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Investment criteria
Criteria are, principles used to help with making decisions (Oxford Learner’s Diction-aries for Academic English, n.d.). Within the study are investment criteria used for de-scribing the criteria used for evaluating investments in a manufacturing system. By screening portions of the body of literature that exists regarding investment criteria, within both traditional manufacturing systems and within advanced manufacturing sys-tems were several criteria identified. The criteria represent different possible benefits that the investment proposals are evaluated against. The criteria will now be presented in the following section to then be summarised into a table.
Flexibility, productivity, quality and dependability are some of the biggest competitive priorities for manufacturing companies according to DeMeyer, Nakane, Miller, and Ferdows (1989), based on their survey made in Europe, North America, and Japan. Proctor and Canada (1992) mean that flexibility, productivity, quality and dependability are intangible criteria that need to be in balance to succeed with the business strategy. Flexibility can be defined as “the ability to respond to changes in product, product mix, and volume” (Saleh et al., 2001, p. 1267). Flexibility are deemed important because it enables higher through-put (Kaplan, 1986; Karsak & Tolga, 2001; Kulatilaka, 1984; Saleh et al., 2001), lower cost for retooling (Kulatilaka, 1984), greater ability for vol-ume adjustment (Kulatilaka, 1984), reduced inventory (Kaplan, 1986; Saleh et al., 2001), and better handling of unforeseen changes (Saleh et al., 2001), etc.
Karsak and Tolga (2001) and Meredith and Suresh (1986) and Saleh et al. (2001) discuss different types of flexibility that could be important in investments decisions, the types of flexi-bility are process flexibility (i.e. the ability to produce different variants, also called flexibility of function), volume flexibility (i.e. the ability to produce different levels of volumes within the system), and material flexibility (i.e. ability to change the used ma-terial). Quality is defined by Saleh et al. (2001, p. 1268) as “Conformity (uniformity), consist in product and easiness in product testing” and according to DeMeyer (1989) are quality deemed the most important competitive factor in USA. There are multiple reasons for why high quality is important, such as less scrap and rework (Kaplan, 1986; Saleh et al., 2001), fewer inspections (Kaplan, 1986; Saleh et al., 2001), reduced nec-essary inventory (Kaplan, 1986; Saleh et al., 2001), and higher through-put (Frank et al., 2013). According to Slack and Lewis (2011) can dependability be defined as keep-ing delivery promises to the customers, i.e. delivering the right quality and quantity at the right time.
According to DeMeyer (1989) did manufactures in Europe, North Amer-ica, and Japan find it important to be able to make dependable deliveries i.e. they valued dependability.
According to Saleh et al. (2001) and Almannia, Greenough, and Kay (2008) can the safety of the people working within the manufacturing system increase with AMS, where safety is defined as “the ability to avoid injuries and death accidents” (Saleh et al., 2001, p. 1267). Grimaldi and Simon (1989, [Through (Saleh et al., 2001)]) mean that by increasing the safety for the workers, can also multiple benefits for the company be achieved, such as reduced: sick days, overtime due to lost time, and activities in handling, recording, and investigating injuries.
Training are also deemed an important criterion while investing, depending on the train-ing provided can the implementation become more or less successful. Saleh et al. (2001, p. 1267) define training in the context of AMS investment as “the availability and qual-ity of training procedure for implementing a complicated technology”. Saleh et al. (2001) points out that training quite often happens to be dropped in the last minute or are planned to be conducted under the start-up phase. The effort needed to complete a good quality training are almost always underestimated according to Majchrzak (1988, [Through (Saleh et al., 2001)]) and Rothwell (1987, [Through (Saleh et al., 2001)]). According to Saleh et al. (2001) are training and vendor support closely linked to each other, and define vendor support as “Quality dimension of the services and support function performed by vendor before and after sales”(Saleh et al., 2001, p. 1267). Ven-dor support are important for more reasons such as how fast they react upon requests (both pre and after sale), quality of the service, how professional they act, and how available they are towards the customer (Kennedy and Young, 1989, [Through (Saleh et al., 2001)]).
