!ected by and a!ect all of the other major areas in the business, including engineering, accounting, and marketing to make better decisions. There is a need to take into account all of these important interactions within the business. ERP software is the medium for accomplishing this integration of decisionmaking processes. Since nearly every department in a company could be computerised, the ERP software can link and coordinate all of these computerised functions, to make them `talka to each other. Groupware refers to software designed to help business teams work together across locations. It coordinates schedules, messages and work#ow among group members and usually includes modules for group analysis and decision-making, as well as group document preparation. Similarly, an intranet is an internet-based network for use within an organisation. Fig. 20 deals with managerial opinion on two related trends that are making waves globally today. Groupware and intranets help companies to combine the uses of databases and electronic messages (E-mail). What results is `the death of distancea as far as information sharing is concerned. Information may be simultaneously made available to managers located on di!erent continents. Interestingly, a small number (less than 10 in each case) of responding companies have already used intranets and/or groupware. Intranets have a slight edge here. A large number of companies (about 25) are considering both these applications. An equally large number have not considered them yet. Interest in these developments seems to be at a threshold level. Figs. 21}24 provide interesting insights into the nature and causes of implementation of ERP software in Indian manufacturing industry. Interest in ERP has crossed the threshold level, with about 25% of responding companies stating that they are evaluating the available ERP packages, and about 20% stating that the selection process has been completed or that implementation is in progress. 13% of the responding companies have considered and rejected ERP. About 31% of the

Fig. 20. Status of use of groupware and intranets.

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Fig. 21. Present status of ERP.

Fig. 22. Selection factors for ERP.

Fig. 23. Perceived bene"ts of ERP.

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Fig. 24. Problems encountered in ERP implementation.

respondents have not considered it yet or are not aware of it. From those responding companies that have gained some exposure to ERP, the following trends emerge: E the deciding factor for selection of a package is its functionality. The recommendation of parent companies is the deciding factor in some cases. E The bad news for those who position ERP software as a template for reengineering is that the major bene"t from ERP is perceived to be `integration of di!erent departments and easy access to dataa. `Fundamental improvements through reengineering and streamlining the processes of manufacturinga is a distant second. E `Lack of "t of existing processes with features provided by the packagea and `Lack of availability of personnel for implementation and use of the packagea are the biggest problems for those going in for ERP implementation. Fig. 25 shows the extent of use of electronic interchange of data across departments within companies. As shown in the "gure, the use of electronic links is gaining ground, with more than half of the responding companies reporting its use between stores and purchase. Electronic links between stores and PPC and production and PPC are also quite widely used. Such electronic links could be made possible due to increasing inter-departmental connectivity and use of perhaps ERP-type or groupware-type software packages.

11. Analysis of 5ndings of survey The previous section gives a summary of the survey. The "gures given there present snapshots of an industry in a stage of transition, operating in one of the big emerging markets of the world * India. In addition, these "ndings also raise some important research issues that have been addressed brie#y in the sub-sections that follow. These issues are:

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Fig. 25. Departments between which data transfer is fully electronic.

E E E E

the stated manufacturing objectives of Indian organisations vis-a-vis international trends breadth of IT infrastructure with respect to depth of IT use in manufacturing the e!ectiveness of use of IT in integrating the components of manufacturing systems breadth versus extent of integration of IT infrastructure.

12. The manufacturing strategic intent In order to compare the manufacturing objectives of the participant organisations with those of world-class manufacturers, we propose a two-way classi"cation called the manufacturing strategic intent (MANSI) grid. This compares the manufacturing objectives on two dimensions * to be an agile manufacturer, or to be a conventional manufacturer (stressing capacity utilisation). This classi"cation has two inherent assumptions: 1. The stated objectives of the respondents are actually the strategic objectives of the responding companies; and 2. The practices of the responding companies re#ect their stated objectives. Maskell (1994) de"nes agile manufacturing as `a series of techniques that have been used by good companies to bring about unprecedented improvements in quality, productivity and customer service. These techniques are not new, many have been available for several decades, and others have been developed gradually over the last 30 years by innovative companies like Toyota.a He identi"es quality, just-in-time (JIT) manufacturing, people and #exibility as the bases of agile manufacturing. Conventional mass producers are driven by internal objectives that are centred on ezciency. The prime example of an e$ciency-oriented measure is capacity utilisation. Agile manufacturers, on the

