giftjourn@l Indian Institute of Technology Delhi ISSN 0972-2696giftsociety.org/download/gift-journal/4-3.pdf · 2013-04-15 · Editor-in-Chief Sushil Chair, Strategic Management Group

Editor-in-ChiefSushilChair, Strategic Management GroupDepartment of Management StudiesIndian Institute of Technology DelhiHauz Khas, New Delhi-110016e-mail : [email protected] : 91-11-26591167Fax : 91-11-26862620

Global Journal ofFlexible Systems Management

ISSN 0972-2696

(Quarterly Journal of Global Institute ofFlexible Systems Management)

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Editorial BoardRakesh Kumar AgrawalSchool of ManagementUniversity of Western Sydney

Sydney, Australia

Ali DastmalchianDean, Faculty of BusinessUniversity of Victoria

Victoria, Canada

M.C. JacksonDirector of the Business SchoolUniversity of Hull, UK

Editor-in-Chief,Systems Research andBehavioral Science

Jatinder N.D. (Jeet) GuptaEminent Scholar and Chairperson

Department of Accounting &Information SystemsCollege of Administrative Science

The University of Alabama inHuntsville, USAAssociate Editor, Decision Sciences

Anthony MichellVisiting Prof. (Strategy & Global Mgt.)

School of Public Policy andManagement, KDI, Korea

H. PaulProfessor and DeanSchool of Management

Asian Institute of TechnologyPathumthani, Thailand

Daniel RouachProfessorSchool of ManagementESCP-EAP, Paris, France

Kulwant SinghHead, Department ofManagement & Organization

Faculty of Business Admn.National University of SingaporeChief Editor,

Asia Pacific Journal of Management

MembersA.K. AgrawalCEOAutometers Alliance Ltd., Noida

Rajat K. BaisyaHead, Dept. of Management StudiesIIT Delhi

P.K. JainDept. of Management StudiesIIT Delhi

K.M. MitalDepartment of Management StudiesIIT Roorkee

Shyam SethiVice PresidentWhirpool of India Ltd., New Delhi

Sanjay K. SinghManaging Editor-Higher EducationPearson Education IndiaDelhi

Managing Committee

Deputy EditorsK. MomayaDept. of Management StudiesIIT Delhi.

O.P. SharmaDelhi College of Engineering,Delhi

Regional Editor-North America Region

Prabir K. BagchiDir.-Logistics & Operations ManagementSchool of Business & Public ManagementThe George Washington UniversityWashington - DC, USA

Associate EditorsJames H. PerryThe George Washington UniversityWashington - DC, USA

Susan WhiteThe George Washington UniversityWashington - DC, USA

Srinivas PrasadThe George Washington UniversityWashington - DC, USA

Thomas CorsiUniversity of Maryland-College Park, USA

Herbert KotzabCopenhagen Business SchoolDenmark

Tage Skjoett-LarsenCopenhagen Business SchoolDenmark

Helge VirumNorwegian School of Management

Nanua SinghProfessor and Director of IntegratedProduct Development Laboratory,Wayne State University, USA

Kathryn E. SteckeThe University of Texas at DallasSchool of ManagementRichardson, USAEditor-in-ChiefIntl. Journal of Flexible Mfg. Systems

Ushio SumitaProfessorGraduate School ofInternational ManagementInternational University of JapanJapan

Henk W. VolberdaProfessor of Strategic Management &Business PolicyRotterdam School of ManagementErasmus University, The Netherlands


giftjourn@l

ISSN 0972-2696 Vol. 4 No. 3, July - September 2003

Contents

Editorial iii

Research Papers

l A Decision Support System for Flexibility in Manufacturing 1

Boppana V. Chowdary and Arun Kanda

l Polarization of Perceptions of IT-enabled PrivacyViolations at Workplace: Impact of Respondent Position,Peer Belief and Peer Pressure 15

Nivedita Debnath and Kanika T. Bhal

l Stakeholder Flexibility in E-Business Environment:A Case of an Automobile Company 21

Rajeev Dwivedi and Kirankumar Momaya

Short Communication

l Innovating Growth through “Six Sigma”:A Strategic Approach for Combining Robustness with Flexibility 33

Amit Chatterjee

Event Diary 39

giftjourn@lGlobal Journal ofFlexible Systems Management2003, Vol. 4, No. 3, pp iii

Editorial

How flexibility andproductivity are

related to each other

A normal proposition isflexibility hampers

productivity by reducedoutput and requirement

of more input

Let us compare theoutput of a mass

manufacturing systemand a flexible

manufacturing system

Less flexibility means moreapparent productivity of

undesired output, whereasmore flexibility willfacilitate more realproductivity of the

desired output

Normal assumption is thata dedicated system

requires less inputs andis more efficient

A flexible system maybetter cope with

uncertainty of demandleading to less inputs per

unit of output

In an uncertain anddynamic environment, thereal productivity of a moreflexible system is expected

to be higher than a lessflexible system

© 2003, Global Institute ofFlexible Systems Management

Flexibility and Productivity

Is there a relationship between the two key performance variables of any enterprise, i.e.flexibility and productivity? If yes, what is its nature? Does it mean that greater flexibilityimplies lesser or higher productivity? These are some of the bubbling questions in the mindof any manager or management researcher.

Normally, it is argued that, as flexibility implies more options, change mechanisms andfreedom of choice, it would be hampering the productivity both by way of reduced outputand more inputs for more options. This proposition can be examined from two viewpoints:one from the output point of view and the other from the input.

By considering the output, as the main variable, do we see that the output of a lessflexible system is higher than a more flexible system. Let us consider two manufacturing systems:(i) a mass manufacturing dedicated assembly line; and (ii) a flexible manufacturing systemable to handle many models/products. In which case, the output is expected to be higher interms of number of products manufactured per day? Obviously, one would argue that in thecase of a dedicated system the output would be higher as there are no changeover times requiredin between. But, in reality, we require many models to be produced as per the customerrequirements and manufacturing more of only one model would not serve the purpose. If morethan one model is to be produced on the dedicated assembly line, it would entail loss ofset-up time as with every change of model a new set-up is to be created. Whereas, in case of aflexible manufacturing system many models can be processed simultaneously thereby havingmore desirable output and thus more productivity in real sense. Thus, with less flexibilityapparently the productivity is high but more of undesired output, whereas more flexibilityfacilitates more real productivity of desired output.

Let us examine the same issue from the viewpoint of input required in a less flexibleand more flexible system respectively. Normally, it is assumed that a dedicated massmanufacturing system with special purpose machines/assembly lines would be more efficientand would require less inputs of manpower and machines per unit product. In a dedicatedsystem, dealing with one product, the production stages are well balanced and the skill levelsof workers are quite high as the job is repetitive in nature. On the other hand, a flexiblemanufacturing system, dealing with multiple products at a time, would require higher inputsof technology and multiskilling on the part of the workers. Thus, on the face it appears thatthe productivity level of a less flexible system would be higher on account of lower inputs.However, in real terms it need not necessarily be so, because a dedicated system might belying idle if the demand of that specific product is low, thereby having higher input costs perunit of output produced. Whereas, since a flexible system is dealing with variety, it may beable to better cope with uncertainty of demand, thereby having higher capacity utilization inreal terms leading to higher productivity by way of less inputs per unit of output.

Thus, from the above discussion it can be concluded that though the apparentproductivity of a less flexible system may be higher than a more flexible system in a stableenvironment, in real terms the situation would be reverse in an uncertain and dynamicenvironment, i.e. the real productivity of a more flexible system is expected to be higher thana less flexible system from both the points of the view of the output and the input.

SushilEditor in Chief

Guidelines for Authors


giftjourn@lAimThe journal is intended to share concepts, researches and practicalexperiences to enable the organizations to become more flexible (adaptive,responsive, and agile) at the level of strategy, structure, systems, people, andculture. Flexibility relates to providing more options, quicker changemechanisms, and enhanced freedom of choice so as to respond to thechanging situation with minimum time and efforts.It is aimed to make the contributions in this direction to both the world ofwork and the world of knowledge so as to continuously evolve and enrichthe flexible systems management paradigm at a generic level as well asspecifically testing and innovating the use of SAP-LAP (Situation- Actor -Process-Learning-Action-Performance) framework in varied managerialsituations to cope with the challenges of the new business models andframeworks. It is a General Management Journal with a focus on flexibility.ScopeThe Journal includes the papers relatingto: conceptual frameworks, empiricalstudies, case experiences, insights,strategies, organizational frameworks,applications and systems,methodologies and models, tools andtechniques, innovations, comparativepractices, scenarios, and reviews.The papers may be covering one or manyof the following areas: Dimensions ofenterprise flexibility, Connotations offlexibility, and Emerging managerialissues/approaches generating anddemanding flexibility.CoverageThe journal is organized into varioussections to include following types ofcontributions: Research papers, Shortnotes/correspondence, Applicationsand case studies, Book reviews, Booksummaries, Interviews and round tables,Information about relevant conferencesand seminars, Educational and learning experiments, and any other relevantinformation related with the theme of the Journal.Manuscript SubmissionManuscript should be submitted to the Editor-in-Chief at the address:Prof. Sushil, Department of Management Studies, Indian Institute ofTechnology Delhi, Hauz Khas, New Delhi-110 016, Ph: 91-11-26591167,Fax: 91-11-26862620.It is preferred to have electronic submission through web to avoid delays.Please submit the “word” file attached to email on the following address:[email protected] At the time of final submission, anautobiographical note and a passport size photograph of all the authors willbe required.CopyrightThe submission of paper to giftjourn@l implies that the paper is original andnot submitted elsewhere for publication. Copyright for published paperswill be vested in the publisher i.e. GIFT, and authors should complete astandard publishing agreement, which will be supplied with final proofs. Itis the author’s responsibility to obtain written permission to reproducecopyright material.LanguageAll papers will be published in English and manuscripts must be submittedin that language.Reviewing ProcessEach paper is reviewed by the editor and if it is judged relevant forpublication, it is than sent to referees for double blind peer review. The

Checklist* The paper is original, not submitted anywhere else.* The length of the paper is commensurate with content.* The title and headings are brief and catchy.* The author(s) name and affiliation are given only on cover page.* Abstract and keywords are provided.* Focus on flexibility in management is kept.* The paper incorporates innovative ideas/models in a practical

framework.* Mathematical models, if any, are given in Appendix.* Tables/Figures are properly placed and numbered with brief

titles/captions.* References are in standard style.* Few highlights (8-10) of two-three lines are provided to put in

boxes.* Few key variables (3-5) are identified for flexibility mapping on

a continuum.* Some key questions (2-3) are provided to reflect the applicability

in real life.

papers are reviewed for relevance, focus on flexibility, innovation, practicalconsiderations, quality of evidence, contribution, methodology, readability,and organization. Based on the recommendations of the referees, the editorthen decides whether the paper should be accepted as it is, to be revised orrejected. The reviewing time will normally be 10-12 weeks.Manuscript RequirementsLength: No maximum length for a paper is prescribed, however, authorsshould write concisely.Title: The title should be brief and typed on a separate sheet.Format: The paper should have a cover page giving title, author’s name,complete address, telephone number, fax number, and email of the author.In case of co-authors, these details should also be provided for each co-author. Correspondence will be sent to the first named author unlessotherwise indicated.

The second page should contain the title and an abstract of 100-150words. It should also include upto eightkeywords about the paper. The authorsmay attach the category sheet to definethe relevant categories to which thepaper belongs (available on the website-www.giftsociety.org.). The second pageshould not include the authors name.The paper should begin from the thirdpage.Headings: should be short clearlydefined, and numbered.Footnotes: should be used only whenabsolutely necessary and must beidentified in the text by consecutivenumbers placed as superscript.Text: The main text should be morereadable and mathematical models, ifany, should be provided in Appendix.The ideas proposed should preferablybe supported by real life case examplesfrom business situations.Tables and Figures: All tables and

figures should be kept to a minimum and numbered consecutively usingarabic numerals. Each table should have a brief title written on the top ofthe table, and each figure should have a brief caption written on the bottomof the figure.Photos and Illustrations: must be supplied as good quality black and whiteoriginal with captions. Their position should be shown in the text by typingon a separate line the words “take in Plate n”References: to other publications must be in standard style. That is shownwithin the text as the author’s name followed by a comma and year ofpublication, all in round brackets, e.g. (Volberda, 1997). At the end of thepaper a reference list in alphabetical order must be given as follows:For books: Surname, initials, (year) title, publisher, place of publication.e.g. Mckenzie J. (1996) Paradox: The New Strategic Dimension, McGraw -Hill,Berkshire.For journals: surname, initials, (year) title, journal, volume (number), pages.e.g. Volberda H.W. (1997) Building Flexible Organization for Fast MovingMarkets, Long Range Planning, 30 (2), 169-183.ProofsPage proofs for correction of printer’s errors only will be sent to the authorspecified on the typescript. Proofs should be returned to the printer withinthe specified time period.OffprintsTwenty offprints of each paper will be provided free of charge to theprincipal author. Additional copies may be purchased on an offprint orderform, which will be sent to authors along with proofs.

Complimentary MembershipAll authors, whose papers will be published in giftjourn@l , will be offered one year complementary membership of GIFT.

GIFT Best Paper AwardEvery year one best paper award will be conferred based on evaluation of refrees which will consist of cash award of US$ 500 and

complimentary life membership of GIFT equivalent to US$ 500.

1


A Decision Support System for Flexibility in ManufacturingBoppana V. Chowdary

Department of Mechanical and Manufacturing EngineeringThe University of the West Indies

St. Augustine, Trinidad and Tobago, West [email protected]

Arun KandaDepartment of Mechanical Engineering

Indian Institute of Technology Delhi

AbstractPerformance modeling and evaluation of manufacturing systems help decision makers at higher levels to conduct an economicfeasibility analysis for expansion/diversification of the system. Manufacturing system design, with flexibility and related issues, isa complex phenomenon, which is concerned with the selection from a wide variety of available system configurations andcontrol strategy alternatives in the light of several criteria (flexibility, quality, productivity, costs etc.), many of which are difficultto quantify. For evaluation and selection of manufacturing systems here an attempt has been made through a decision supportsystem by developing and combining models such as integrated manufacturing performance measurement, multi-criteria evaluationand ranking, and a knowledge based expert system approaches. The usefulness of the proposed decision support system forflexibility in manufacturing is demonstrated through a sample session.

Keywords : flexibility, FMDSS, productivity, quality

giftjourn@lGlobal Journal ofFlexible Systems Management2003, Vol. 4, No. 3, pp 1-13

Introduction

Performance modelling and evaluation of flexiblemanufacturing systems (FMS) helps decision makers athigher levels to conduct an economic feasibility analysis forexpansion/diversification of the system. Also, this could helpin installing a new manufacturing system with a substantialreduction in the number of machines, floor space, inventorylevel, throughput and lead time and also high qualityproducts, with a greater flexibility to respond to the marketneeds (Kakati and Dhar, 1991). Flexible manufacturingsystems design is a complex phenomenon, which isconcerned with the selection from a wide variety ofavailable system configurations and control strategyalternatives in the light of several criteria (flexibility,quality, productivity, costs etc.), many of which are difficultto quantify (Borenstein et al., 1999).

Justification and implementation of advancedmanufacturing technology (AMT) involve decisions that arecrucial for the practitioner regarding the survival of businessin the present day uncertain manufacturing world. Sinceadvanced systems require huge capital investments and offerlarge number of intangible benefits such as flexibility,quality, competitiveness, customer satisfaction etc., whichare ill structured in nature and sometimes very difficult toquantify. Basically, the justification and implementation ofAMT is a very difficult question to answer because:

l Profitability and survival of a manufacturing firm dependsupon accommodating fluctuating product demands, day-to-day technological advancements, and competitionfrom and among different firms. Flexibility plays a vital

role for operation in such a scenario. To meet theobjective, various manufacturing flexibilities need to bemeasured to evaluate and select a desired flexiblemanufacturing system.

l Organizations should act to improve performance incritical areas. To help in such decision-making, anintegrated manufacturing performance measurement interms of both well structured costs like productivity andill-structured costs like quality and flexibility is essential.This would help in, planning of business strategy atthe strategic level, decision-making regardingimplementation of AMT projects, and competitivedisposal of individual products at the global market.

l To evaluate different manufacturing alternatives underunpredictable market environments, changes in productdesign, demand, and mix, a system for differentmanufacturing scenarios under conflicting multi-objectives is required.

l Selection of flexible machining centres using aknowledge based expert system will ease the process ofjustification and implementation of advancedmanufacturing systems.

Thus, it can be argued that such justification andimplementation decisions are unstructured and calls fordecision support systems (DSS) approach that assistsmanagement in translating information in to effective actionsfor the organization. Over the many years of research andapplication around the world, the benefits of DSS, haveclearly manifested through huge tangible returns as profitsor cost savings to the organization.

DecisionSupport System

2

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The organization of the paper is as follows. Section 2gives a brief review of justification approaches. Section 3describes developments of the FMDSS. Section 4 presents asample session. In the last section it gives the discussionand conclusion.