Within AMSs is it possible to encounter challenges for workers in the system as a result of changes to the technical and organisational system (Saleh et al., 2001). According to Saleh et al. (2001) may the challenges for the workers result in uncertainties for the system, affecting the moral and performance of the individuals. To counter the uncer-tainty is it important to provide both technical and management support, which can be done through earlier involvement for the employees within the system (Hughes Aircraft Company, 1992 [Through (Saleh et al., 2001)]). The areas of interest for technical and management support are according to Saleh et al. (2001) planning, directing, marketing and contracting, procurement and subcontracting, organising and staffing, space and facilities, and develop engineering.
By changing focus from the traditional cost-saving or cost-reduction goals for investing in the manufacturing system, to more intangible goals as higher flexibility, has the need to change cost focus appeared. According to Saleh et al. (2001) is it necessary to put focus on the total cost for the manufacturing system, across it life-time, resulting in the criteria system cost. Saleh et al (2001) continued to present a revised version of the system cost after controlling the sub-criteria with the industry and concludes that the costs that should be included are all costs related to acquisition and installation cost, quality cost, material handling cost, personnel support cost, operating equipment cost, research and development cost, facility and utility costs, documentation costs for pro-duction control, and logistics support cost.
Even though financial criteria are ill-suited for investments in AMS by itself (Kaplan, 1986; Meredith & Suresh, 1986; Saleh et al., 2001), could financial criteria be used as a compliment to the intangible criteria, to get a more detailed picture of the investment (Chung, 1993; Kaplan, 1986; Karsak & Tolga, 2001; Meredith & Suresh, 1986; Proctor & Canada, 1992; Saleh et al., 2001). To perform the financial evaluation are there many different financial criteria but some of the most frequently used are return of investment (ROI) (Karsak & Tolga, 2001; Meredith & Suresh, 1986), net present value (NPV) (Chung, 1993; Meredith & Suresh, 1986; Proctor & Canada, 1992), and payback (Mer-edith & Suresh, 1986).
With the changing market demands does the ability to keep up become important and therefore also to keep the manufacturing system compatible with future and existing system parts (Saleh et al., 2001). Compatibility are defined by Saleh et al. (2001, p. 1268) as “ability to be compatible with the existing (or future) software, hardware, and people”. The compatibility level of system parts affects how much effort are needed to integrate parts that are not compatible with each other, which is time consuming, ex-pensive, and hard to achieve (Saleh et al., 2001).
The different criteria are summarised within Table 9, together with a definition, and which authors that have found the criteria to be important in investment considerations.
1Introduction
1.1BACKGROUND
1.2PROBLEM DESCRIPTION
1.3PURPOSE AND RESEARCH QUESTIONS
1.4DELIMITATIONS
1.5OUTLINE
2Method .
2.1STUDY DESIGN
2.2THEORETICAL FRAMEWORK
2.2.1Literature searc
2.2.2Literature analyses
2.3CASE STUDY .
2.3.1Case selection
2.3.2Interviews
2.3.3Document studies .
2.4DATA ANALYSIS
2.5TRUSTWORTHINESS .
2.5.1Credibility
2.5.2Transferability
2.5.3Dependability
2.5.4Conformability
2.6ETHICAL CONSIDERATIONS
3Theoretical framework
3.1LEAN
3.2RECONFIGURABILITY
3.3INVESTMENT
3.3.1Investment criteria
4Findings
4.1INVESTMENT APPROACH .
4.2THE DEVELOPMENT PROCESS.
4.3PRODUCTION DESIGN PRINCIPLES
4.4RECONFIGURABILITY WITHIN THE FOCAL COMPANY
4.5INVESTMENTS WITHIN THE DEVELOPMENT PROJECTS .
4.6HOLISTIC VIEW THROUGHOUT THE DEVELOPMENT PROCESS
5Analysis .
5.1WHAT ARE THE SIMILARITIES AND DIFFERENCES BETWEEN LEAN AND RECONFIGURABILITY?
5.1.1Holistically comparison
5.1.2Analysis of lean’s management principles .
5.2HOW DO EXISTING INVESTMENT CRITERIA SUPPORT LEAN AND RECONFIGURABILITY?
5.2.1Connection between investment criteria and lean and reconfigurability
5.3HOW CAN THE EXISTING INVESTMENT CRITERIA BE COMBINED INTO A SET OF INVESTMENT CRITERIA THAT FACILITATES LEAN AND RECONFIGURABILITY? .
5.3.1Investment criteria .
5.3.2New investment criteria list .
6Discussion and conclusions
7References
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Can lean and reconfigurability be combined?
