Abstract
This chapter presents an empirical investigation of the adoption of AMTs by providing a first-pass assessment of the technology adoption of auto component firms in India. Before delving into the econometric investigation, it is important to examine the incidence of use of the advanced manufacturing technologies and practices in the industry in order to have a grasp of the pattern and extent of usage of the various AMTs and their dynamics. Thus, we provide a descriptive overview of the adoption pattern among the firms based on the survey data that lays the foundation for the econometric analysis presented in the next chapters.
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Notes
- 1.
It may be noted that the organised sector contributes to the majority of the output in the sector.
- 2.
These locations were chosen for they account for the most (about 95 %) of the firms in the organised sector. Out of 427 member firms of ACMA the survey covered about 400 firms.
- 3.
The pilot survey was carried out in March 2012 and the final survey was carried out between December 2012 and May 2013.
- 4.
The basis reference point for our questionnaire design was the advanced manufacturing technology surveys conducted by Statistics Canada for (www.statcan.ca/english/research/scilist.htm) and Arvanitis and Hollenstein (2001). Insights were also borrowed from the structure and content of CIS surveys conducted by individual countries following the OECD OSLO manual.
- 5.
An electronic version of the questionnaire was also sent to all firms to facilitate the response. The firms were requested to return the questionnaire within two weeks of receipt, in the self-addressed envelope enclosed with the survey. In view of the initial poor response of the survey, the firms were sent reminders and another copy of the survey. In some cases several reminders were sent to prompt a reply.
- 6.
This response rate can be assumed to be a fairly good representation given the nature of this kind of surveys. Moreover, taking into consideration the arduous task of ensuring response in a developing country like India, we feel that this number is a reasonably good representation of the industry. For the statistical issue of representativeness of the sample refer to Sect. 7.2.1.
- 7.
The types of AMTs included in the list have been decided after consulting industry experts regarding their suitability and relevance to the Indian auto-component industry. See Appendix for a description of these techniques.
- 8.
The information on firms’ product profiles is taken from the ACMA data and was not asked in the survey.
- 9.
It may be borne in mind here that this comparison is completely on the basis of the firm’s competitors present in the industry, not on the basis of the nature of the product produced. For example, the firms have less competition might be producing a product which is not so important for the industry and hence have less competition. However, this proposition is hard to test from the data and hence it cannot be completely addressed. Hence no implications are drawn regarding the positive/negative effects of this kind of concentration.
- 10.
In spite of the fact that there is over capacity in the industry, the typical levels of capacity utilisation that was obtained in the survey might have also picked the relatively low industry conditions prevailing during the survey period. However, in our view, this does not affect the overall impression to a significant degree.
- 11.
As has been noted in Chap. 4, the auto component industry is subject to a three-level global tierisation. On the first rung are those manufacturers who supply directly to the automaker. This is followed by the second rung that comprises of component manufacturers who supply to the first tier; this is followed by the third rung that supplies to the second tier.
- 12.
See Chap. 4 for the details of each of the broad product categories.
- 13.
Given the ambiguity in the definition of cluster in the literature, we have taken the discretion of defining clusters as ‘locations having more than 20 firms in a geographical distance of about 20 km”. Moreover, as has been noted in Chap. 5, the concept of cluster is used to denote sectoral and geographic agglomeration of firms.
- 14.
The Delhi-Gurgaon cluster can be broadly thought of the cluster belonging to the National Capital Region (NCR) surrounding the city-state of New Delhi. Actually, NCR consists of two neighbouring states, both of which exhibiting a notable number of auto component firms in the cities of Delhi and Gurgaon, respectively. Moreover, these two are located in a distance of about 20 km. Hence, viewing Delhi- Gurgaon as one geographical entity (or rather economic space), seems appropriate to our purpose.
- 15.
It may be noted that the crucial role of AMPs for firms’ competitiveness is a research area in itself. However an attempt here is made to introduce the notion of AMPs as they are quite complementary to the adoption of AMTs. It must be borne in mind that our focus is not to study AMPs per se. Rather our interest is to explore and verify if there is a positive correlation with the adoption pattern of adoption of AMTs. Therefore we don’t go into the detailed discussion on the issue of organizational innovations and just introduce the notion in order to familiarize the concept in our context.
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Appendices
Appendix
This appendix provides brief functional descriptions of common advanced manufacturing technologies and descriptions of related practices that have been used in the present study.
List of AMTs (Advanced Manufacturing Techniques) Used in the Study
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1.