A Review of Literature

Manufacturing system evaluation, design and selectionissues, have developed considerably over the past 3 to 4decades. On the modelling side, emphasis has shifted frommodelling conventional manufacturing systems to modellingof automated systems due to uncertainty in product demandand day to day technological developments. The spirit ofthese attempts is to justify the installation of AMT eitherin phased manner or total.

Son and Park (1987) propose a procedure to quantify andcombine three total performance measures into a singleunified measure, i.e., integrated manufacturing measure(IMP) from productivity, quality and flexibility along witha hypothetical case example, which indicated that theadaption of a FMS improved the integral manufacturingperformance, compared to a conventional system. Hutchinsonand Sinha (1989) enumerated a decision theoretic approachto evaluate a manufacturing system to meet the demand bothfor cost and flexibility with an example. The study of Beachet al. (1998) highlights the importance of manufacturingflexibility, which states that“the desire to exploit newprocess technology and theneed to reduce costs andthroughput times, to acceleratenew product introductions, and to insure against marketuncertainties have contributed to the increased importancemanufacturing enterprises attach to manufacturingflexibility”.

As shown in the studies of Son and Park (1987), theevaluation of manufacturing systems through an integratedmanufacturing performance measure is one of the uniquelyidentified procedures. But the coverage of a number offlexibilities is limited. The number of flexibilitiesconsidered for evaluating a flexible manufacturing systemor an automated factory of future may not be adequate. Therole of performance modelling is to aid this decision-makingin an effective way. During the design and planning stages,performance modelling can help in deciding the number andtype of machines, number of material handling devices,number of buffers, number of fixtures, best possible layout,and part type selection (Stecke, 1985). Progress in themanufacturing sector has been triggered by timelyintroduction of new technologies. Hence the selectionproblem of appropriate manufacturing systems becomes amajor design issue at a strategic level for system designers.

The selection of a manufacturing system to suit aparticular production environment from among the largernumber of available configurations has become a difficult

task. Various considerations such as product design, choiceof equipment, flexibility, and economics need to beconsidered before a suitable manufacturing systemconfiguration or machining centre can be selected. In thisaspect, the literature review exercise has been divided intotwo sub groups. (i) selection of user desired manufacturingsystem configuration and (ii) selection of advancedmachining centre or facility and is presented below.

Selection under Multi-Criteria Decision MakingEnvironment

A characteristic of most of the formal techniques that havebeen used for decision-making is the selection of the bestalternative with respect to a certain figure of merit.Tabucanon (1988) proposed a conceptual model of decision-making in industrial systems suitable for social, technical,and economic objectives. He also listed severaltechnological, economic, ethical, political, legal, and socialfactors that affect an organization. Multi-criteria decision-making (MCDM) refers to making decisions in the presenceof multiple, usually conflicting criteria in complex andunstructured situations. MCDM can be defined as theprocess of decision-making in the selection of an act orcourses of action from among alternative acts or courses ofactions such that it will produce optimal results under somecriteria of optimization. In precise terms criteria are

considered to be 'strictly'conflicting if the increase insatisfaction of one results in adecrease in satisfaction of theother. A conflict may arise due

to intrapersonal and interpersonal reasons. The processrequires the decision makers to develop a hierarchicalstructure of the problem, identifying the relative importanceof each of the criteria, specifying a preference for eachdecision alternative with respect to each criterion in the formof a prioritized ranking so as to arrive at overall preferencefor each of the decision alternatives.

Stam and Kuula (1991) developed a visual interactivedecision support framework, to aid the decision maker inselecting the most appropriate technology and design whenplanning an FMS. Their work was divided into two phases.The first phase, namely, prescreening phase, used thequalitative and quantitative criteria and are used to narrowthe set of alternative system configurations underconsideration down to a small number of most attractivecandidates. In the second phase, multi-objectiveprogramming was formulated for each of the remainingconfigurations to explore and evaluate the costs and benefitsof various different scenarios for each configuration. Stamand Kuula (1985) developed equations to various multi-criteria like production, cost and flexibility with in thesystem-dependent machine time constraints under FMSdesign environment. Significant contributors in this MCDMfield include Steuer (1985), Gupta, Evans and Gupta (1991);Stewart (1992); Mollaghasemi and Evans (1994); Kim, Chan

Advanced systems require huge capitalinvestments - gives intangible benefits which aredifficult to quantify.

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A Decision Support System for Flexibility in Manufacturing

DSS provides tangible benefits as profits orcost savings.

and Yoon (1997); Parkan and Wu (1998); Parkan and Wu(1999) and Chang and Yeh (2001). Inclusion of multi criteriain the framework of DSS can be seen in the studies ofKorhonen, Moskowitz, and Wallenius (1992); and Rao andDeshmukh (1997).

Selection of Advanced Machining Centre throughArtificial Intelligence Techniques

In developing countries, the right machine could be verydifferent from the one suited for the developed countries.So decision-making in the area of advanced machining centreselection is affected by the ongoing development of newtechnology, practices and machines having enhancedcapabilities and complex characteristics. Further it isunderstood that the specific problem of advanced machiningcentre selection is a knowledge-intensive and complicatedtask due to the presence of many feasible non-determinedalternatives, and the need to satisfy multiple and possiblyconflicting objectives. Machine selection influences itsoperational capabilities in terms of various part designfeatures, various performance measures set by the customerand then cost. The elicited hierarchy (Wick, 1979, Vermaand Kumar 1989) in selection of a machining centre is asuitable working length, working diameter, achievabletolerance, number of axes, number of tool stations, price,level of available power, speed, and automatic swarfdisposal. Hence, machining centre selection procedure is acomplex and unstructured, hence,special attention is required tomeet the varying customerrequirements in the market.

The selection of machining centre is a typical designproblem. It is frequently unstructured, characterized byextensive domain dependent knowledge, and requiressubstantial expertise, making it an ideal candidate for theapplication of expert systems. Apart from multi-attributedecision-making models discussed earlier, expert system isalso a valid tool for dealing with the problem of selectionof machining centres. A brief review of literature in this areais now presented.

Knowledge Based Expert Systems

Artificial intelligence (AI) gained popularity in the late1960s. Since then it has experienced considerablemomentum. Expert Systems, one application of AI, haveachieved considerable success in recent years. Specialists inindustrial and production engineering are beginning to takeinterest in expert systems as a means of solving problems intheir domain. Several prototype systems are being built inthe areas of manufacturing, facilities layout, maintenanceand fault diagnosis. Malmborg (1989) described amicrocomputer based, expert system for selection ofindustrial trucks. Rambabu and Murthy (1989) has workedon the problem of optimum design of the machine layoutfor an FMS using knowledge based expert systems (KBES)approach, whereas, Shivathaya and Fang (1993) developed

an expert scheduling system for tool room operations (whichcan be used on-or-off-line) through if-then rules. The KBESconcept had been applied to various areas such as materialsselection (Ram et al., 1989), scheduling of FMS (Rambabuand Murthy, 1989) acceptance sampling (Reddy and Murthy,1989), process planning (Ajmal, 1989) design of FMS(Borenstein, 1998, Borenstein et al 1999), design of materialhandling equipment selection system (Chan, 2002), and alsofor other areas related to AMS (Jain and Chandwani, 1989,Rambabu 1997, Rambold 1989). The use of expert systemsfor the selection of a flexible machining centre thus seemsa promising area for research.

It is apparent from the literature that evaluation andselection of manufacturing systems is a problem specific,unstructured and involves large number of multipleattributes. Developing and combining modules such asintegrated manufacturing performance evaluation, multi-criteria evaluation and ranking; and knowledge basedmachining centre selection approaches can deal with it. Inthis context, a decision support system for flexibility inmanufacturing (FMDSS) for evaluation and selection ofmanufacturing system is developed and demonstrated here.A brief description of the heuristics used in the model basesuch as the models for evaluation of integratedmanufacturing performance, multi-criteria evaluation ofmanufacturing configurations, and knowledge based expert

system for the selection of aflexible machining centre isgiven in Table 1. The proposedFMDSS and its capabilities

through a sample session are provided in the followingsections.

Development of the Decision Support System forFlexibility in Manufacturing (FMDSS)

Decision support system is an aid that assists managementin translating information in to effective actions for theorganization. It may be said that the deployment of a DSSrepresents the engineering of managerial decision-makingprocess to meet the challenges posed by demandingconstraints and objectives in a complex environment. Overthe many years of research and application around the world,the benefits of DSS, have clearly manifested through hugetangible returns as profits or cost savings to the organization.

A decision support system for handling of flexibility andrelated issues in manufacturing should possess thecharacteristics like simple to use, with an ability to evaluatethe system in terms of both quantitative and qualitative keyperformance measures, such as flexibility, productivity, andquality. It should also have the ability to integrate variousperformance and operational aspects in a modular fashionso that evaluation and selection of manufacturing systemsbecomes easy. Also, the DSS should have the ability toaccount for individual preferences, and permit the use ofsystem by any user. Some of the developments in the areaof DSS are now explained.

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Son (1991) developed an integrated decision supportframework for economic justification of factory automationproject and demonstrated it through a real application. Raoand Deshmukh (1997) developed a decision support system(DSS) for selection and justification of advancedmanufacturing technologies. Also, this study says thatselection and justification of AMT are unstructured andshould consider other issues such as economic, analyticaland risk factors in a decision support environment. Asummary of literature in the area of DSS applied tomanufacturing is presented in Table 2. The listed literature(in Table 2) shows that decision support systems have beenapplied for different applications such as productionplanning, production control, production management,project analysis and for justification of advancedtechnologies. These studies lead to develop a new DSS

Table 1: Description of Heuristics used inModel Base of FMDSS

Heuristic Used Description

1. For Evaluation of System Performance

i) Total productivity (TP) Total productivity measure ismeasure computed primarily from various

partial measures of productivitysuch as labour, capital, equipment,material, and overhead

ii) Total quality (TQ) Computed from product failure,measure process failure, and appraisal costs

of quality

iii) Total flexibility (TF) Computed based on various partialmeasure flexibilities such as product, process,

demand, and equipment.

iv) Integrated manufacturing Integrated measure of TP, TQ, andperformance measures TF for existing and proposed(IMP, RIMP) approaches

2. Multi-criteria Evaluation and Ranking

i) Simple additive weighting To compute weighted alternativesmethod (SAW) for ranking of manufacturing

system configurations using simpleadditive weighting method

ii) Hierarchical weighting To compute composite vector ofmethod (HAW) manufacturing system configura-

tions for ranking using hierarchicaladditive weighting method

iii) Elimination et Choice Pair-wise comparison of alterna-Translating Reality tives based on the degree to whichMethod (ELECTRE) evaluation of alternatives and

preference weights confirm orcontradict the pair-wise dominancerelationships among the alternatives

iv) Technique For Order Ranking of manufacturing systemPreference By Similarity alternatives based on the concept ofTo Ideal Solution Method shortest distance from the ideal(TOPSIS) solution and the farthest from the

negative ideal solution

3. Knowledge based for selection of a machining centreexpert system (KBFMS) Intelligent selection of a

machining centre based on userspecified features like shape, size,investment, and control system.Through data base, knowledgebase, and inference engine (adaptedfrom Chowdary, 1997).

Legend:IMP - Integrated manufacturing performanceRIMP - Revised integrated manufacturing performance

Author(s), Year DSS Application

Janos and Temesi (1988) Production control undermultiple criteriadecision-making

Wu and Tabucanon (1988) Production management

Qingwen and Yingchu (1988) Multi-objective projectanalysis

Chidambaram and Rambabu (1989) Production planning

Ravichandran and Design of FMSChakravarty (1989)

Son (1991) Factory automation

Stam and Kuula (1991) Design of FMS

Ashfaq (1991) Selection of processparameters in milling

Aly and Subramaniam (1993) Design of FMS

Rao and Deshmukh (1997) Selection andjustification ofautomation technologies

Ozdamar, Bozyel, and Birbil (1998) Production planning

Table 2 : Literature on DSS Applicationto Manufacturing Problems

Justification and implementation advanced manufacturingtechnologies involve decisions that are crucial forthe practitioner regarding the survival of business inthe present market environment. Since advancedsystems require huge capital investments and offer largenumber of intangible benefits such as flexibility, quality,productivity, customer satisfaction etc., which areill structured in nature and hence complex to quantify.But traditional justification approaches are insufficientto justify advanced technologies (Rao and Deshmukh,1997).

framework for evaluation and selection of manufacturingsystems in this paper.

From the literature it is clear that design and selectionof manufacturing systems is a complex process involving alarge number of key system performance measures becauseof which the evaluation of a manufacturing system problemis tend to unstructured. By combining economic andsubjective attributes, a decision maker will have greateropportunity to evaluate and rank the flexible manufacturingsystem under a multi-criteria environment. In addition to thisa knowledge based expert system will further strengthen thedecision process in selection of a flexible machining centrefor design of flexible manufacturing systems. Byincorporating all these features a decision support systemfor flexibility in manufacturing (FMDSS) is proposed in thispaper.


5


Architecture of the Proposed System

The development of the FMDSS has been taken up in amodular manner. The major components of the proposedsystem are: data base, knowledge base, and model base.The architecture of the proposed FMDSS is presented inFigure 1 and each module dealt in detailed in the followingsections.

IFpremise(s)

THENconclusion(s)

For example a rule for selection of a machining centrebased on job shape is:

IF(The Job Shape is Plate Type) AND(The Operations to be Performed are ofBoring Operations)

THEN(Select Vertical Type Machining Centre)

Model Base

The model base contains the models, namely, heuristics formeasurement of partial and total measures of productivity,quality, flexibility, and integrated performance measure. Italso comprises of various multi-criteria evaluation modelsfor selection of manufacturing configurations apart from aknowledge based expert system for selection of a flexiblemachining centre.

The flexibility measure of each type is computed toarrive at the resultant total flexibility measure. Eachflexibility type under each level is connected with the

performance measures namely totalproductivity and total quality tocontribute towards the total systemperformance measure. The total

productivity (TP), total quality (TQ), and total flexibility(TF) measures are used to derive the RIMP measure. Thepartial flexibility measures are computed in terms of costfactors. The procedure for arriving at RIMP is presented inAppendix A.

Based on the structure of the problem and theinformation available, we consider four well known andcommonly used multi-attribute value theory-based MADMmethods (Hwang and Yoon, 1981) suitable for obtaining anoverall cardinal ranking of manufacturing configurations.These methods are (a) the simple additive weighting (SAW)method, (b) the hierarchical weighting (HAW) method, (c)the elimination et choice translating reality (ELECTRE)method and (d) the technique for order preference bysimilarity to ideal solution (TOPSIS) method. The basic logicof SAW is to obtain a weighted sum of the performanceratings of each alternative over all attributes. In HAW,composite vector for ranking of manufacturingconfigurations is computed based on hierarchical additiveweighting method. ELECTRE logic uses the degree towhich evaluation of alternatives and preference weightsconfirm or contradict the pair-wise dominance relationships.TOPSIS is based on the concept that the most preferredalternative should not only have the shortest distance fromthe positive ideal solution, but also have the longestdistance from the negative ideal solution. For more details

Role of performance modeling is tomake decision-making effective.

Figure 1 : Proposed Decision Support System for Flexibilityin Manufacturing (FMDSS)

Data Base

The data base will contain the data items such as flexibility,quality, productivity, decision matrix for selected attributes,weights vector (to reflect the customer's preferences), andknowledge base. Data regarding a machining centre featuresneeds to be referenced in the operation of the expert system.This sub module is created usinglinked list structure with the detailsof machining centre type, job size,weight, and price. A user interfaceprobes the data base files whenever required during theconsultation session.

Knowledge Base

The technical knowledge about the manufacturing systemand the logic used by successful practitioners in selectingthe appropriate machining centre must be captured into thesystem. This becomes a knowledge base. The knowledge,which a system designer uses in selecting a flexiblemachining centre, is vast and complex. Knowledge aboutthe selection of a flexible machining centre can be obtainedfrom literature (Wick, 1979, Verma and Kumar 1989), byinterviewing experts in that specific domain, and byobserving the experts at work.

In the present study, the knowledge representation hasbeen carried out through a combination of declarativeknowledge, which includes the machine tool facts andprocedural knowledge, which consists of the rules formachining centre selection. The rules are expressed in thestandard if -then format and are used to represent relationshipbetween facts and the kind of inference used in forwardchaining. The rule based expert system is selected in thepresent machining centre selection system because of itsmerits like built in hierarchy, dynamic representation andease of implementation. A generic rule may, therefore, bestated as


6

giftjourn@l

DSS assists management in translatinginformation into effective actions.

on these methods, the reader has been referred Hwang andYoon (1981).