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other hand, are driven by multiple objectives (e.g. faster new product development, #exibility of volume and mix, quality, on-time delivery and lead time reduction, etc.) which focus on e!ectiveness in meeting the needs of the external customer. The objective of agile manufacturing is to produce to demand and avoid speculative production. This brings manufacturing closer to the market. As Taiichi Ohno (1992) has written, what is important is that the operable rate of equipment * the percentage of time for which the equipment is ready for operation when required * should be 100%. The operating rate * the percentage of available time for which the equipment was actually operated * should be determined by demand. Manufacturers will have to achieve world-class manufacturing status to compete e!ectively in the global market. Therefore, world-class manufacturers emphasise agile objectives and deemphasise capacity utilisation. This classi"cation places a manufacturer into one of the following four types (Fig. 26): (i) World-class players: Companies that have the potential to be world-class. These are those which rated agile objectives above 3 and capacity utilisation below or equal to 3 on the 5-point scale. (ii) Transitional players: Companies that rated both agile objectives and capacity utilisation above 3. These are companies that can make the transition to world-class players. (iii) License-regime survivors: Companies which rated agile objectives below or equal to 3, and capacity utilisation above 3. These companies continue to operate with objectives that would have led to success before the liberalisation of the economy. (iv) Inertia players: Companies that rated both objectives below 3 are surviving on inertia. The reasons for their survival could include a monopolistic or oligopolistic market. As we would expect in any emerging market, the largest chunk of the responding companies is in the transitional players' quadrant. This signi"es an industry in transition. Having the right objectives may not always lead to superior performance. However, operating without these objectives is virtually guaranteed to lead to competitive disadvantage! The companies that are in the MANSI world-class players' quadrant have, therefore, achieved a necessary, but not a su$cient condition.

Fig. 26. MANSI classi"cation of the responding companies.

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13. Strategic use of IT in Indian manufacturing The needs and skills required to manage today's businesses in a global environment are far di!erent than they were just a decade ago. Clearly, we need a new way of looking at manufacturing, for the way we have considered it in the past is no longer su$cient. With the rapid changes in IT and manufacturing technology, "rms are therefore getting increasingly interested in managing the strategy-technology connection to develop new ways of achieving competitive advantage (Applegate, McFarlan & Mckenney, 1996). Firms are attempting to link manufacturing strategy with business strategy (Skinner, 1985; Wheelright, 1981; Luftman, 1996), to examine the strategic impact of rapidly changing manufacturing and information technology (Jelinek & Goldhar, 1983; Kantrow, 1980), and to "nd new ways of viewing manufacturing as a competitive weapon (Skinner, 1985; Hayes & Wheelright, 1984; Jelinek & Goldhar, 1984). Information technology is a key ingredient in this emerging trend of getting competitive advantage through manufacturing. Today's emphasis on competing through manufacturing may stimulate "rms to reassess their alignment of IT strategy with business strategy. New ideas concerning how IT can change the way "rms compete, are being explored (Applegate et al., 1996; Callon, 1996; Jelassi, 1994). However, computer integrated manufacturing (CIM), which blends recent developments in manufacturing and IT to achieve competitive advantage, can provide full strategic bene"ts only if there exists a broadened partnership of top management as well as engineering, marketing, manufacturing and IT executives who share a common vision of how CIM makes possible new approaches to designing business systems. But, as is evident from the analysis given above, most companies have focused on &stand-alone' applications of CIM component technologies, such as computer numerical control (CNC) machines, computerised bill-of-materials, and turnkey CAD systems that improve engineering design productivity. Obviously, it will be somewhat premature to discuss strategic use of IT (i.e. CIM) in such a &stand-alone' applications environment. Hence, what has been done here is to develop a taxonomy of IT applications role, and use it to de"ne the breadth and depth of IT infrastructure. Scheer (1994) had proposed an &Architecture of Integrated Information Systems' (ARIS). ARIS is used here as a conceptual framework for visualising the roles which IT applications can play in running a business, as opposed to the functions performed by them. As shown in the Fig. 27, these range from operative systems which essentially record quantities to long-term decision support systems. The higher the level of IT applications in the ARIS classi"cation, the more is the likelihood of using IT strategically. The shaded portion of the diagram represents the thrust areas for IT use for most Indian manufacturers (the bases for this conclusion are the "ndings in Figs. 17}19). Unfortunately, this usage pro"le precludes the use of IT for sophisticated tasks such as planning and decision support. The emphasis on accounting systems indicates a `data-processinga mentality. Even the data processing capabilities are not fully harnessed because of lack of integration. The important implication for managers, however, is that a company-wide, integrated IT infrastructure should be viewed only as a prerequisite towards the ultimate stage of using information leading to decision support for strategic planning. For example, IT-generated inputs could be used to speed up the accounts receivable process instead of just tracking sales and performing credit checks. This would be a transition to a controlling role. At a higher level, analysis might reveal that the bene"ts from this step could be used to reduce prices. This would be a strategic role.

