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CMU-RI-TR-96-43
Robotics Institute
School of Computer Science, Carnegie Mellon University
CMU-RI-TR-96-43
Accelerating the Diffusion of Production Management
Innovations Among Small to Midsized Enterprise
Via Electronic Marketing
Donald W. Kosy
December 1996
CMU-RI-TR-96-43.ps
Keywords:
This report presents the results of an exploratory study of factors
affecting the diffusion of production management innovations among
small to midsized manufacturing firms (SMEs), and argues for several
market-oriented extensions to current government programs that would
help reverse declines in real wages in this sector by accelerating
innovation diffusion. The principal production management innovations
introduced in the US over the last 30 years include manufacturing
resource planning systems (MRP II), just-in-time systems (JIT), theory
of constraints/optimized production technology (TOC/OPT), and
finite capacity schedulers (FCS). According to published surveys, the
adoption levels for these systems among SMEs is no more than 40-50%,
compared to an estimated 75-95% for large firms. Based on a 1993 National
Research Council study of smaller manufacturers and a detailed
evaluation of available systems, it is hypothesized that most SMEs
are psychographically 'late adopters' of these kinds of innovations and
that this, as well as economic factors, accounts for their low
adoption levels. In particular: (1) SMEs as a group have a more
conservative attitude toward innovation than larger firms; (2) they are
less aware of potential benefits to firms their size; (3) incentives to
adopt are weaker compared to the perceived cost; (4) they have
relatively few opportunities to learn from, or be influenced by,
positive peer experience; and (5) vendors don't create the kind of
scaled-down low-cost packages and marketing approaches that fit this
size enterprise until the higher profit, large enterprise markets have
been saturated (if then).
The federal program that is most clearly focussed on innovation
diffusion, and involves the broadest spectrum of small to midsized
manufacturers, is the Manufacturing Extension Partnership (MEP),
administered by the National Institute of Science and Technology.
Although this program has been extremely effective (including an
economic benefit to surveyed client firms of eight times federal
investment in 1994), it is currently relies on a labor-intensive
approach that severly limits the number of companies that can be helped
with available resources. Six new ways to pool, package, and
disseminate expertise electronically are proposed, aimed specifically
at late adopters, that would shift parts of the consulting and
education currently performed by MEP field engineers to interactive
software. In addition, it is suggested that the MEP program establish
a liaison with technology vendors to stimulate them to repackage their
offerings to better match the needs of the late majority market.
Synopses of production management concepts and of the evolution of MRP
systems are given as appendices.
78 pages
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