Inference Engine : The dialogue base facilitates the userinterface to traverse through the decision-makingenvironment. The capability to apply the machine toolknowledge and planning logic contained in the knowledgebase is the problem solving procedure known as inferenceengine (IE). The IE manages the sequence of reasoning,interpreting the machining centre facts and selection rulesand determining the sequence of rules activation. In thepresent expert system model, the inference process is carriedthrough a forward chaining rule. The format of forwardchaining rule used in the process is

IF Premise(s) THEN

Conclusion

The KBFMS contains threeprincipal inference modules (i)classification of machiningcentres, (ii) an exact/close machining centre selectionmodule, and (iii) advising module. Based on the dependentrules created in the knowledge base, the first module willclassify the machining centres by extracting the centre nodeinformation from the data base i.e. it will group all themachining centres which fall or satisfy all the dependentrules. This forms the basis for selecting a close machiningcentre through the next module. The exact/close machiningcentre selection module will try to match the centresinformation that is grouped in the above module with theinformation taken from the user. If there is exact matchingit will suggest the corresponding best centre. If exactmatching fails then this module will suggest a closemachining centre as per the requirements of the user withinpermissible limits, which can be specified for each nodewhile building the data base. An advising module providesthe message by interacting with the user and the system. Themessage is in the form of suggested exact/close machiningcentre along with machine features if there is matching ofuser information with the classified centres either exactly orclosely. Otherwise it will direct the user to try again foranother centre.

The knowledge based expert system has an interface withthe user where the expert system seeks certain informationabout the problem. Based on the information the expertsystem tries to match the information available in theknowledge base and fact base. The analysis will be carriedout depending on the closeness of the match.

This module in FMDSS gathers all the user specifiedinformation both in qualitative and quantitative form. Thisinformation is provided as new facts to the system and helpsthe inference engine in computing system performance,multi-criteria evaluation and ranking of manufacturing

configurations, and selecting a close machining centre. Thesalient features of data base and model base of the proposedFMDSS are depicted in Table 3. FMDSS requires thefollowing information at the data base level:

l details of productivity cost elements (CL, CR, COH, CC )

l details of quality cost elements (OT, CP, CF, CA )

l details of flexibility elements (CL, CiR, COH, CC, CP, CF,CA, CIC, COB, CCF, CTP, CW, CS, CR, CID, CMH, CCF, CIPC,CPR, CIN)

l details of alternative system configurations and attributes(decision matrix and weights vector)

l preferences/weightage vector to reflect the attitude of theuser

l facts and rules relating with flexible machining centre(data base, knowledge base)

The underlying logic of the modular FMDSS and thefunctional details of variousmodels are presented inFigure 2. All the models (referTable 1) used in developing the

FMDSS are integrated using interactive menus. The mainmenu of FMDSS is as given in Appendix B1.

Figure 2 : Decision Support System for Flexibilityin Manufacturing (FMDSS)

The sub-levels (such as total productivity, total quality,total flexibility, and integrated performance evaluation) ofmodule 1 are as shown in Appendix B2. All these levelstake inputs from the existing manufacturing system such asoutput of the system, cost elements relating with various


7


system performance measures like productivity, quality andflexibility. This module computes various total performancemeasures such as total productivity (TP), total quality (TQ)and total flexibility (TF) and revised integratedmanufacturing performance measure (RIMP).

Module 2 evaluates the identified alternative configura-tions under multi-criteria environment. This module hasfour sub modules (SAW, HAW, ELECTRE and TOPSIS) asshown in Appendix B3. Each sub-module will evaluate andrank the alternative configurations as per the user'spreference.

The selection process of a machining centre is a complexproblem as it is influenced by many parameters such as jobshape, design features, accuracy required, tool requirements,cost etc. In this study, the machining centre selectionproblem is based on the criteria such as (i) flexibility, (ii)quality, (iii) productivity, and (iv) cost. The rationale inselecting these criteria is based on the opinions ofresearchers, and informationfrom machine tool brochures, andtechnical reports. Theconstituent elements of theknowledge base and the selected criteria for selection of aflexible machining centre are presented in Table 3.

Flexibility Criterion: Under the flexibility criterion,machine, control and program flexibilities are considered asoptions, which are created in the knowledge base. Eachflexibility option follows with rules/facts, which influencethe selection process. For example, machine flexibilitydepends upon the capability of handling of various jobshapes and number or nature of operations it can perform.An example rule in this regard is

IF (Job Shape is Multi Sided) AND(Operations to be performed are of ALL type) AND(Type of Control System required is CNC)

THEN (Select Centre = Horizontal Type)

The remaining flexibility options and the associated rulesidentified are presented in Table 3.

Quality Criterion: The quality level of a product has beendivided into three categories: very high, high, and average.Classification of the quality as 'very high' depends upon thecharacteristics such as minimum accuracy that can beachieved from the machine, and flexibility to modify thecontrol functions (if it is a CNC Machine). These two rules,which are important in the selection of advanced machiningcentre based on the quality criterion, can be explainedfurther with respect to their dependent rules (alternatives)presented in Table 4. For example,

011 OT, CL, CR, COH, CC P1, P2, P3, P4; TP

0121 OT, CP, CF QP, QF; TQ

0122 OT, CP, CF, CA QP, QF, QA; TQ

0131 OT, CI, CSU, CW, CI FE, FP, FS, FD; TF

0132 OT, CIC, COB, CI, CCU, FD, FM, FV, FC, FP, FEX,

CSU, CA, CW, CS, CR, FS, FM, FR, FE, FMU,

CID, CMH, CCF, CIPC, FPR, FID, FC, FPD; TFCPR, CIN

0141 OT, CL, CR, COH, CC, TP, TQ, TF, RIMP

CP, CF, CI, CSU, CW,CINV

0142 OT, CL, CR, COH, CC, TP, TQ, TF, RIMPCP, CF, CA, CIC, COB,

CCF, CTP

021 * Decision Matrix * Comparable Numerical(for Matrixselected * Weights Vector * Weighted Alternativesattributes)

022 * Decision Matrix * Consistency Matrix(for * Weights Vector * Composite Vectorselectedattributes)

03 Machining Centres Inference EngineInformation* Data Base* Knowledge Base

Table 3 : Data Base and Model BaseDetails of FMDSS

Data Base Model Base

LegendOT = System Output

CL = Labour Cost

CR = Raw Material Cost

CP = Prevention Cost

CA = Appraisal Cost

COB = Cost of Obsolete Products

CCU = Cost of Additional Tooling for Capacity Utilization

CA = Additional Cost of Infrastructure for Expansion

CW = Parts Waiting Cost

CS = Cost of Additional Setup

CIE = Idle Cost of Equipment

CPR = Cost Incurred Due to Frequent Changes in Production Programs

CTPC = Total Production Cost

CIN = Investment Cost for Information Processing

CR = Additional Cost Incurred due to Rerouting

CNH = Additional Material Handling Cost

CCF = Cost of Controlling

CC = The Service Cost ofusing Invested Capital

COH = Overhead Cost

CF = Failure Cost

CSU = Cost of Setup

CIC = Investory Costs of Finished Products and Raw Material

CI = Infrastructure Cost Incurred to Produce Break-even Volume

TP = Total Productivity

TQ = Total Quality

TF = Total Flexibility

RIMP = Revised Integrated Manufacturing Performance

DSS should be simple to use, able to evaluate thesystem both qualitatively and quantitatively.


8

giftjourn@l

IF (Control System Type = Advanced) AND(Tool Monitoring System required is ofExpert System) AND(Positional Accuracy = 0.0015)

THEN (Select Centre = CNC Type Centre)

Productivity Criterion: Each machining centre possesses itssignificance depending on the functional features. Amachining centre could havedifferent benefits such as reductionin set-up for job and tool, andreduction in material handlingefforts. This criterion should be able to discriminate betweenalternative machining centres based on the presence of suchfeatures. This criterion incorporates these rules and likewiseone can develop several dependent rules. For example, arule under this criterion is

IF (Setting Effort = Automatic Pallet Changer) AND(Tool Changing Time = 6 seconds) AND(Number of Tools = 48)

THEN (Select Centre = Centre having two Pallets)

The sub-menus of this module are depicted in AppendixB4. The structure used for creation of the knowledge baseis very flexible so that the user can add more criteria to it.The robustness of the proposed knowledge base structure istested through a 'cost' based criterion and is demonstratedin the sample session.

Salient Features of the FMDSS

The user is provided with wide scope to evaluate themanufacturing system performance, multi-criteria ranking of

Table 4 : Summary of Selected Criteria and their Details

Criterion Options Rules DependentRules

Action Value Match TypeParameter* Node*

Flexibility Machine Shape Plate Type Vertical Machiningor or centre typeMulti-sided Horizontal Machining

Centre

Operation Tool effort ATC Possible Fexpan Toolmaz

Program Control System CNC Advanced Control ControlSystem Type System Type

Quality Very High(0.0008-0.001) Control System CNC Advanced Control Control

System Type System Type

High(0.00030- 0.00079) Control System CNC Advanced Control Control


Average(0.0001-0.00029) Control System CNC Advanced Control Control


Productivity High(151-200%) Tool Effort ATC Possible Future expansion Tool Magazine

Medium(101-150%) Tool Effort ATC Possible Future expansion Tool Magazine

Average Tool Effort ATC Possible Future expansion Tool Magazine(90-100%)

Note: The numerals with in the parenthesis represent the option value fixed in the sample session* Notation followed while developing the FMDSS

manufacturing configurations and selection of a flexiblemachining centre. The salient features of the proposedFMDSS include:

l The developed FMDSS is easy to understand since mostof the input is in the form of monetary values.

l Greater emphasis on manufacturing flexibility

l Evaluation of system in terms ofboth well structured and ill-structured costs such as flexibility,productivity and quality

l Evaluation and ranking ofmanufacturing configurations under multi-criteriaenvironment

l Intelligent selection of flexible machining centre throughuser defined criteria such as flexibility, productivity andquality.

A Sample Session with FMDSS

Usefulness of the present FMDSS is demonstrated througha case situation. The case situation is taken from Chowdary(2001) as illustrated in Table 5. Input cost elements are theimportant data items (as explained in module 1) incomputing the integrated manufacturing performance.Identification of alternative configurations and formation ofdecision matrix (D) is an important task in evaluating andranking of manufacturing systems under multi-criteriaenvironment. Finally, building of data base (facts) relatingwith the latest machining centres and creation of productionrules in consultation with the experts are the twoindependent and crucial inputs under flexible machining

DSS should have ability to accountindividual preferences.


9


centre selection module. The procedure explained inChowdary (1997) is followed for preparation of data baseand knowledge base. A sample test run for the proposedFMDSS under selected case situation is presented inAppendix C.

Usefulness of the FMDSS

Decision support system for flexibility in manufacturing(FMDSS) may serve the needs of modern industry in termsof providing guidelines for evaluation and selectionof manufacturing systems. Therobustness of the individual modulesis tested through different casestudies and results are available withthe corresponding author. The results show that theperformance evaluation module can be used as a decisiontool to assess the performance of variety of manufacturingsituations. First, the impact of addition of a new facility ona manufacturing system was investigated. Secondly, currentand past performance of a manufacturing system wascompared. Finally, evaluation of system performance hadcarried out when there are fluctuations in the product design.

The second module aims at evaluation of amanufacturing system under multi-criteria environment,which supports the user in selection of a desiredmanufacturing alternative in terms of various costs andbenefits. This module also has been tested for quantificationof costs of quality, productivity and flexibility throughdifferent real manufacturing situations, where conventionalfacilities are in use and the managements are looking forwardfor conversion of existing systems into flexible systems.Some of the highlights of the results that are obtained fromthe module-2 of FMDSS are:

l Various production costs and operational benefits dueto relocation of an existing facility

l Multi-criteria ranking of manufacturing alternatives withoptions for routing and machine flexibilities

The third and final module deals the selection of amachining centre through a knowledge based expert system.Building of data base (facts) relating with the machiningcentres and creation of production rules in consultationwith the experts are the two independent and crucialinputs under the flexible machining centre selection module.

The utility of this module is demonstrated by assistingthe practitioner for introduction of flexible advancedmachines. This has been tested through a set of keyperformance criteria such as productivity, quality, flexibility,and cost.

Discussion and Conclusions

Decision support systems assist management in translatinginformation in to effective actions for the organization. Inany manufacturing system design and selection process,quantitative as well as qualitative factors should be takeninto account since it is a complex process and whichinvolves a number of system performance measures such asflexibility, productivity, quality, system utilization,implementation risk, and WIP inventory. For evaluation andselection of manufacturing systems here an attempt has beenmade through a decision support system by developing andcombining models such as integrated manufacturingperformance, multi-criteria evaluation and ranking, and aknowledge based expert system approaches.

The major components of the decision support systemfor flexibility in manufacturing (FMDSS) are data, model,

and dialogue bases. The data basecontains items such as flexibility,productivity, quality, decision matrixfor selected attributes, and weights

vector. The model base contains models such as integratedmanufacturing performance measurement, multi-criteriaevaluation and ranking heuristics, and an inference enginerelating to selection of flexible machining centres. Thedialogue base facilitates the user when traversing throughthe decision-making environment. The usefulness of theproposed FMDSS is demonstrated through a sample session.The developed FMDSS is expected

l to judge whether the system is capable to accommodateany changes in product design or not (Module-1 i.e.Compute System Performance).

l to evaluate a manufacturing system under a multi-criteriadecision-making environment for ranking of variousmanufacturing configurations (Module-2 i.e. Multi-criteria Evaluation and Ranking).

l to assist the practitioner for introduction of automationin a phased manner, by replacing the conventionalsystem with advanced machining centres and to help indesign a full-fledged flexible manufacturing system withgrowing adoption of AMT in developing countries(Module-3 i.e. Machining Centre Selection).

The type of exercise carried through the FMDSS here issought before investing huge amounts on automationprojects. The present study is also useful to organizationsworking with conventional systems and consideringconversion to FMC, FMS, or CIM. Some of the additionalfeatures of the developed FMDSS include:

i) It is user-friendly software and can embed theknowledge obtained from the experts.

Traditional approaches are insufficientto justify advanced technologies.


Company Precision machine tool manufacturing

Products CNC lathe and machining centres

Distribution network Global as well as local markets

Existing machinery type Combination of NC, CNC andconventional

System's capability Cable of producing 6 and 3 modelsof first and second product typesrespectively

Company goals Maintain competitive edge byintroducing new products

Table 5 : Case Situation (Chowdary, 2001)

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giftjourn@l

ii) It can handle qualitative as well as quantitative data.

iii) It has minimal user interaction.

Limitations

Some of the limitations presented here, if rectified by futureresearchers, will further provide guidelines for introductionof flexible manufacturing systems for improvement inproduction operations, where still conventionalmanufacturing practices are in existence. Some of thelimitations associated with the proposed FMDSS are:

i. The case studies selected for testing the robustness ofthe FMDSS are combination of traditional and semi-automated, because of which only a selective numberof flexibilities are computed.

ii. While creating the data base under the machining centreselection module the following assumptions are madedue to the non-availability of the data:

l Accuracy parameter of a machining centre is taken asthe deciding factor for selection of a machining centreunder quality criterion

l Number of pallets available within a machining centreis chosen as the selection criteria of a machining centreunder productivity criterion.

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The various partial measures of flexibilities can be given bya) Demand flexibility (F

D) = O

T / C

IC

b) Market flexibility (FM) = O

T / C

OB

c) Volume flexibility (FV) = O

T / C

I

d) Capacity flexibility (FC) = O

T / C

CU

e) Product flexibility (FP) = O

T / C

SU

f) Expansion flexibility (FEX

) = OT / C

Ag) Process flexibility (F

S) = O

T / C

W

h) Machine flexibility (FM) = O

T / C

S

i) Routing flexibility (FR) = O

T / C

R

j) Equipment flexibility (FE) = O

T / C

IE

k) Material handling flexibility (F

MH) = O

T / C

MH

l) Program flexibility (FPR

) = OT / C

PR

m) Information and Data handlingflexibility (F

ID) = O

T / C

IN

n) Control flexibility (FC) = O

T / C

CCF

o) Production flexibility (FPD

) = OT / C

TPC

The TF during a given period is given byTF = O

T / (C

IC + C

OB +...+C

TPC) … (3)

4. Revised integrated manufacturing performance measure

The revised integrated manufacturing performance (RIMP)measure in terms of TP, TQ and TF is given by

1 1 1 1

RIMP TP TQ TFor

RIMP = (TP*TQ*TF) / (TP*TQ) + (TQ*TF) + (TF*TP) …(5)

Appendix B1

Main Menu of FMDSS

1. Compute System Performance

2. Multi-Criteria Evaluation and Ranking

3. Machinning Centre Selection

4. Exit

Enter Your Selection:

Appendix B2

Sub Menu for System Performance of FMDSS

1. Compute Total Productivity (TP)

2. Compute Total Quality (TQ)

3. Compute Total flexibility (TF)

4. Perform 1, 2 and 3

5. Integrated Performance Measure

Enter Your Choice :

31. Existing

32. Proposed

51. Existing

52. Proposed

Appendix B3

Sub Menu for Multi-Criteria Evaluation and Ranking

1. SAW 2. HAW

3. ELECTRE 4. TOPSIS

Enter Your Choice :

Appendix B4

Sub-Menu for Machining Centre Selection of FMDSS

1. Data Base 2. Knowledge Base

3. User Interface 4. Quit

Enter Your Choice :


Appendix A

Development of the Revised IntegratedManufacturing Performance Measure

1. Total productivity (TP) measure

Total productivity (Son and Park, 1987) for a given period is theintegrated measure of partial measures like labour productivity,capital productivity, material productivity and overhead productivity.

