Economic and strategic justification of AMT inferences from industrial practices

Abstract

Organizations vary greatly in their approaches and success in justifying investment in advanced manufacturing technology (AMT). This study investigates usage of various justification approaches by US manufacturers and examines the impact of such practices on the ultimate performance of AMT projects. Responses from a survey mailed to 584 plants in the US were used to test four propositions concerning AMT justification practices. We first discover that the majority of plants are not utilizing the more sophisticated justification techniques that are being touted by many researchers. Significantly, firms using hybrid justification strategies which include both economic and strategic justification approaches were found to attain higher levels of success from their AMT projects than plants that used only one method. However, once a plant used a hybrid justification method, preference for either strategic or economic criteria had no impact on the level of success of the project. Not surprisingly, plants using the more complex manufacturing technologies were more likely to have multiple functional departments involved in the justification process. Finally, the composition of inter-departmental teams for planning, justification and installation activities have an impact on the success of the AMT project.