Computer Aided Design/Engineering (CAD/CAE): Use of software to carry out design and engineering calculations. CAD produces designs on users’ computer screens allowing them to visualise the implications of design changes. CAD/CAE systems reduce product development time and improve accuracy and quality of product.
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2.
Computer Aided Manufacturing (CAD/CAM): Use of software to control machining of parts (tool paths) according to CAD/CAE output. CAM reduces machining times which results in higher production rates and reduced delivery times.
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3.
Modelling or simulation technologies: Software for visualising product or process performance parameters. Modelling technologies involve the testing of 3days solid models on computing platforms. Process simulation refers to the use of physical or mathematical models to simulate process performance. Examples include the simulation of the flow of molten plastic into an injection mould, the tool path for a cutter of NC-controlled machine tool, and the trajectories of materials handling equipment in a flexible manufacturing system. A related technology is virtual prototyping. Process simulation provides the capability to discover potential problems before facility installation and the potential to compare solutions.
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4.
Manufacturing Resource Planning (MRP)/Enterprise Resource Planning (ERP): MRP refers to the management software that directs ordering, procurement, production planning and routing (work allocation), and material storage. MRP operations are based on expected demand. ERP supersedes MRP. ERP refers to the management software for determining a master schedule of what to produce, balancing overall demand against resources.
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5.
Computerised Production Planning System: Software that directs ordering, procurement, production planning and routing, data capture and materials (inventory) storage.
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6.
Computer numerically controlled machines (CNC/DNC): Use of computer to control a machine tool’s machining sequence. Computer functions include program storage, tool offset and tool compensation, degree of computation and the ability to send and receive data from a variety of sources, including remote locations. This is an advanced version of NC. CNC is used with machining centres and flexible manufacturing cells.
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7.
Programmable Logic Controllers (PLCs): Solid-state, microprocessor-based industrial control devices that have programmable memory for storage of machine control instructions. It performs functions equivalent to a relay panel or a wired solid state logic control system. PLCs provide programming flexibility and reliability in harsh industrial environments and are user friendly.
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8.
Robots: Reprogrammable, multifunctional manipulators designed to move materials, parts, tools or specialized devices through various programmed motions for the performance of variety of tasks. Robots are primarily used to enhance productivity in mass manufacturing.
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9.
Rapid Prototyping Systems (RPS): Production of a physical model from a computer model without the need for any jig or fixture. RPS shortens product design and development processes.
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10.
Electronic exchange of CAD files: Electronic transfer of data across different platforms to co-ordinate operations.
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11.
Other Network Systems (e.g., LAN, WAN) for engineering and/or production: A computer network that spans a relatively small area. Most LANs are confined to a single building or group of buildings. However, one LAN can be connected to other LANs over any distance via telephone lines and radio waves. A system of LANs connected in this way is called a wide-area network (WAN).
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12.
Inter-company computer networks: Refers to the computer network linking plant to subcontractors, suppliers, and/or customers.
List of AMPs (Advanced Manufacturing Practices) Used in the Study
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1.
Just-in-time production and inventory control: Internally focused production system that produces parts on demand. It uses pull system to signal production based on the demand at the succeeding workstation and ultimately final customer.
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2.
Cross-functional design teams: Groups comprised of workers from all relevant functional areas responsible for product/process design. By simultaneously considering all aspects of development, production and use, teams can increase quality, reduce development time and minimise costs.
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3.
Continuous improvement (including TQM): An approach to planning and improving each production activity that depends on the participation of all individuals at every level of the organisation. This is synonymous with continuous improvement.
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4.
Benchmarking: The continuous process of measuring products, services, and practices against recognized industry standards. It is an ongoing activity that is intended to improve performance and can be applied to all facets of operation. Benchmarking requires a measurement mechanism so that the performance “gap” can be identified. It focuses on comparing best practices among dissimilar enterprises.
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5.
Plant certification: Refers to a series of standards that has become worldwide models for good management practices and certify quality, conferred by various International Organisations for Standards (ISO). The ISO 9000 and ISO 14000 series of standards has become a worldwide model for good management practices.
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6.
Certification of suppliers: Similar to the above.
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7.
Concurrent engineering: Systematic approach to the integrated, concurrent design of products and their related processes, including manufacturing and support.
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8.
Cellular manufacturing: Method of organising production around groups of complementary machines to facilitate manufacture of families of parts or products. The associated software and hardware is referred to as group technology.
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Diebolt, C., Mishra, T., Parhi, M. (2016). Technological and Organizational Innovations in Auto Components Industry: An Analysis of Survey Data from Diffusion Perspective. In: Dynamics of Distribution and Diffusion of New Technology. India Studies in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-32744-0_7
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