LetO

T = System output (usually expressed in physical volume, such

as pieces, tons and other measurable units).C

L = Labour cost

CC = The service cost of using invested capital

CR = Raw material cost

COH

= Overhead cost

Now TP is given byTP = O

T / (C

L + C

C + C

R + C

OH) … (1)

2. Total quality (TQ) measure

Total quality measure (Son and Park, 1987) for a given period isthe integrated measure of partial measures like prevention andfailure costs. But based on the literature and the opinion of theexperts in the field it is decided to include the appraisal quality inthe definition of the total quality measure (TQ).LetC

P = Prevention cost

CF = Failure cost

CA = Appraisal cost

Now TQ is given byTQ = O

T / (C

P + C

F + C

A) … (2)

3. Total flexibility (TF) measure

In addition to the partial flexibilities such as demand, volume,equipment, and process defined earlier (Son and Park, 1987), somemore partial measures of flexibilities in terms of monetary valuesare considered in this research. These measures are presented asbelow:

LetC

IC = Inventory costs of finished products and raw materials

COB

= Cost of obsolete productsC

I = Infra-structural cost incurred to produce break-even volume

CCU

= Cost of additional tooling for capacity utilisationC

SU = Cost of setup

CA = Additional cost of infrastructure for expansion

CW

= Parts waiting costC

S = Cost of additional setup

CR = Additional cost incurred due to rerouting

CIE

= Idle cost of equipmentC

MH = Additional material handling cost

CPR

= Cost incurred due to frequent changes in production programsC

IN = Investment cost for information processing

CCF

= Cost of controllingC

TPC = Total production cost

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giftjourn@l

Appendix C

Sample Test Run for Demonstration ofFMDSS Decision Support System for

Flexibility in Manufacturing

Main Menu of FMDSS1. Compute System Performance2. Multi-Criteria Evaluation and Ranking3. Machining Centre Selection4. Exit

Enter Your Choice: 1

Sub-menu for system performance1. Compute Total Productivity2. Compute Total Quality3. Compute Total Flexibility4. Perform 1, 2, and 35. Integrated Performance Measure


1. Use Existing (IMP) Measure2. Use Proposed (RIMP) Measure


Input from the User

System output(millions of Rs.) =? 570.74Labour cost(millions of Rs.) =? 323.36Overhead Cost(millions of Rs.)=? 50.82Capital Cost(millions of Rs.) =? 57.07Equipment Cost(millions of Rs.) =? --Raw Material Cost((millions of Rs.) =? 49.22Cost of Prevention(millions of Rs.) =? 47.52Cost of Failure(millions of Rs.) =? --Cost of Appraisal(millions of Rs.) =? --Idle Cost of Equipment(millions of Rs.) =? 80.72Setup Cost(millions of Rs.) =? 33.26Part Waiting Cost(millions of Rs.) =? 27.72Work-in-process inventory(millions of Rs.) =? 370.98

FMDSS OutputTotal Productivity(TP)= 1.18Total Quality(TQ)= 12.01Total Flexibility(TF)= 1.11Revised Integrated Manufacturing Performance (RIMP)Measure = 0.548Are You Satisfied with the Output (Yes/No): noYou want to design a new manufacturing system (Yes/No): yes



Sub-menu for system performance1. HAW2. SAW3. ELECTRE4. TOPSIS


Input from User

How many Criteria ? 9Number of Manufacturing Alternatives to Evaluate? 3Preference/Weights Vector: (give in row wise,also ensure that sum = 1.0)0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.05 0.05Type of Criteria ?1. Benefit type2. Cost typeEnter Your Choice: 1Criteria #1: Elemental values in Criteria #1: 8.93 7.80 7.78Type of Criteria ?1. Benefit type2. Cost type

Enter Your Choice: 2Criteria #2: Elements in Criteria #2: 0.0330 0.0296 0.0299Type of Criteria ?1. Benefit type2. Cost type



Enter Your Choice: 2Criteria #5: Elements in Criteria #5: 1253.00 1222.97 0997.90Type of Criteria?1. Benefit type2. Cost type

Enter Your Choice: 1Criteria #6: Elements in Criteria #6: 1.23 1.27 1.38

Type of Criteria?1. Benefit type2. Cost type

Enter Your Choice: 1Criteria #7: Elements in Criteria #7: 1.72 3.99 3.99Type of Criteria?1. Benefit type2. Cost type

Enter Your Choice: 2Criteria #8: Elements in Criteria #8: 1 7 7Type of Criteria?1. Benefit type2. Cost type

Enter Your Choice: 2Criteria #9: Elements in Criteria #9: 1 7 7

FMDSS OutputManufacturing Alternatives Ranking

Alternative# RankI 2II 3III 1

Are You Satisfied with the Output (Yes/No): yesYou want to select flexible/advanced machining centre(Yes/No): yes



Sub-menu for Machining Centre Selection1. Data Base2. Knowledge Base3. User Interface4. Quit

Enter Your Choice:

Q: Which criteria would you like to base upon?1. Flexibility2. Quality3. Productivity4. Cost


Type of Investment1. Large Scale Investment: (0.45 -0.500)2. Medium Scale Investment: (0.30 -0.449)3. Small Scale Investment: (0.01 -0.229)



13


Input from User

Criteria: CostEnter '-' If you do not know the precise valueCentre type (ct) value: --Job shape (shape) value: plateOperational capability (opc) value: boring group of

operationsFuture expansion for MH (expansion) value: --Accuracy required (acc) value: 0.0011Control system required (cs) value: Numerical ControlType of control system value: --Number of pallets required value: --You want automatic tool changer value: --Tool magazine

no. of tools value: --future expansion value: not required

Tool capacitymaximum diameter of tool value: --maximum length of tool value: --maximum tool weight value: --tool change time value: 9

Work sizelength value: 15width value: 20height value: 15weight value: --

Travel rangex-direction value: --

y-direction value: --z-direction value: --

Spindlespeed range (rpm) value: 2000drive motor (hp) value: --

FMDSS OutputDetails of the Centre Selection are:Machining centre close to Requirements: Centre (V2)Complete Features of the selected Centre:Centre type (ct) : VerticalSuitable to : Plate Type JobsCapable to perform : Boring operationsFuture expansion for MH (expansion) : not possibleMinimum budget required :0.0594 million US dollarsAccuracy possible : 0.001 inchControl System attached : Numerical Control TypeType of Control system : Non advancedNumber of pallets attached : nilAutomatic tool changer setup : Not availableTool magazine

number of tools attached : 40future expansion for tools : Not possible

Tool Capacitymaximum diameter of tool : 4.0maximum length of tool : 12maximum tool weight : 12tool change time : 10 seconds

Work sizelength : 12width : 24height : 18weight : 300

Travel rangex-direction : 24y-direction : 12z-direction : 5

Spindlepossible speed range : (60-2000) rpmmotor power : 2 hp


Flexibility Mapping : Practitioner's Perspective

1. What types of flexibilities you see in "DSS for flexibility in manufacturing" on the following points:

l Flexibility in terms of “options”

l Flexibility in terms of “change mechanisms”

l Flexibility in terms of “freedom of choice” to participating actors.2. Identify and describe the DSS for flexibilities in manufacturing that are relevant for your own organizational

context?

3. Try to map your own organization on following continua(Please tick mark in the appropriate box(es))

DSS

User Friendly Non-User Friendly

Performance Measure Flexibility

Evaluation Quantitatively Evaluation QualitativelyOutside

Performance Measure ProductivityEvaluation Quantitatively Evaluation Qualitatively

4. Develop a SAP-LAP (Situation Actor Process-Learning Action Performance) model of "DSS for flexibility inmanufacturing" relevant to your organization.

Reflecting Applicability in Real Life

1. Is your organization using any decision support system for flexibility in manufacturing? How would yourorganization will benefit using the proposed system?

14

giftjourn@l

In the uncertain and turbulent business environment, assessment and management of risk is key for the better businessperformance and effectiveness of any enterprise. Many researchers over time have stressed the importance of incorporatingflexibility in the formulation of business strategy as it may help to achieve better business success. Therefore, 'flexibility'assumes significance for enterprises dealing with uncertainty. In fact, both flexibility and risk are inter-linked with eachother. In general, flexibility in the systems helps in managing the risk; for example, financial flexibility of options canbe used as a hedging mechanism. However, it should be recognized that flexibility can also enhance the risk. For instance,flexibility in manufacturing and supply chain to cope with changing customer requirements may add unused capacityand thereby affect profitability and operating risk.

The purpose of this special issue is to group together high-quality research papers that lie at intersection of theissues of flexibility and risk management. Both the terms flexibility and risk are adapted in most generic sense andincludes both the service and manufacturing enterprises. The flexibility in the context of an enterprise means moreoptions, change mechanisms and freedom of choice. Some examples of the subject matter of the papers suitable for thespecial issue, inter-alia, are:

l Measurement/Implications of Business Risk, Financial Risk and Flexibility.

l Financial flexibility and Risk Management.

l Sensitivity Analysis and Risk Management.

l Financial Derivatives as Tool of Risk Management.

l Risk Management in Flexible Enterprises.

l Flexibility in Production System and its Impact On Operating Risk.

l Risk Assessment in Flexible Supply Chain System.

All manuscripts should follow the standard guidelines and will be reviewed as per the standard practice of the“International Journal of Risk Assessment & Management”.

Please submit a soft copy by e-mail to any of the two Guest Editors on the following addresses, latest byJune 30, 2004.

Guest Editors

Prof. P. K. JainDepartment of Management StudiesIndian Institute of Technology DelhiHauz Khas, New Delhi 110 016Phone: 91-11-26591199Fax: 91-11-26862620E-mail: [email protected]

Prof. SushilDepartment of Management StudiesIndian Institute of Technology DelhiHauz Khas, New Delhi 110 016Phone: 91-11-26591167Fax: 91-11-26862620E-mail: [email protected]

Call for Papers Special Issue of “International Journal of Risk Assessment & Management”

on “Flexibility and Risk Management”

15


Polarization of Perceptions of IT-enabled Privacy Violationsat Workplace: Impact of Respondent Position,

Peer Belief and Peer PressureNivedita Debnath

Research Scholar

Kanika T. BhalAssociate Professor

Department of Management Studies,Indian Institute of Technology Delhi

AbstractWhereas Information Technology (IT) has given us freedom to do things in more easy and flexible ways on one hand, on theother, it also given us some ethical issues to look into. One such issue is that of privacy. People’s perceptions on the issues ofprivacy and IT vary and it is important to assess how they vary. Perceived ethicality is not a normative fact, the perceptionvaries from situation to situation and individual to individual. It is a function of how the individual constructs the socialsituation. There are many factors that influence how the individual constructs and perceives a situation. This paper empiricallyassesses the role of three such factors, respondent position (as a target or an actor), peer beliefs / perception of the situation,and the tendency of an individual to give in to peer pressure. Responses of 125, undergraduate and postgraduate students, ona structured questionnaire are analyzed. Results show a significant difference in the perception of respondents when they aretarget and when they are actors. Peer perception, is related to perceived ethicality and peer pressure moderates the relationshipbetween peer perception and perceived ethicality though only for situation where the respondent is the actor.

Keywords : ethics, IT enabled, privacy, peer pressure


Introduction

Information Technology (IT) has given freedom to do thingsin easier, faster and flexible ways. The use of IT has givenrise to many capabilities both immediate and derived. Tobegin with the data and information is now accessible to amuch larger number of potential users than previouslypossible. It has made the capturing of until now intractabledata possible at a much faster speed, with facilities forstorage. Indeed these capabilities have helped tremendouslyin managing operations at a much larger scale in a muchshorter time. As in any other managerial function, the studyof Management Information systems raises questionconcerning “appropriate or responsible” managerial behavior.No doubt, IT has provided the capacity to do many thingsand make many decisions, but the ethical issue would be,does this capacity to do something justify the act itself? Forexample, if a manager can monitor employees behavior atall times of the working day, should he or she do so? Theindividual privacy in the workplace is becoming animportant ethical issue in the present day context. Thenotion of privacy in recent times is undergoing changeowing to the recent developments in the use of informationtechnology. People’s perceptions of what is ethical and whatis not are under flux and get governed by many factors.Before we address the issues of privacy in this context, letus look at how the concept of privacy has been treatedtraditionally.

Privacy is a fundamental human right recognized in the UNDeclaration of Human Rights, the International convict oncivil and political rights and in many other international andregional treaties. Privacy underpins human dignity and otherkey values such as freedom of speech. It has become one ofthe most important human rights issues of the modern age.Of all the human rights in the international catalogue,privacy is perhaps the most difficult to define (Michael,1994). Privacy has roots deep in history. The Bible hasnumerous references to privacy (Hixon, 1987). There wasalso a protection of privacy in early Hebrew culture, classicalGreece and ancient China (STOA). These protections mostlyfocused on the right to solitude. Definitions of privacy varywidely according to the context and environment. In manycountries the concept has been fused with data protection,which interpret privacy in term of management of personalinformation (Davies, 1996).

The law of privacy can be traced as far back as 1316,when the justice of the Peace Act in England provided forthe arrest of peeping toms and eavesdroppers. In 1888,Cooley planted the seed of privacy for the legal profession’sinterest in the soil of the United States of America accordingto him the right to respect for private life is the right to beleft lone. A couple of years later in (1890), Warren andBrandies (1890) cultivated the notion with the initialanalysis of the concept of privacy. Interest in the right ofprivacy increased in the 1960s and 1970 with advent of IT.

EmpiricalStudy

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The surveillance potential of powerful computer systemsprompted demands for specific rules governing thecollection and handling of personal information.

Different authors have defined privacy in different ways.Alan Westin (1967) defined privacy, “as the desire of peopleto choose freely that under what circumstance and to whatextent individuals will expose themselves”. According toHenderson and Snyder (1999), privacy is a right ofindividual to control the collection and use of personalinformation about themselves.

As mentioned earlier, over the past decade IT has becomean important tool for communication and research. Thetechnology is growing at an exponential rate with millionsof new users. IT is also used increasingly as a tool forcommercial transactions. The capacity, capability, speed andreliability of IT are constantly improving, resulting inconstant development of new uses for the medium. IT haschanged the public’s perception of privacy. Organizationsare faced with completely new policy decisions in term ofwhich actions can be deemed damaging to individual’sprivacy and which are merely inconvenient (Agranoff, 1991).Information gathered via computer monitoring is likely tobe increasingly used to coach employees. Currently manyorganizations use the information so gathered as a basis forcriticism (De Tienne, 1993). The increasing sophisticationof information technology with its capacity to collect,analyze and disseminate information has introduced a senseof urgency to the demand for legislation (Davies, 1996). Twoforces threaten our privacy. One is the growth of informationtechnology, with its enhancedcapacity for surveillance,communication, computation,storage and retrieval. A secondand more insidious threat is theincreased value of information in decision-making.Information is increasingly valuable to policy makers; theyconvert it even if acquiring it invades another’s privacy(Mason, 1986). For some privacy is a psychological state, acondition of being apart from others closely related toalienation (Weinstein, 1971).

As mentioned earlier concept of privacy has beenflexible, largely determined and decided by the individual.However, the current presence of information technology hasmade it even more unclear and ambiguous. In the wake ofnewer situations and newer issues relating to privacy, thereis a need to assess how individuals perceive these newersituations. The perceived ethicality or otherwise of differentissues related to privacy will involve a study of individualdecision-making process and the factors that affect thisprocess. Ethical issues by definition, involve a socialconstruction by the individual, this process becomes morecomplex and important where is situational norms are alsoin a flux. Thus, the perceived ethicality of issues related toprivacy depends upon the factors that affect this individualdecision-making process. One important factor beingconsidered in this work is the respondent position as an actor

or target of violation of privacy. Using the ego defense bias,the rationalization processes are at work when the individualis the actor of situation involving violation of privacy, usingthe mechanism of neutralization (McDonald and Pak, 1996)and denial of an unethical act. It is also possible that theindividual uses rationalization process to justify his or heract. Given the human tendency to diminish the negative actsof the self, it is likely that the individual will not perceivea violation of privacy as unethical. On the other hand, ifthe individual is the target of an unethical act of violationof privacy, it is likely that perceived unethicality isexaggerated.

Thus, our first objective is to study the perceivedethicality of a situation as a function of respondent position.On first hypothesis, hence is given below

H1: Situations where individuals are targets are likely to beperceived as more unethical as compared to the situationwhere individual are actors

There are many other factors that affect the perceptionof individual while making any ethical/unethical decisionregarding privacy issues, peer belief is one such variable weare studying, the impact of this variable on perceivedethicality.