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Fig. 27. Usage of IT in Indian manufacturing architecture of information systems.

14. Classi5cation by breadth of IT infrastructure and depth of manufacturing applications In recent years Indian manufacturing industry is increasingly feeling the need to harness IT to manage information #ows for more responsive manufacturing. The predominance of Materials Accounting and Computer Aided Design and Drafting has begun to give way to other applications. In order to assess the perception of this need and its impact on emerging IT infrastructure in manufacturing, we propose a conceptual framework exploring IT utilisation across two dimensions of its breadth and depth. The breadth dimension of prevailing IT infrastructure in a company is assessed by the number of departments that have been computerised, and companies with more than "ve computerised departments out of a total of 11 were classi"ed as those with a high breadth. The depth of IT use in manufacturing can be measured by the number of layers computerised in the ARIS architecture. However, as shown in Fig. 27, it is limited to the bottom-most two layers only for all the participating companies. Hence, the ARIS architecture has not been used as the basis for de"ning the depth. Instead, depth of IT utilisation is measured by the number of categories of IT applications in manufacturing existing in an organisation out of the 10 applications mentioned in the questionnaire (Fig. 19). The depth is considered high if more than three applications out of the 10 existed in the organisation.

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Fig. 28. Classi"cation in terms of breadth of IT infrastructure and depth in manufacturing applications.

The resulting classi"cations are (Fig. 28): (i) Resource optimising: These companies have used their extensive IT infrastructure to the hilt by using a number of manufacturing applications. (ii) Islands of automation: This has long been the bane of manufacturing companies. The depth of IT use in manufacturing is not leveraged adequately due to the less developed infrastructure (low breadth) in these companies. (iii) Resource accounting: These companies are stuck in the 1960's, with neither adequate breadth of IT nor depth of manufacturing applications. Computer applications would probably be limited to payroll and similar other areas. (iv) Ozce automation: These companies have invested in a broad IT infrastructure, but have not capitalised on it to use IT as a manufacturing management aid. Applications used would typically include o$ce automation suites and e-mail. A large number of the responding companies fall in the o$ce automation quadrant. This can be imputed to the fact that the need for sophisticated use of IT in manufacturing has been felt only recently by industry at large. The e!ective use of applications such as computer-aided process planning, simulation, shop #oor control, etc. will enable the shift to the resource optimisation quadrant.

15. Classi5cation by breadth and integration of IT infrastructure CIM seeks to integrate `stand-alonea design and engineering, manufacturing and business decision support systems into the manufacturing of the future. Thus, integration of IT infrastructure is yet another dimension of move toward CIM, which facilitates strategic use of IT and has not been addressed so far in the analysis. The extent of integration in a company's IT infrastructure is therefore a key indicator of the potential for strategic use of IT in the company. We have awarded two points to each company for each data transfer (out of a list of seven provided in the questionnaire) which is fully automated and

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Fig. 29. Classi"cation in terms of breadth and integration of IT infrastructure.

one point for each department which is networked. Companies with a score higher than 10 were classi"ed as highly integrated companies. The basis for measuring the breadth of IT infrastructure was the number of departments in which computers are used, as in the previous section. The categories into which we classi"ed the responding companies are (Fig. 29): (i) Holistic approach: These companies have attained a high degree of integration and possess a high breadth IT infrastructure. (ii) Slice approach: Companies which have computerised only a few departments but gone in for extensive integration. (iii) Piecemeal approach: Companies that have low breadth and low integration. They may not be able to extract productivity gains from IT. (iv) Scattered approach: Companies that have high breadth but have not leveraged it to attain hgih integration. We have a large number of companies in the scattered approach quadrant. This is probably due to the propensity of management to invest in `computersa without realising the role of integration in using IT strategically. However, the recent interest in ERP software shows that companies are becoming increasingly aware of this need.

