THE IMPACT OF FLEXIBLE MANUFACTURING SYSTEMS ON PRODUCTIVITY AND QUALITY

Worldwide competition and the pace of technological innovation simply will not permit distraction from industries' primary task: producing quality products at competitive prices. The profitability, productivity and market share of North American and European firms have been adversely affected by many factors, including raw material price increases, a failure to understand customers and markets, domestic wage increases, a shorter work week, and poor use of capital. A flexible manufacturing system (FMS) provides a good means to improve this situation. Nevertheless, an FMS implementation usually costs an organization millions of dollars and the long payback period for an FMS may hinder management from adopting this new technology. It is therefore necessary that both financial and strategic benefits produced from the acquisition of an FMS be evaluated on a long-term basis. Flexible manufacturing systems are widely claimed to positively impact productivity and quality. From an extensive search and analysis of empirical studies, propositions regarding issues of flexibility, productivity, and quality are presented. Major findings support FMS investment leading to reduced labor costs, increased output, decreased manufacturing costs, increased flexibility, and reduced production lead time. There was a moderate, yet weaker, relationship between FMS investment and decreased work-in-process inventories and improved quality. There was no accurate return-on-investment justification reflecting discounted cash flow or net present value analysis on specific projects. A few projects reported project payback, the payback ranging from two to six years.