Peer Beliefs /Perception

Sutherland and Cressey’s (1970) theory of differentialassociation assumes that ethical/unethical behavior is learnedin the process of interacting with persons who are part of

intimate personal groups or roleset. Research by Ferrell andGresham (1985) research, showthat differential associations withpeers are better predictors ofethical/unethical behavior as

compared to one’s own ethical belief system. The findingssupport a model, which assumes that individual couldbecome engaged in unethical behavior with a supportingbelief system. This research further determines that thereferent other group predicting ethical/unethical behavior ofthese employees is peers rather than top management.

Ferrell and Ferrell (1982), in another study onadvertisement agency executives found that peers, thereferents group closest to the focal person, is the strongestpredictor of their ethical/unethical behavior. Watson and Pitt(1993) in their study investigated the personal computeruser’s attitudes towards ethical issues in personal computing.The findings of this study indicate that behavior of personalcomputer users when faced with an ethical/unethical issuesis determined by their impression of how their peers behavein that situation. Thus, our second objective is to study theimpact of peer beliefs about ethicality of privacy on theperceived ethicality.

However, we further believe that this relationship mightvary for situations where the respondent is either the actoror the target. Our second hypothesis is as follows:

The individual privacy in the workplace isbecoming an important ethical issue in thepresent day context.


17


H2: Peer beliefs about ethicality of privacy will influencethe perceived ethicality for situations where the respondentis the actor and not when the respondent is the target.

Though peer belief is an important predictor, it is likelythat individuals vary on the extent to which they getinfluenced by peer perception. One factor that affects thisrelationship is the tendency of an individual to give in topeer pressure. Hence peer perception is the next issue thatwe explore.

Peer Pressure

Peer pressure occurs when the individual experiencesimplicit or explicit persuasions to adopt similar values,beliefs and goals or to participate in the same activities asthose in the peer group. Ideally, the individual should makea decision based on a combination of value internalizedfrom the family (as socialization process), values derivedfrom thinking independently and values derived from friendsand peers. Individuals vary in the extent to which they usethese factors in decision-making. Thus, peer pressure is highfor those who get influenced by the values of the relevantpeer group. Though, peer perception is an importantdeterminant but individuals vary in terms of the extent towhich they get influenced by the peers. Peer pressure is theperceived pressure on the person from the peers. Thus peerpressure is likely to affect the above mentioned relationshipbetween peer perception and perceived ethicality. Thus, ourthird hypothesis is as follows:

H3: Peer pressure will moderate the relationship betweenpeer belief and perceived ethicality such that the perceivedethicality would be more like that of the peers for thoserespondents who show high peer pressure.

MethodologyRespondents

The present study collecteddata using questionnaire from125 respondents. There were56 undergraduates’ studentsand 69 MBA student of IITDelhi, India. The average ageof undergraduate respondents was around 20 years, and theaverage age of MBA students was around 30 years. Of these91 were male and 34 were female respondents.

Procedure and Questionnaire

Data was collected through a structured questionnaire, whichwas divided into two sections. The details of thequestionnaire are given below:

Section 1

This section contains two situations regarding privacy. Firstsituation is where an individual is a target and the secondsituation is where the individual is the actor. Both thesituations are followed by a question of perceived ethicality

and peers perception of ethicality. (Please see Appendix forthe situations)

Section 2

This section of the questionnaire assessed the peer pressure,i.e., the extent to which an individual gets influence bypeer’s beliefs. The four-item scale is taken from Taylor andPeter (1995) and modified for the present study to assesspeer pressure only.

Results

Our first objective was to assess whether there is asignificant difference in the perceived ethicality of situationswhere the respondent is either the target or the actor. Totest this t- test was conducted between the perceivedethicality means for the two situations. Results are reportedin Table 1.

It can be seen from Table 1 that the perceived ethicalityof the first situation where the individual is the actor issignificantly higher than that of the second situation wherethe individual is the target. Thus our first hypothesis findsfull support.

To assess the relationshipof peer belief, and peerpressure with perceivedethicality, correlations werecomputed. The results (seeTable 2) showed that for boththe situations, the correlationswere highly significant, there

by indicating that peer belief strongly affects perceivedethicality of the individuals both as targets as well asactors. Thus our second hypothesis receives only partialsupport as, we expected the relationship to be significantonly for the first situation where the individual is theactor.

To assess the moderating role of peer pressure, ahierarchical regression analysis was conducted for perceivedethicality as dependent valuable (DV), and Peer Belief, PeerPressure and the interaction between the two (in that order)as independent variables. For each interaction term thevariables were first converted into Z- scores to give thescores equivalence. The interaction term was taken as theproduct of the Z – scores. The regression method used

Two forces threaten our privacy, one is theenhanced capacity for surveillance,communication, computation, storage and retrievalwith the growth of information technology andsecond is the increased value of information indecision-making.

Situation 1(Actor)

Table 1 : t–Test for Perceived Ethicality forTwo Situations: Actor and Target

Situation 2(Target)

T

Mean 3.5200 3.1680

SD 1.13 1.10 3.927**

N 125 125

Note. ** = p<. 01

Polarization of Perceptions of IT-enabled Privacy Violations at Workplace

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Situation 1(Actor)

Table 2 : Inter Correlations amongst PerceivedEthicality, Peer Belief and Peer Pressure

Situation 2(Target)

PE(PerceivedEthicality

PB(Peer Belief)

PB(Peer Belief)

PP (PeerPressure)

PE(PerceivedEthicality

PB(Peer Belief)

PP (PeerPressure)

PE(PerceivedEthicality) 1 0.430** -0.127 1 0.474** 0.033

PB(PeerBelief) 0.4300** 1 -0.001 0.474** 1 0.019

PP(PeerPressure) -0.1227 -0.001 1 0.033 0.019 1

** Correlation is Significant at 0.01 level.

requires the researcher to specifythe order of independentvariables. In this research, theindependent effects of the twovariables are included first andthe interaction term was included last. Thus, by taking theinteraction at the third step the compounding effects of thefirst two were removed. For the interaction hypothesis to besignificant, the beta weights of the product term had to besignificant.

Table 3 shows the results of perceived ethicality inprivacy situation one, where individual is the actor. Theresults show that both peers belief and peer pressure has amajor influence on individual perceived ethicality regardingprivacy issue. Results also show that peer pressure interactswith peer belief to predict perceived ethicality. Before wetest the direction of this moderator let us look at results forthe second situation (target).

Table 3 : Perceived Ethicality in Situation 1(where individual is the actor) of Privacy

Beta t Sig

Peer Belief (PB) 1.723 3.073 0.003**

Peer Pressure (PP) 1.755 2.569 0.011*

Interaction (PBEPP) -2.264 -2.58 0.011*

Table 4 shows the results of perceived ethicality inprivacy situation two, where individual is a target in thesituation. The result shows that the interaction of peer beliefand peers pressure has no impact on perceived ethicality ofindividual decision regarding privacy.

The interaction effect is significant for situation one, i.e.,where the respondent is the actor. To see the direction ofthe results means are identified. Significant interaction isfurther analyzed graphically scores with ± one standarddeviation from the means were plotted (Hunt and Osbrun,

1975). It needs to be mentioned here that the graphicalrepresentation shows the direction of the interaction effect,which is not shown by the beta weights. For the graphicalpurpose data are grouped into qualitative categories (lowand High) Table 5 lists the mean scores on perceivedethicality for different combinations low and high of peerpressure and peer beliefs. The same data is shown

graphically in Figure 1. Theresults clearly indicate that forhigh peer pressure perceivedethicality is lowest when peerbelief is low and it is highest

when peer belief is high. Thus our third hypothesis too findsfull support.

Beta t Sig

Peer Belief (PB) 0.085 0.144 0.886

Peer Pressure (PP) -0.066 -0.09 0.928

Interaction (PBEPP) 0.128 0.138 0.891

Table 4 : Perceived Ethicality in Situation 2(where individual is a target) of Privacy

Ethical/unethical behavior is learned in theprocess of interacting with persons who arepart of intimate personal groups or role set.

3.44

SD = 1.05

N = 64

3.14

SD = 1.41

N = 14

2.33

SD = 1.12

N = 9

4.08

SD = .81

N = 38

L

PeerPressure

(PP)

H

Figure 1: Perceived Ethicality as a Function of Interactionbetween Peer Belief and Peer Pressure for Situation 1 (Actor)

Discussion

In the present study we have taken ethical issues ofprivacy and tried to assess the impact of peers belief andpeers perception on unethical/ethical decision-makingregarding these issues, at the same time we are alsotrying to assess the difference in the opinions of individualin a situation where they are acting as an actor and in a


Peer Belief (PB)

Table 5 : Mean Scores on Perceived Ethicality forLow and High Belief and Peer Pressure

19


situation where they are a target themselves. At the firstlevel, there is a significant difference in the perceivedethicality of the situation where the respondent is eitheran actor or the target. For the identical situation if oneis the actor the situation is perceived as more ethicalas compared to a situation where the actor is a target.Ego defensiveness biases are operating while makingdecisions of ethicality. Hence it is important to build thisreason and logic into any assessment of individual’sperceptions.

Our first result shows that a situation is perceived to beunethical if self is the target as compared to the situationwhen the self is the actor. It seems that at least in thesesituations self-interest is the guiding principle in decidingthe ethicality of an issue and not a set of independentstandards or values. This could be explained on the basisof changing situation and no clear social norms of right orwrong in the context of IT. Thematerial worlds (IT) changes fastand the non-material world(values and beliefs) take a whileto fall in place. In this time offlux, self-interest might govern ethical decision-making. Atthe individual level it looks like the psychological defensemechanism of neutralization is at work. Individuals, to lessenthe impact of norm-violating behaviors upon their self-concept often use the neutralization framework as atechnique. This is a rationalization process. The mostcommon perceptual components of neutralization are (1)Denial of responsibility: where individuals might argue thatthey are not personally accountable for their actions becauseof circumstances beyond their control. (2) Denial of Injury:where the individuals contend that their action is notimportant and is an acceptable violation of normativebehavior as probably no one suffers. (3) Denial of victim:where individuals condone their action by arguing that theviolated party deserved whatever happened, i.e, a form ofretributive justices is provoked. (4) Condensing thecondemner: where individual points out that that they arenot alone in the unethical action and that other are involvedin similar disapproved behavior. Thus it seem in the caseof a situation where ones own self acts as a violator ofethical norms the impact is significantly diminished. On theother hand, when one is the target the tendency is toenhance the negative impact. Thus, when the organizationsdesign systems for control privacy issues this tendency toeither inflate or deflate the impact needs to be accountedfor.

The results of present study clearly show that individualdecision-making gets influenced by what their peers thinkis right or wrong. Social belief of the referent group playsan important role in the perceptions of ethicality. Thus, itmeans that the collective norm or value operating in anorganization will be a strong predictor of the pervasivenessof an unethical act. From the point of view of the

organization, hence developing cultural belief throughformal and informal mechanism are likely to yield positiveresults for controlling breach of privacy.

However, when the focus of attention is the individual,one important factor that predicts the perception is thetendency of an individual to get influenced by peerbeliefs. However, it needs to be mentioned here that peerbeliefs and peer perception are important predictors in ourstudy because the sample of our study is the students whoare more likely to get influenced by their peer groups. It islikely that the results (specially for hypothesis 2 and 3) arenot all that strong for another sample of matureprofessionals.

Our study thus indicates that the individuals use ethicalperception flexibly even for the same situation, as a functionof their position. Thus the cognitive rationalization moves

on a continuum of high ethicalityto low ethicality depending upontheir position. Also this perceptionis used flexibly as a function ofpeer belief and peer pressure. Thus,the design of system must respond

to the issues flexibly (Bhal, 2000), keeping in mind theindividual variations. The design of HR system, for privacymust keep in mind the position of the employees, as theperceptions of higher level employees (likely to be actors)will be different from that of the lower level employees(likely to be targets). The system must respond to thedynamic flexibility of level wise perceptions. The perceptioncould be seen as moving on a continuum of ethical tounethical but it needs to integrated based on the situationand the actor involved, (Sushil, 2000 a, b). The flexibilityhas to be made operational at the level of diagnosis andanalysis of the systems, keeping in mind the varyingperceptions. At the next level the design of systems haveto be flexible depending upon the situation and the positionof the people.

Thus, the perceived ethicality of the same individualvaries and there is a flexibility in the perception of ethicalityspecially by virtue of the position the respondent is in. Afact that must be addressed in the diagnosis and design ofappropriate systems.

ReferencesAgranaff H.M. (1991) Controlling the Threat to Personal PrivacyCorporate Policies must be Created, Journal of Information SystemsManagement, 8, 48–52.

Alan F.W. (1967) Privacy and Freedom, Athenaeum, New York.

Bhal K.T. (2000) Organization Theory Revisited: Toward a Paradigmof Flexibility, In Sushil (Ed.) Cornerstones of Enterprise Flexibility,New Delhi, Vikas Publishing House.

Davies S. (1996) Big Brother: Britain Web of Surveillance and theNew Technological Order, London, Pan

De Tienne K.B. (1993) Big Brother or Friendly Coach, Futurist, 27,33 – 37.

Peers, the referents group closest to thefocal person, is the strongest predictor oftheir ethical/unethical behavior.

Polarization of Perceptions of IT-enabled Privacy Violations at Workplace

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Ferrel O.C. and Greesham L.G. (1985) A Contingency Frameworkfor Understanding Ethical Decision Making in Marketing, Journal ofMarketing, 49, 87 – 96.

Ferrell Z.M. and Ferrell O.C. (1982) Role Set Configuration andOpportunity as Predictors of Unethical Behavior in Organization,Human Relations, 35 (7), 587 – 604.

Henderson S.C. and Snyder A.C. (1999) Personal Information Privacy:Implication for MIS Managers, Information and Management, 36,213–220.

Hixon R. (1987) Privacy in Public Society, Human Rights inConflict, 3.

Hunt J.G., Osborn R.M. and Larson L.L. (1975) Upper Level TechnicalOrientation of First Level Leadership Within a Non-contingency andContingency Framework, Academy of Management Journal, 18,475-488.

Mason (1986) Four Ethical Issues of Information Age, MIS Quarterly,10 (1), 4–12.

McDonald G. and Pak P.C. (1996) Its all Fair in Love and Business:Cognitive Philosophies in Ethical Decision-making, Journal of BusinessEthics, 15, 973-996.

Michael A.W. (1971) The Uses pf Privacy in the Good Life, PrivacyNomos XIII.

Michael J. (1994) Privacy and Human Rights, UNESCO.

Shirle T. and Peter A.T. (1995) Understanding Information TechnologyUsage: A Test of Competing Models, Information Systems Research,6 (23), 144-176.

Sushil (2000a) Cornerstones of Enterprise Flexibility, New Delhi, VikasPublishing House.

Sushil (2000b) Flexibility in Management, New Delhi, Vikas PublishingHouse.

Sutherland E. and Cressey S. (1970) Differential Association Theory,Principles of Criminology, Lippincatt, Chicago.

Warren and Brandies (1890) The Rights to Privacy, Harvard LawReview, 4.

Watson R.T. and Pitt L.E. (1993) Determinants of Behavior towardsEthical Issues in Personal Computing, Omega, 21 (4), 457–470.

Appendix IInstructionFollowing are two likely situations in the work place. Please readthe situations respond to the questions that follow each situation.Situation 1You are HR manager, and you want to see that the employeesare using phone and e – mail only for business purposes. Youuse a computer and other devices to randomly monitorcompliance with this policy.Q1. How correct is this activity in your view.

Very wrong….Wrong….Not sure….Correct….. Very correct….Q2. What would your peers think about your action. Would they

consider it.Very wrong….Wrong….Not sure….Correct….. Very correct….

Situation 2Suppose you are working for a company with a policy that phonesconversation and e – mail use should be related only to businessonly. The company uses a computer to randomly monitorcompliance with this policy.Q1 How correct is this activity in your view.

Very wrong….Wrong….Not sure….Correct…..Very correct….Q 2 What would your peers think about your action. Would they

consider it Very wrong….Wrong….Not sure ….Correct…..Very correct….

Section 2Following four items assess the pressure of your peers regardingthe use of computer. Please mention on the scale given, how truethey are for your peers and friends.1. I get influenced by what my friends think that I should do.

Very true…. True….Not sure ….Not true….. Not at all true….2. Generally speaking, I want to do what my friends think I

should do.Always…. Usually….Sometimes ….Rarely…..Never….

3. I would get influenced by what my classmates think that Ishould do.Always…. Usually….Sometimes ….Rarely…..Never….

4. Generally speaking, I want to do what my classmates think Ishould do.

Always…. Usually….Sometimes ….Rarely…..Never….


Flexibility Mapping : Practitioner's Perspective1. What types of flexibilities you see in the IT enabled environment regarding "Privacy at Workplace" on the

following points:l Flexibility in terms of “options”l Flexibility in terms of “change mechanisms”l Flexibility in terms of “freedom of choice” to participating actors.

2. Identify and describe the types of flexibilities in “Privacy at Workplace” that are relevant for your own organizationalcontext? On which dimensions, flexibility should be enhanced?