16. Manufacturing strategy, world-class status and IT use The common thread that runs through the individual analyses is that a few select companies are already on their way to attaining world-class status in terms of these frameworks. However, most of the responding companies have a lot of groundwork to do in terms of: E setting world-class manufacturing objectives, especially by de-emphasising capacity utilisation and emphasising `agile objectivesa; E using integrated IT infrastructure to help in operationalising these objectives; E extending the `manufacturing deptha of their available IT infrastructure to harness their manufacturing resources towards these objectives; and

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Fig. 30. A conceptual framework for evaluation of IT infrastructure in manufacturing.

E using IT to eliminate information delays that cause waste in the processes of manufacturing and logistics. Fig. 30 is our proposed conceptual framework for evaluating IT initiatives from a business perspective. The breadth of IT infrastructure refers to the portfolio of functions (or departments) in which IT is used. The level refers to the level of Scheer's hierarchy (see Fig. 27) upto which IT use has been extended. Execution and accounting signify the lowest level, control signi"es a medium level and planning and analysis signify the highest level. Integration refers to the extent to which data transfers are achieved electronically through networking. Our research "ndings show that many IT initiatives have followed paths parallel to the paths A, B or C (Fig. 30), i.e. they have ignored one dimension out of the three. This results in fragmented or technically oriented information management systems that do not enable the organisation to deliver superior value to its customers. Path D is the path along which organisations striving for world-class performance must align their IT initiatives. That is, simultaneous improvements on the three fronts of breadth, integration and level of IT use are the keys to building information systems which will support agile manufacturing. This would require a change in the mind-set of management to consider information as a strategic resource and information management as an organisational issue rather than a technological one! If information is to be used strategically in manufacturing, the use of IT in manufacturing should be driven by an IT strategy which is in alignment with the manufacturing strategy. Of course, to derive competitive advantage from manufacturing, the manufacturing strategy should itself be derived from the business strategy of the "rm. There has been a lot of research in terms of aligning IT strategy with business strategy as well as aligning manufacturing strategy with the business strategy. However, the issue of aligning IT strategy with the manufacturing strategy has been addressed to a lesser extent in the literature. Therefore, we propose below a framework for alignment of business, manufacturing and IT strategy (Fig. 31). Given the need for alignment of business, manufacturing, and strategies, the key question is how a company should accomplish it?

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Fig. 31. Aligning business, manufacturing and IT strategies.

17. Conclusion This paper has explored Indian manufacturing "rms for the level of their preparedness for world-class status using their strategic intent, manufacturing practices and IT infrastructure as a basis. The research "ndings, which are based on a national-level representative survey, are somewhat alarming. It shows that only a few select companies are already on their way to attain world-class manufacturer status, whereas the majority either lack the world-class vision, or have poor manufacturing practices or poor IT infrastructure. Given the economic agenda of the Indian government, the manufacturing sector really needs help to overcome this lacunae in the near future or else our economic progress may be in jeopardy.

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Dr. K. B. C Saxena is NALCO Professor of Strategic Information Management and Chairman, Information Technology Management Area at the Management Development Institute, Gurgaon, India. Prior to this, he held faculty positions at the Indian Institute of Management, Bangalore; Erasmus University, Rotterdam; and Hong Kong Polytechnic University, Hong Kong. Dr. Saxena has more than 25 years of academic and diversi"ed industrial experience in systems development and management of information services and technology. His research and consulting interests are in business process reengineering, information systems/technology planning and management support systems. He has conducted as well as managed research in these areas with funding support from the Netherlands and Hong Kong governments and the Commonwealth Foundation, UK. Dr. B. S. Sahay is Professor of Operations Management and Chairman (Graduate Programmes) at the Management Development Institute, Gurgaon, India. Dr. Sahay has over 16 years of experience in teaching, management consultancy, training and industries. He has participated in Management Consultancy and Project Management programmes organised by Asian Productivity Organisation/Japan Productivity Centre, Tokyo and German Foundation of International Development, Berlin. He has worked both in India and abroad on various assignments for engineering, manufacturing, chemical, process, jobbing, electronic and service industries. His teaching, research and consulting interests include production and operations management, project management, productivity management, industrial engineering, system dynamics and policy modelling.