3. Try to map your own organization on following continua (Please tick mark in the appropriate box(es))Manager's Perspective (Actor)

High Important Low ImportantSubordinates Perspective (Target)

High Important Low ImportantOutsideIndividual Personality (Peer Pressure)

High Important Low ImportantOPeer Group Belief

High Important Low Important


1. Is your organization going through IT enabled privacy violations at workplace? How will you use the findingsof this study to manage them?

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Stakeholder Flexibility in E-Business Environment:A Case of an Automobile Company

Rajeev DwivediResearch Scholar

Department of Management StudiesIndian Institute of Technology Delhi

[email protected]

Kirankumar MomayaAssistant Professor

Department of Management StudiesIndian Institute of Technology Delhi

AbstractEarlier, researchers talked about Stakeholder Theory, Stakeholder Responsibility, Stakeholder Partnerships, StakeholderManagement, Stakeholder Engagement, Stakeholder Relationships, Stakeholder Reporting, Stakeholder Mapping, StakeholderPerformance, Stakeholder Strategy, Stakeholder Dialogue, Stakeholder Networks etc. and various dimensions of stakeholder.E-Business is the concept to bring flexibility in the business. Researchers emphasized e-flexibility of online business in manyways such as CRM flexibility, SCM flexibility, marketing flexibility etc. This paper introduces a new concept of stakeholders andflexibility, i.e. stakeholder flexibility due to e-business environment. In the new economy, data, information, knowledge, interaction,technology, trust, and the relationship are the keys to success but flexibility is for sustaining in the dynamic and unpredictedpresent business environment. Flexibility is defined by three terms: more options, freedom of choice, and change mechanism.This paper is based on the strategic and flexibility aspects of E-Business transformation. This flexibility helps to produce a new,integrated approach of flexibility, which is dual in nature and sometimes it shows the multidimensional nature of flexibility. Thepaper examines the flexibility for stakeholders from business and from business to stakeholders in E-Business environment. Thereare mainly two groups of stakeholders: one is direct stakeholders and the other is an indirect stakeholder. This paper explainsthe direct stakeholder flexibility. The paper also addresses certain fundamental questions such as: Why flexibility? Why stakeholderflexibility? What is the nature of flexibility?

Keywords : e-business environment, flexibility, stakeholders, stakeholder flexibility


Introduction

E-Business is the new, evolving paradigm. Management hasfaced several transformations from the age of agriculture tillinformation technology. Recent decades are the witness torapid changes, which may be due to MIS or ERP. The focusof time-based paradigm has shifted from traditional brick andmortar centered setting to click and brick systems. In fact,competitive priorities in many firms have shifted fromsimply business speed to e-speed (Norris et al., 2001). Thee-business revolution is impossible to ignore. It istransforming businesses in virtually every industry andreshaping the global economy. The traditionalorganizational structure and operational processes aresuddenly changed due to information technologyrevolution. The e-business transformation is an evolvingtransformation since last five years and need lot of researchin context of strategic management.

Gartner Research (1999) developed an e-businessstrategy framework that can help business leaders to getbetter results from strategic plans. This strategic frameworkconsists five phases: e-vision, e-management, e-competition,e-plans and e-review. These are the basic components ofstrategic management. Those e-business strategies maximizeopportunities and minimize the risks.

E-Business is not one-man effort; it needs variousstakeholders such as technology providers, application

service providers, supplier, distributor, retailer, shareholder,customer, and financial service providers. The keystakeholder involved gain lower cost of the product, betterservices, and ultimately more profits.

The recent advances in IT and telecom are changingbusiness processes and structures, they are reshapingrelationships with business partners and competitors, and insome cases they even cause the transformation of an entireindustry. The Internet has brought about a dramatic changein the way business is done in today's world. And buildingan E-Business strategy is perhaps the single most importantissue faced by corporate strategists. E-Business, of course,is not about technology itself – it's about how to use thetechnology to transform business processes. It's about newmodels of commerce, marketing and distribution. In fact, oneof the key parameters companies are being evaluated ontoday is how well, and how fast, they can adapt themselvesto the Internet.

Within next two years nearly two-third businesstransactions will be conducted through e-business in India.Business-to-business (B2B) e-commerce will continue itsrapid pace of growth, generating $7.29 trillion in salestransactions worldwide in 2004. The revenue generation inthe year 2001 was $953 billion, $2.18 trillion in 2002, and$3.95 trillion in 2003. The report estimates that such activitywill make up 37 percent of the B2B e-commerce market,

CaseStudy

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worth $2.71 trillion by the year 2004. Business-to-business(B2B) e-commerce will continue its rapid pace of growth,generating $7.29 trillion in sales transactions worldwide in2004, according to a report published by the research firmGartnerGroup (2002). The Internet business in India is worthabout INR 120,00 billion per annum.

This paper presents an approach which providestractability from strategy to process through the critical linkof the business stakeholders: all those who have a 'stake' orinterest in the success of the company whether they arecustomers, suppliers, owners, staff, or community-based.Stakeholder flexibility is very important to successfully runa business in competition. The stakeholder flexibility is morestrategic approach in e-business environment. The area ofe-business strategy is emerging and needs a lot of attentionin order to understand the stakeholder flexibility. Theflexibility is the key to sustain in the dynamic and uncertainworld. The e-business strategy is fundamental to transforma business from brick and mortar to brick and click.Therefore, it becomes important to study e-businesstransformation, which brings stakeholder flexibility tosustain in competitive world.

E-Business (New Economy) Change Mechanism

The changes in technology and economy are creating a newset of business rules and practices what is being called “TheNew Economy” or “E-Economy”. Some of major businessbeliefs in the old economy and how these beliefs are shiftingin the new economy (e-business environment) are shown in

Tables 1 and 2.

The change comes often when the previous phase facesthe saturation of S shape growth curve. Previous change wasMIS. The failure of e-commerce brought e-business to createnew opportunities for business, especially for B2B.E-Business, is to exploit the opportunities created by theInternet and information technology for business to createvirtual marketplace. E-Business is concerned specially aboutB2B segment because the failure the B2C segment(e-commerce). The transaction of money is much more inB2B as compared to B2C e-business.

For Whom E-Business is?

E-Business is for thestakeholders of the business:customers, employees, andshareholders, every one. Itgives flexibili ty and JITservices at one place. From business point of view, it's forbig MNCs to exploit the resources and opportunitiesavailable globally. They can afford the cost infrastructureof e-business with the help of world-class technologypartners. The e-business can be for small and medium sizedenterprises to adopt and transform e-business step by stepas the Sawhny & Zabin (2001) described the ladder frominform to transform.

According to Tettech and Burn (2001), Web basedbusiness can be an extremely attractive option for most

SMEs to extend their customerbase into a global marketwithout vast expenses, butthere are many hurdles andhidden costs. SMEs canachieve the globalcompetitiveness without

necessity increasing their actual size, but rather by buildingon their virtual or soft assets in order to expand. Thesevirtual assets include information skills, digital resources,and competencies for managing inter firm relation andcollaborative engagements with other firms.

Economic development is a goal of most governments.Globally it is recognized that approximately 80 per cent ofeconomic growth comes from the SME sector. It is, therefore,

Old Economy New Economy

Advertisement based brand Performance based brandbuilding buildingCost Value

Customer Acquisition Customer RetentionLook primarily at financial Look also at marketingscorecard scorecard

Marketing does the marketing Everyone does the marketingOrganize by product units Organize by customer segments

Over promise under deliver Under promise, over deliver

Product Technology Process TechnologyShareholder Stakeholder

Table 2 : Business Focus from Old Economy toNew Economy

Change Areas Old Economy New Economy

Assets Tangibles IntangiblesBusiness Change TransformationCommunication Physical Meetings TelecommunicationCompetition Known UnknownControl Centralized DecentralizedDemand/Supply Market Driven Customer DrivenFuture Prediction UncertainIntegration Vertical Integration Virtual IntegrationKnowledge Utilization Creation & RenewalManagement Compliance Self ControlOrganization Structure, Hierarchy Edge of Chaos,

NetworkedReach Local GlobalSharing Information Sharing Knowledge SharingSkills Individual CollectiveStrategy Prediction Anticipation of surpriseTechnology Convergence DivergenceTechnology In-House Development, Tech Outsourcing,Resource Innovation DiffusionTrade Rules Government Driven WTO DrivenWork Office Work, Flexi Work,

Flexi Time Fixed Time

Table 1: Changes from Old Economy toNew Economy

E-Business is not one-man effort; it needs variousstakeholders such as technology providers,application service providers, supplier, distributor,retailer, shareholder, customer, and financialservice providers.


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likely that government strategies aimed at facilitating SMEsadopting the Internet enabled business processes andpractices to help increasing national GDP (Dawan, Bodorikand Dhaliwal, 2002).

Who Are Stakeholders?

The Webster Business Dictionary defines stakeholders as“Stakeholders include all individuals and groups who areaffected by, or can affect the organization”. The dictionarymeaning of stakeholder is "one who holds a stake". Theword stake is defined as "apersonal interest orinvolvement" or " a monetaryor commercial investment insomething, as in hope ofgain."

Corporate Stakeholders and e-Business

A company involved in e-business has a responsibility toprotect its corporate stakeholders, because in any e-businessmodel, corporate stakeholders may be harmed in number ofways. This may turn in financial loss, reputation loss, andloss of trust. Stakeholder groups (Fig.1) always includecustomers, vendors/suppliers, service providers, shareholders/investors, corporate executives, board of directors and thegeneral public.

for this route must focus on areas that have challenged theirindustry, for example, e-channel fulfillment or establishingprivate marketplaces. The key advantage is the opportunityto get a jump-start with a proven e- business model. A maindisadvantage is the lack of control of customer demand ina Web channel.

The Pressure for Flexibility

There are causes of pressure for flexibility demanded bystakeholders, shown in Table 3. All stakeholders want profit

and money by long-termassociation with the business.On the other hand, businessputs pressure on stakeholder forflexibility, shown in Table 4. E-Business environment has thepotential to tolerate both

pressures at the same time by conducting the businesselectronically and results in stakeholder flexibility.

Why are Stakeholders Important forE-Business Transformation?

A company can transform itself including value network (allthe stakeholders). To do this, companies must divest non-core businesses to partners to cut cost and gain flexibility.In doing so, they'll create a value network of partners thatwill fulfill the same demand, but with a smaller asset andresource base. If businesses choose this route, a critical massof capable business service providers emerges. This wouldresult that the company benefits from its partner's growthand capabilities. Successful value networks excel largelythrough their technology and information sharing practices.To create an e-business transformation, companies shouldpartner with or acquire a company with a proven e-businessmodel and channel. For competitive advantage, firms going

Stakeholders are those who have rights orinterests in a system. For an organization,stakeholders are any group or individual, whocan affect, or is affected by the achievement ofthe organization's purpose.

Figure 1 : Key Stakeholders of E-Business

Stakeholder Cause

Customer Want ever lower prices and moreimmediate delivery

Competitors Want to strive to satisfy these samecustomers

Shareholders They want higher profit on theirinvestment

Government agencies They are squeezing budgets anddemanding better value for moneyin service delivery

Employee Want high salary, services and flexiwork

Suppliers Want accurate order process systemand more demand

Distributors Want higher commission and fastorder fulfi l lment and productdelivery

Retailers More commission and to satisfycustomer demand

Technology Providers Want long time association

Call Centers Want profit by renewing tenureand assignment for more time

Consultants Want to give the more solutions ofproblems for earning

IT Partners/comp Want to upgrade new technologiesand log term engagement

Financial Service providers/ Want to provide financial servicesbanks/Insurance to increase revenue

Media Partners Want to promote productcampaign to earn money

Table 3 : Pressure for Flexibility by Stakeholders

Dual Nature of Stakeholder Flexibility

Stakeholders are those who have rights or interests in asystem. For an organization, stakeholders are any group orindividual who can affect, or is affected by the achievementof the organization's purpose. Those, who has a 'stake', claimor vested interest, those who provide something ofimportance to the organization, and expect something in

Stakeholder Flexibility in E-Business Environment : A Case of an Automobile Company

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return. Stakeholders can be individuals, communities, socialgroups, or organizations that has the ability to influencedecision-making in an organization. Stakeholders are viewedas playing an important role in determining organizationaldirection by influencing the goals and strategies thatorganizations adopt.

E-Business can create new value propositions for everystakeholder. A value proposition describes the perceivedvalue that each member of the value chain (buyer,seller, distributes, alliancepartners, etc.) receives fromparticipating in a businessmodel. This creates flexibilityfor stakeholder as a wordchange in order to getinformation, transaction, and transformation of work culture.

Flexibility of a business process is how easily a businessprocess can be adjusted according to different stakeholder'sneeds. Moreover, flexibility means more options and morechoices in change mechanism (Sushil, 2000). There are twotypes of flexibility: first to stakeholders and second tobusiness from the stakeholders. We are taking both the waysof flexibility in the account. The dual nature of stakeholderflexibility is shown in Appendix I in detail.

Customers

Customers are the focus points of any business. E-Businesscreated many options and choices for customers to save timeand money and get better quality with better services. Now,the second phase of the coin, how e-business creates

Stakeholder Cause

Customer Buying product and long termretention

Competitors Information of competition andmarket demand

Shareholders Investment

Government agencies Facilities and flexible rules

Employee High Productivity

Suppliers Cheap materials and immediatedelivery

Distributors Fulfill the customer demand andbetter services to customers

Retailers Fulfill the customer demand andbetter services to customers

Technology Providers Innovative and new technology togain competitive advantage

Call Centers Customer care and providinginformation to stakeholders

Consultants Accurate planning and bettersolution of the problem

IT Partners/comp Better hardware, software andservices with time to time updating

Financial Service providers/ Easy financial processes with lowbanks/ Insurance interest rate

Media Partners Better campaigning for brandbuilding

Table 4 : Business Demand from Stakeholders flexibility for business? This is helpful to establish one-to-one customer relationship. This also brings end-to-endbusiness solutions to ensure long-term success in managingcustomer relationships based on ongoing learning with thehelp of information. The most important thing brought bye-business, is information gathering about market with in thetime, helpful in learning about customers and marketinganalysis. This will help to determine its place in theelectronic marketplace of future. This will help to formbetter customer relationship.

Employees

Employees may be benefited in terms of flexible hours,flexible work, and flexible place to work. This could bebeneficial in terms of less stress, more time with family andfriends and easy to work at home. Employees may getknowledge not only of their own field but also other fields,which are essential and influences their work. On the otherhand, business or company will get the benefit in terms ofconnectivity with employees. So the management can getinformation about their performance and may establishedbetter relationship with their employees. The business canalso save their expenses from the facilities reduction. Jobshare and location independent among employees mayenhance the flexibility and knowledge managementperspectives. So they can share their knowledge with thehelp of e-business, and facilitate job rotation to enhanceknowledge, not only their own job but also other jobs, ifneeded.

Shareholders

The flexibility to shareholders from e-business is to getupdate information about the stock exchange and theirposition (Trading Update) time-to-time by newsletter or dailynews. They can also share their view and ideas with the

company by providing thesuggestions through onlinemeeting and communities. Newinitiative about the businesswill be provided to all theshareholders to get their

feedback. The second phase how business is gettingflexibility from e-business in terms of shareholders. Businesswill get more investment from shareholders as well as newshareholders associated with the business. Now, shareholderswill also care about the IT, because the failure of New YorkStock Exchange. Business can give the information aboutnew policies, initiative, and can also get feedback just intime so decision-making would be made easily for abusiness. Online traders, such as e-trade, and evenexchanges, such as New York exchange, have experiencedsystems failure that has made them the unhappy centers ofworld attention. In June 1999, the Internet auction site e-buy was down for 22 hours. In the next two trading days,the e-buy's share price dropped by 25%. So definitely yourshareholders will care about the IT.

A company involved in E-Business has aresponsibility to protect its corporate stakeholders,because in any e-business model, corporatestakeholders may be harmed in a number of ways.


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Supply Chain Partners (Suppliers, Dealers, Retailers)

The information about all the products, reviewing products,review product specifications, check availability of rawmaterial and production schedules, commit order, track orderstatus, schedule delivery, will be easily availableelectronically due to e-business. The transaction givesfreedom of space and time, and also avoid burden of hardfiles and manuals. There is difficulty of security and secrecyof information and money transaction. The seamlessintegration of all supply chain activities reduces cost ofprocurement, delivery cost of product, inventor informationcost and production cost. The manufacturer benefits fromincrease in sales. The retailer gets benefits from having anadequate stock of the product and being able to offer it tothe end consumer at a lower cost, thereby increasing salesvolume. This will be helpful to increase profit margin forbusiness and all supply chain partners (IBM e-biz resource).

Information Technology Companies

E-Business forms alliances with leading e-business software,hardware, networking, and service provider companies todevelop and deliver the back-end integration capabilitiesthey required to provide theircustomers and business withcomplete e-business portal andmarketplace solutions. Company products help partnerscreate an open, scalable framework that supports complexinteractions among customers, buyers, suppliers, partners,and employees. Technology company alliances includeIBM, Oracle, Microsoft, and so on.

Call Centers

Call centers are helpful to communicate with dealers andconsumers. When dealers communicate with theirmanufacturer online, and when consumers find the answersto the questions online, the cost comes down dramatically:through the dealer e-channel, manufacturers and dealers cankeep their costs down. Consumer questions are answeredonline, and they can research the products and otherinformation they seek online as well. For dealers, they canconduct business with consumers. They save the enormouscost-of-business expenses. Call centers will be benefited bylong term engagement with the business for profit making.

Media Partner

The media partner provides promotion of business throughdifferent channels such as radio, TV, Web publishing,posters, hoardings, newspapers, magazines and so on. But,the booking and transaction of promotion could beelectronic and payment could be made by electronictransaction between business and media partners. Mediapartners also provide consulting, business assurance services,ad delivery and privacy attestation and consultation,assistance to mergers and acquisitions, tax planning andcompliance, capital structuring and employee benefits and

executive compensation packages. Media partners will havelong-term association in providing so.

Financial Services Providers

This includes bankers and insurance companies to providefinancial services online into interest of business, and tomake money from the business.

Consultants

E-consultancy is the way to get benefit of electronicmedium for facilitating business customers and businessonline, results in reducing time, and cost from both ways.Internet also helps to provide information to consultantsregarding business and search.

All Alliance Partners

The non-core process will be shifted to all alliance partners,so they may become a part of e-business. If the business getsprofit then they will also be benefitted; if they grow thebusiness also grows. E-Business includes all the alliancepartners, IT partners and different channel partners. Thee-business brings flexibility for alliance partners in terms of

development of new thoughts,research and development, newlearning opportunities, creatingnew forums and virtual

meetings, information sharing and access, and finallyrecognition.

Case Study : Maruti Udyog Limited (MUL) isThriving Stakeholder Flexibility inE-Business Environment

Maruti Udyog limited (MUL) is the largest car manufacturerof India. In the year 1982, the government signed a jointventure with Suzuki Motors Corporation of Japan and setup the first joint venture of Government of India in carmanufacturing. Maruti has 2.8 million customers round theglobe, an average of 30,000 to 40,000 cars coming outof assembly lines each month, and a network of 10regional offices across the country. Maruti exports to 70countries. Some of the key processes and their results arepointed in Table 5.

IT at MUL

Maruti, an INR 9,6720 million company is doing well toretain its market leadership, and seems to coming out ontop. One of the biggest weapons in Maruti's is informationtechnology. Currently, almost 75% percent of Maruti'syearly business transactions is conducted online; thecompany is poised to take it to 80 percent by 2003. On anaverage, Maruti invests between INR 150-200 million everyyear on IT.

B2B at MUL

As part of its Web initiative Maruti is also a part of aconsortium of eight majors, which intends to set up anautomotive e-marketplace for India. This kind of a market,

Stakeholder flexibility in any business is veryimportant to successfully run business incompetition.


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which gives an opportunity for the company for supplychain optimization as well as helps in eliminating flab fromoperations at various tiers of the value chain. On the B2Bfront it includes putting its entire dealer and vendor networkfully online by developing extranet-based systems, whichintegrate dealers and suppliers to Maruti's business systems.The first step was the linking of its 260 dealers in India intoits Wide Area Network (WAN).

Being a transaction-heavy organization, Maruti's primearea of focus in installing its numerous systems andapplications has been to cater to its various functions, thushelping it achieve the highest efficiency levels. Maruti hasestablished collaborative systems with its business partners,e.g. dealers and suppliers besides enhancing/re-engineeringits in-house systems and processes. With almost 99 percentof dealers using the extranet facility today, currently Marutihas implanted similar facilities for its vendors. Maruti boastsof a full-featured B2B marketplace for business partners,which is the Maruti extranet based on a Virtual PrivateNetwork (VPN). Maruti has implemented various modulesand systems including production planning, scheduling andmaterial scheduling in order to enhance its supply chainefficiencies. The company has implemented a Just in Time(JIT) materials procurement system. Vendors under thissystem are given specificdelivery instructions formaterials supply, which specifyall details to the last degree theexact date and time of delivery,even the specific workstation inside Maruti and the exactquantity to be supplied to any of these. This allows thevendor adequate time to schedule his own productionsystem and ensures smoothening at his end.

B2C at MUL

On B2C front Maruti is currently in the process of fine-tuning its purely informative product-specific website to a

customer relationship oriented corporate website that willboast of a virtual showroom, using Microsoft's yet to bereleased portal development software Microsoft Share Point.The company is connecting the new site to about 260 dealersites, all of which have been developed by Maruti itself andare hosted on VSNL. This will allow the customersprivileged access to information catering to their specificneeds and tastes and also allow customers to book carsonline.

IT Infrastructure

IT at Maruti is a competitive weapon. IT infrastructure atMaurti is shown in Table 6 given below. Maruti developssome of the IT software and services in house and some areoutsourced.

Processes

l End to end streamline procurement system, which integratesover 500 suppliers and around 300 dealers network.

l Use of Extranet and Intranet

l Offers JIT procurement

l Teleconferencing from Suzuki Motors Japan

l Oasis portal and Knowledge Bank

l Marutiudyog.com provides wide range of information for all

Results

l Reduce 50% cost of procurement processes.

l Cost reduction of inventory and other overhead costs

l 75% cost saving of paper and other stationary

l 72 Laks Rs by online reverse auction

l Helpful in maintaining Maruti's core competency to providecheapest car

l Customer Information Management, customer support

l Online transaction of 75% of total revenue

Table 5 : E-Business at Maruti

IT Department l Separate IT department at Maruti, heads byMr. Rajesh Uppal, General Manager IT

IT Staff l Around 70 people IT staff at Maruti

IT Systems l 12 Compaq Alpha servers,

l 20 PC servers,

l Around 850 PCs,

l 300 VT100 terminals.

Enterprise Storage Architecture (ESA12K),

l Tape Library,

l Enterprise backup facility of 17.9 TB,

l A remote backup and disaster recovery siteNetwork environment

l 20 km of optical fibre cabling within plantlocation at Gurgaon (1,000-node LAN).

Network l Plant to corporate office connectivityEnvironment 2 Mbps.

l 10 regional offices connected throughVSATs.

l 64 Kbps leased line ISDN link to Suzuki,Japan

Softwares l In House Development, MS Office,Windows, Oracle 9i

Website l Self development with self maintenance

Table 6 : IT Infrastructure at Maruti

MUL Stakeholders

Maruti's stakeholders are listed down in Table 7 but Marutialso has those indirect stakeholders, who are getting

flexibility from e-business suchas Haryana Vidyut Board,Haryana Transport Corporation,society, hospitals (Batra,Escorts) etc. We are consideringonly direct stakeholders of

Maruti's e-business. We are avoiding indirect stakeholderssuch government and society.

Customers

Customers are the focus point of Maruti as in any business.Maruti provides detailed information to the customersthrough their website (marutiudyog.com), that contains allpossible information of customers' interest, such as dealers

Business environment has the potential totolerate both pressures at the same time byconducting the business electronically andresults in stakeholder flexibility.


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Stakeholders Description of Stakeholders

Customers l All Customers of all segment (around 5million vehicles are sold till 2002 and3,50,000 are sold every year)

Employee l Around 2000 employee are IT savvy outof around 5700 employee

Suppliers/vendors l Around 500 suppl ie r and a l l a reconnected through Extranet

Dealers/Retailers/ l Around 260 dealers (show room) all areworkshops/ connected through WAN.

l Around 277 dealers workshops

l Around 1329 Maruti authorized servicestation

Technology l Suzuki Motors Japan with strong Provider communication system

Call center l GE Gurgaon for customer Informationcenter

l i2i enterprise across all 25 cities of India

Financial Service l ABN AMROProviders (Bankers) l American Express Bank Ltd

l Bank Of Tokyo-Mitsubishi Ltd.l Banque Nationale De Parisl Citibank N A.l Citicorp Maruti finance ltdl Corporation Bankl Credit Lyonnaisl HDFC Bankl ICICIl Kotak Mahindral Maruti Countrywide Financel Punjab National Bankl Sanwa Bank Ltd.l SBI Maruti car loansl Standard Chartered Grindlays Bank Ltd.

[Merged]l State Bank of Indorel State bank of Mysorel State Bank Of Travancorel Sundaram Financel Union Bank Of India

Insurance l Maruti Insurance Distribution Services(MIDS), MIDS was set up to sellinsurance as a corporate agent of BajajAllianz General Insurance

l Maruti Insurance Brokers (MIBL). MIBLwas constituted to sell insurance productsof the state-owned National Insurance.

IT partners l Compaql HPl Oraclel Microsoft

Consultants l PWC (Auditor of the Maruti)l AT Kearney for E-Business solutionl MB Athreya for HR (employees

performance system)

Shareholders l Suzuki Japanl Government of Indial Recently Issued Public Shares

Media Partners l Yahoo Indial FM Radiol Indiatimes.coml Business magazines, Newspapersl TV

Table 7 : Key Stakeholders of Maruti information, workshop information, maintainace planner,broucher, online calculator for calculating financial schemeand insurance policy, price of the car, financial schemes,insurance, true value, N2N fleet management, quarry answer,It provides special information and order booking to thespecial buyers such as Handicapped (see Table 8). Thespecial information for holidays around Maruti dealers inIndia also available on the website. Maruti is getting thebenefit in order to retain old customer, acquiring newcustomer, gaining customer trust, and building customerloyalty.

Table 8: Dual Nature of CustomerFlexibility at Maruti

Flexibility to Customers Flexibility to Maruti

l Online information aboutfinance or loan schemes

l Online information aboutinsurance

l Maruti Gateway guide forTravel in India

l True value dealer information

l Product/price/ availabilityinformation

l Information about servicestations/workshops/Maruti roadservice.

l Online brouchers

l Customer want to sell the callfor that online help

l E-mail account on Maruti forservices

l E-newsletter

l Online owner manual

l Online feed back and quarry

l Toll free customer informationfrom GE gurgaon

l Online answer and help

l Trust

l Transparency about availabilitywith online status of booking

l Customer Loyalty

l Long term associations andfeedback from customers

l Online True valueinformation attracts newcustomer segment

l Online information aboutdealers service stationsprovide better reach ability tocustomer and trust

l Global customer interaction

l Rich database of customers

l Rich database of customerdemand

l Database of customer quarry

l Market Informat ion andanalysis

l Regional Demand analysis

Employees

Computerization benefitted Maruti for improving the qualityof life for every employee, by simplifying procedures,reducing paper work and giving instant access to accurateinformation. Moreover the availability of all sorts of datalike production of vehicles to medical claim of employeesonline has resulted in punctuality and accuracy of work.Intranet supports Maruti's organizational work electronicallyin order to reduce work of the employees and reduce paper-stationary cost by managing file transfer and storageelectronically. All intra and extra organizational works areconducted either through intranet, extranet or Internet.Maruti has OASIS portal with in the organization to supportits HR policies. Oasis provides individual ID and passwordto all employees for getting information related toemployee's interest such as monthly incentives, his


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Flexibility to Dealers

Table 9 : Dual Nature of EmployeeFlexibility at Maruti

Flexibility to Employees Flexibility to Maruti

l Oasis portal to provide HRinformation with in theorganization to all employee

l Less Work load using userfriendly software's

l Paperless work usingcentralized server with inorganization

l Maruti started knowledge Bankdatabase for storage andretr ieval of knowledge oforganization

l All Policies and Informationthrough intranet on personalaccount

l E-mail account @mul.co.in

l Fast and flexiblecommunication system

l Teleconferencing betweenSuzuki and Maruti people fromJapan to India and vise-versa

l Oasis helps in HR strategy ofthe Maruti

l Annual 50,000 Suggestionsfrom employees electronically

l Saving paper and stationarycost

l Just in time informationamong employees

l Just in time information andinteraction among employeesfor better decision-making

l Information and interactionwith regional offices of Maruti

l Cut paper and mailing cost ofdocuments with fastprocessing, saving time

l Full detail of staff

of the car, true value information, Maruti Insurance, andcustomers query (see Table 12). The dealership applicationand rules are also available online. E-Business is helpful inMaruti's supply chain management and dealer satisfaction.

Suppliers

Around 500 Maruti's suppliers are connected through theextranet to conduct JIT procurement. The e-procurementsaves the cost of procurement and inventory and processesfast. E-procurement helps Maruti's suppliers in order toprovide information such as inventory information, bidding,auction information, online supplier order rejectionand current position of supplier, online tendering,financial transactions, online order process and approval(see Table 11). This helps Maruti to reduce inventory costfrom 2 days to 2 hours and helps to achieve significantreduction in procurement processes.

Flexibility to Shareholders Flexibility to Maruti

l E-newsletter

l Share market informationonline to Maruti shareholders

l Maruti share information onMaruti website

l Online suggest ions andinteraction about companiespolicies

Table 10 : Dual nature of ShareholderFlexibility at Maruti

l Recently started but Marutiis looking for investment

l Shareholder satisfaction

l Shareholder will care aboutbusiness

performance score, guest entry, claim status of loan, pass ofbill and payment, special policies and related informationto individual, e-learning etc (Table 9). Maruti is having theonline knowledge bank to manage knowledge in theorganization. Through electronic system, Maruti got 50,000feedbacks from their employees last year.

Shareholders

The public issue to Maruti shares was launched recentlyhence much information is not available to get shareholdersfeedback. But, Maruti's two shareholders, Suzuki andGovernment of India get online newsletter and allinformation electronically. This helps to Maruti formore investment and shareholder trust for investment(see Table 10).

Dealers

Maruti has the presence of dealer network at each and everypart of India and connecting through strong electronicnetworking. Maruti's dealers are using e-business (EDI) forbooking online orders, order status, availability of choice

Flexibility to Shareholders Flexibility to Maruti

Flexibility to Maruti

l E-newsletter

l Inventory information ofMaruti

l Online Bidding for Order

l Online payment with Maruti

l Online Order Processing

l Online Order Tracking

l Online vendor ranking

l Online quality informationand rejection rate

l Online contract informationfor vendors

l Auctions/reverse auctioninformation

Table 11 : Dual Nature of SupplierFlexibility at Maruti

l Seamless Procurementusing extranet with around500 dealers

l Online vendor rating helpto reach almost zero defectin Maruti

l Quality inspection rating

l Cut procurement cost

l Manage inventory fromminimum 2 hours tomaximum 2 days, savinginventory cost

l Auctions/reverse auctioninformation

Flexibility to Suppliers Flexibility to Maruti


l Online status of the order toprovide accurate information tocustomer about availability of thecar at place

l Less time to book orderl EDPl Online interaction with direct

suppliers for parts delivery andpayment

l Online interaction with financialservice providers and forinsurance parties regarding loansand insurance schemes

l Fast and easy follow-up processesto customers due database

l Electronic bi l l ing and al ldatabases of customer enquiry

l Order tracking systeml Online information about Maruti

and newsletter and all otherinformation electronically

l Information about dealers locationwise given on the Maruti website

Table 12 : Dual Nature of DealerFlexibility at Maruti

l Wide Dealers networkacross country at smallplace

l EDP with dealersl Satisfying dealers demand

by supplying as soon asgetting information

l 70 countries globallyexport dealers for Maruti

l Global reachl Global interaction with

dealers via Internet andknowing their demandelectronically

l Better dealerscommunication system

l Easy sharing and gettingdealers view for Maruti'spolicies


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IT Partners

To run such a successful integrated e-business system,Maruti needed an infrastructure. This infrastructure consistedof hardware, software, and networking provided by ITpartners. These IT partners gaining advantage to beassociated for long life because Maruti requires continuoustechnology updating and maintenance (see Table 13). Theyalso get advantage to provide same solution for Maruti'ssuppliers. This is helpful to Maruti in order to gain latesttechnology and better streamlined e-business system forbetter and faster processes.


l Time to time updatingsoftware's cause longtimeengagement

l Always updating Marutiwebsite

l Always engagement tomaintain such big IT system

l Hardware maintenance andnew hardware supply

Flexibility to IT Partners Flexibility to Maruti

l Centralized Serves for datastorage and services

l FIBER optics line inorganization for better andfast data transfer

l Save CPU cost by using linkbox

l Self ID division to fulfillmost of IT requirementsapart from hardware

Table 13 : Dual Nature of IT PartnerFlexibility at Maruti

Call Centers

GE Gurgaon call center is the call center for Maruti. It istoll free on BSNL and MTNL from all metros and fromGurgaon. Its called Maruti's Customer Information System.E-business is helping GE callcenter for providinginformation to customerselectronically, to solve queryof customer electronically, tosend information and to getback information fromMaruti electronically. The i2i enterprise, who cares Maruti'scustomer in 25 cities in India. This is helpful to Maruti forgaining customer database, information, requirement, andfeedbacks (see Table 14). It helps to improve customer careof Maruti.

Successful value networks excel largely throughtheir technology and information sharing practices.To create an e-business transformation, companiesshould partner with or acquire a company with aproven e-business model and channel.


l Communication with Marutithrough Internet tocommunicate customerinformation

l Can get the information aboutcustomer quarry from Maruti'speople online

l Long term association

Flexibility to Call Centers Flexibility to Maruti

l Properly managed customersinformation system

l No bother ness about carsinformation

Table 14 : Dual Nature of Call CenterFlexibility at Maruti

from Gurgaon to Japan, online training to Maruti employeesabout technology and about e-learning from Japan(see Table 15). All information and document transactionsare through the Internet from Suzuki to Maruti and fromMaruti to Suzuki.


l Suzuki Motor Japan hasteleconferencing system toconduct meetings

l All information anddocuments transaction throughInternet

Flexibility to SuzukiMotors Japan


l E-learning for employeesabout new technologies

l Teleconferencing to discussissues with directors

Table 15 : Dual Nature of Technology ProviderFlexibility at Maruti

Media Partners

Media partners take order for publicity and campaign fromMaruti electronically. The new channels help for bettercampaigning of Maruti. Indiatimes promote Martui's productonline. FM radio in Delhi broadcasts daily a Maruti programcalled” Delhi Traffic” electronically. E-Business supportsMaruti's marketing strategy globally. This helps forcampaigning worldwide with easy and cheaper and frommore channels (see Table 16).

Financial Services Providers

Information about financial services and information aboutfinancial service providers are available of Maruti's website.

Customers can calculate thefinancial scheme throughonline calculator and canchoose accordingly. Again,Maruti is getting customersatisfaction in order toprovide better information to

the customers (see Table 17).


l Time to time ad campaign

l Time to time marketingassignment

l New channels for promotion

Flexibility to Media Flexibility to Maruti

l New and cheaper ways forpromotion for Maruti

l Save marketing cost

Flexibility to MarutiFlexibility to Financial ServiceProviders


Table 17 : Dual Nature of Financial ServiceProvider Flexibility at Maruti

l Easy loan and financialservices to Maruti's customers

l 70 % of Maruti revenuecomes online

l All financial servicesinformation available onMaruti website

l All policies and Onlinecalculator for getting details onMaruti website

l Online documents transactionand financial processes


Technology Providers

Suzuki Motors Corporation is the technology provider tothe Maruti. E-Business helps MUL to have teleconferencing

Table 16 : Dual Nature of MediaFlexibility at Maruti

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Consultants

E-consultancy is the way to find a better solution to aproblem. Maruti takes help of MB Athreya, and AT Kerneyfor performance and e-business respectively. PriceWaterhouse Cooper takes the responsibility of auditing ofthe Maruti. This is helpful both ways, to reduce cost andtime (see Table 18).

Norris M., West S. and Gaughan K. (2001) e-Business Essential:Technology and Network for the Electronic Marketplace, John Wileyand Sons Ltd., New York.

Sawhney M. and Zabin J. (2001) The Seven Steps to Nirvana, TataMcGraw Hill Publishing Company Limited India, Delhi.

Sushil (2000) Flexibility in Management, Vikas Publishing House Pvt.Ltd., New Delhi.

Tettech E. and Burn J. (2001) Global Strategies for SME-Business:Applying the Small Framework, Logistics Information Management,14, 171-180.

Wheeler D. and Sillanpaa M. (1997) The Stakeholder Corporation: ABlueprint for Maximizing Stakeholder Value, Pitman Publishing,London.

www.flexibility.co.ukwww.gartnerresearch.comwww.gartnertechwatch.com (A Broad Guide of E-Business)www.ibm.comwww.marutiudyog.comwww.stakeholderpensionsdirect.co.uk/ stakeholder_for_companies.html

Conclusion, Implications and Limitations of the Study

Conclusion

Successful competitive strategy and corporate results arelikely to focus on performance attributes including speed,flexibility, quality and scale. E-Business can bring suchthings for their stakeholders. Stakeholder flexibility providessystematic understanding of value chain partners and actorsinvolved in e-business system. This understanding is 360degree via considered options, freedom and choice andchange mechanism of stakeholders of any business. The casestudy proves that the flexibility to stakeholders and fromthe stakeholders is the key to success of Maruti UdyogLimited in an e-business environment.

Implications

The managerial implication of the stakeholder flexibility isto enhance understanding of both side of business (businessto partners, customers and vise-versa) in an electronicenvironment of business. The understanding reflects newstakeholder acquisition, old stakeholders retention, andultimate long term association of stakeholders forcompetitiveness of the business via transparency, speed,cost saving, knowledge management, information,communication, better processes and operation, fastertransaction, participation of stakeholders and so on.

Limitations

The paper considered only key stakeholders of thee-business (see Figure 1). Some other stakeholders may beaffected due to e-business environment such as thegovernment, society, and community. We have restricted ourpaper only up to key stakeholders. But, for further study,all the stakeholders may be considered.

ReferencesDawan J., Bodorik P. and Dhaliwal J. (2002) Supporting thee-Business Readiness of Small and Medium Sized Enterprises:Approaches and Metrics, Internet Research: Electronic NetworkingApplications and Policy, 12, 139-164.

l M B Athreya has developeda new performancemeasurement and develop-ment method system andusing electronically

l E-consultancy option ispossible to save money

l E-consultancy can be given toMaruti as Maruti is IT savvy

l Still A T Kerney group isengaged with Marutiregarding problems inE-Business system

Table 18 : Consultant FlexibilityFlexibility to Consultants Flexibility to Maruti

Appendix I : Dual Nature of Stakeholder Flexibility

Stakeholder Flexibility to Stakeholderfrom Business

Flexibility to Businessfrom Stakeholder

Customers l Online Catalogl Online Shoppingl Online after sales

servicesl Online Enquiry/quarryl Order Trackingl Online Paymentl Online Invoicel Online shopping globallyl More options for same

productl Online Feedback and

Suggestionsl Additional servicesl Time Saving, Money

Savingl 24*7*365 days servicesl Flexi time

Employee l E-mail accountsl Online workl Paperless office & workl Fast information

highwayl Online file transferl Online HR policiesl Online performance

statusl Central Knowledge

Bankl Online Communicationl Online Training and

E-Learningl Flexi Timel Flexi Workl Online Business

Informationl Online Company

Informationl Online market

Informationl Analysis softwares

l Customer Acquisitionand Retention

l Database of customersl Customers feedback

and inputsl Market Informationl Market Analysisl Low cost of setting

distribution centersl Online transactionl Lower cost of

marketingl Time and money

savingl Global customer reachl Telemarketingl Showroom Problems

solvel Operation flexibility

l Better Productivityl Proper Document

Managementl Fast information and

document deliveryl Fast intra organization

workl Less cost of paper and

other materialsl Less manpowerl Teleconferencesl Easy system for

performance appraisall Reduced workloadl Fast decision-makingl Knowledge

managementl Fast information

sharingl Remote online

communication


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Cont... Appendix I



Suppliers/ l Online biddingVendors l Online order

l Online process fulfillmentl Online order trackingl Online inventory

informationl Online auctionl Online communicationl Online status of orderl Reduced paper workl Reduced process workl Time savingl Online paymentl Global manufacturer

reachl Information of marketl Information of dealers

Distributor l Online Booking of orderRetailers l Online status of orderDealers l Online availability of

productl Electronicl Online insurancel Online financel Online customer quarry

and responsel Online after sales servicel Online paymentl Electronic data

interchangel Market Information,

share information, priceinformation etc.

l Order tracking

Financial l Online Financial policiesServices l Online enquiry/responseproviders l Online feedback/inputs

l Online financel Online billing & invoicesl Online transactionl Online paymentl Online insurance

schemesl Online insurancel All financial information

Technology l Technology consultancyPartners/ l Technology projectIT Partners l Technology updating

l Long term associationl Brand building

Call Centers l Long term associationl More projectl More product assignmentl Knowledge gaining

l Minimum inventorymanagement

l Online status ofsuppliers

l Lower process costl JIT procurementl Order trackingl Reduced paper workl Electronic

communicationl No follow-upl Global suppliers reachl Distributors suppliers

information

l Electronic DataInterchange

l Online order statusl Online demand

informationl Online supply

informationl Online market

informationl Online market researchl Order trackingl Reverse auctionsl Customer demands

l Financial flexibility tocustomers

l Insurance flexibility tocustomers

l Financial transactionl Financial policy and

schemes sharingl Customer satisfactionl Electronic

communication

l Less bother ness abouttechnology

l Latest and updatedtechnology

l Competitive move bybetter technology

l Better processes

l Customer carel Customer quarryl Information to all

information seekersl Services 24*7*365

Cont... Appendix I



Shareholders l Share informationl Share market informationl Company position and

informationl Company policiesl News lettersl Feed back/inputsl Participation in online

meetings

Media l More channels formarketing

l Long time associationl Lower cost of marketingl Online marketingl Web marketingl Different channels for

promotion

Consultants l Time to timeconsultancy

l Long term associationl Online consultancy

l Shareholder valuel More investmentl Shareholder

perception

l Different channels forbrand building

l Global Promotionl Information reach to

all stakeholders

l Less bother nessl Better solutionl Online consultancy

Stakeholder Value Propositions ofStakeholders

Value Propositions toMaruti

Customers l More interactiveinformation channels

l Increased informationdetail

l Anywhere, any timeservice

l Transparency in services

Employee l Reduced overall load onstaff

l Improved flexibility ofanalysis

l Better matched withemployee needs

Suppliers l Lower cost oftransaction

l Reduced transaction timel Faster access

Dealers l Increased transparencyin order booking andtracking

l Fast EDP

Technology l IncreasedProviders teleconferencing

l Faster informationavailable

l Increased Retainingold customers andacquiring newcustomers

l Increased globalcustomer reach

l Cheaper channel fordissemination ofinformation

l Increased anywhereaccessibility

l Faster process

l Easy supplier selectionl Electronic linkage

with suppliers

l Better probability tosatisfying dealers

l Availability of marketinformation

l Increased technologylearning

Appendix II : Value Proposition for Stakeholders ofMaruti in E-Business

Value proposition is described as perceived value by theinterest group of business in participating in business model.Table shown below in the context of Maruti's e-businessmodel, explains the value propositions from both ends.


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Stakeholder Value Propositions ofStakeholders

Value Propositions toMaruti

Call Centers l Increased long timeassociation

Financial l Better security ofservice transactionproviders l Increased financial

information andtransactions online

IT l Increased long timeCompanies association

Media l New ways of marketingPartners

Consultants l Increased E-consultancy

Shareholder l Increased online tradingl Update information of

share

l Enhanced customercare

l Increased onlinetransactions

l Reduced transactiontime and cost

l Better maintenanceand better IT

l Reduced cost ofmarketing

l Easy Global reach

l Reduce cost ofconsultancy

l More investment

Cont... Appendix II Acknowledgement

The authors are thankful to Mr. H. Srivastava of MarutiUdyog Limited for providing valuable information and theirexperiences for the case study.

Flexibility Mapping : Practitioner's Perspective

1. What types of flexibilities you see in the practical situation of "e-Business Environment" on the following points:

l Flexibility in terms of “options”

l Flexibility in terms of “change mechanisms”

l Flexibility in terms of “freedom of choice” to participating actors.

2. Identify and describe the types of flexibilities in “e-Business Environment” that are relevant for your ownorganizational context? On which dimensions, flexibility should be enhanced?

3. Try to map your own organization on following continua(Please tick mark in the appropriate box(es))

E-Business Transformation

Technology only Strategy only

Business Concept

Module Concept System Conceptutside

Business Integration

Vertical Integration Virtual Integration

Business Focus

Shareholder Stakeholder

Nature of Stakeholder Flexibility

One Way Flexibility Dual or Multiway Flexibility


1. How important is the stakeholder flexibility for the success of your organization particularly in e-businessenvironment?

2. How would you enhance the stakeholder flexibility in your organization?


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Introduction

Six sigma framework has been traditionally used for enhancing operational performance byfocusing on reduction of process variations and bringing it within predetermined limitsbased on specified requirements. The essence is to have an analytical approach with anoutside-in view, keeping the end users or customer in focus. So far concepts of six sigmahad been applied to areas related to operations, design or manufacturing either forimprovement of existing processes or design of new products and processes. The core idea ofStrategic Six Sigma is to analyze the likely risks/variations in any given system of initiativescomprising the strategy, identify the cause and effects, and apply “Define, Measure, Analyze,Innovate and Control (DMAIC)” philosophy based qualitative and quantitative tools for processimprovement.

Recently, the six sigma concepts have been innovatively adapted to strategy process andapplied uniquely in the Indian industry for making the strategy deployment process morerobust, yet maintaining the flexibility of options. The liberalization and globalization processhas strengthened the competitive environment which has thrown up unique set of challengesfor Indian industry to be met through innovation. This calls for a unique combination in ourapproach to strategy - “robustness to minimize risks with flexibility to adapt to change” andenhancing organizational effectiveness towards strategy deployment.

The Potential to Unlock Value for the Organization

The defining characteristics of six sigma is disciplined through an analytical approach. Sixsigma in conventional terms is a performance target which reflects how effective and efficientwe are in doing what we are supposed to do. Six sigma is a breakthrough strategy and is amethodology to achieve the six sigma target. If we are not doing things right at the first time,then such situation leads to some kind of waste and every such waste has cost or risks associatedwith it. Be it wastage of engineering man-hours, material, time or even cost of identifying awrong opportunity in strategic sense.

Sigma is a measure of how consistent and hence predictable our actions are. At a highsigma level (say five sigma) our actions will lead to more consistent and predictable resultsthan if we are at a low sigma (say one sigma).

Six sigma is about asking questions and finding answers. General logic and commonsense can lead to general results. To achieve special and different results we need to thinkand act differently. For that, we must ask questions differently. Six sigma orients us to askquestions differently and provides a toolbox of various tools, which help find answers tothose questions.

What cannot be measured cannot also be controlled and managed. We also measure whatwe value and sigma level is a measurement of performance for any process that produces anytype of tangible value based output.

Innovating Growth through “Six Sigma”:A Strategic Approach for Combining Robustness

with FlexibilityAmit Chatterjee

Head-Corporate Strategy & Business Initiatives, TATA Honeywell [email protected]

Six sigma so far applied tooperations, design or

manufacturing andprocesses

Recently six sigma havebeen adapted tostrategy process

Unique combination inapproach to strategy

robustness with flexibility todeal with unique

challenges

Six sigma is a performancetarget which reflects howeffectively and efficiently

we are working

Six sigma is askingquestions differently and

finding answers tothese questions

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Motorola pioneered andsuccessfully applied six

sigma in early 80’s

It is performancedeployment, benchmarking

and continuousimprovement tool

Six sigma projectprogresses through

five phases

A Brief History and its Recognition as a World Class Benchmark

The concept of six sigma was pioneered and successfully applied at Motorola in early eightiesand transmitted through Larry Bossidy at Allied Signal/Honeywell which was one of the firstorganizations to adopt six sigma to GE in mid nineties. This phase saw GE’s dramaticturnaround strategy under the legendary Jack Welch. Every aspect and process in GE went thesix sigma way and Jack Welch attributed this approach in bringing in the discipline that laidthe foundation for the organizational success.

Since then it has been recognized as the common language of disciplined approach tobusiness across all organizations around the world that have reaped success. It is nowacknowledged as the performance deployment, benchmarking & continuous improvement toolto be used in conjunction with any business excellence framework the organization may wishto adopt such as TBEM, Malcolm Baldridge or Deming.

A six sigma project progresses through five phases (Figure 1) : Define, Measure, Analyze,Innovate and Control. In Define phase the initiatives definition is completed and scope isfinalized. In Measure phase “as is” situation is assessed. In Analyze phase what is going wrongor risks entailed is studied. In Innovate phase the recommendations are deployed and changeis tested. In Control phase an operational plan is put in place along with necessary measurementsfor monitoring sustained gains. This model is known as DMAIC model. Various six sigma toolsused in these different phases.

Amit Chatterjee

Figure 1 : Five Phases of Six Sigma Project

The approach links up all elements, starting from strategy to the final process that deliversthe desired product or service. Figures 2 and 3 integrative approach that ties up all elementsof the business value chain.

The process flow is as depicted in Figure 4 with extensive usage of tools in each stage ofthe process.

The inherent checks and balances using the stage gate mechanism shown in Figure 5 ofthe six sigma process ensures that investments are focused on the right opportunities andthe risk are minimized. The profile above indicates how investments increase as ideaspropagate through stage gate clearances after satisfying requirements of the process in eachphase.

The Framework and Tools

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Figure 2 : Approach 1, Linking Various Elements

Figure 3 : Approach 2, Linking Various Elements

Innovating Growth through “Six Sigma”: A Strategic Approach for Combining Robustness with Flexibility

36

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Figure 4 : Strategy Implementation-The Six Sigma Way

Robustness with Flexibility by Stage Gate based Checks and Balances

Figure 5 : Stage Gate Balancing for Optimal Investment Profile

Todays competitiveenvironments leaves

no room for error

Six sigma act as long rangeradar that provide balanced

insight and flexibility

Amit Chatterjee

Conclusion

Globalization, disruptive technologies and instant access to information, products and serviceshave changed the way our customers conduct business – old business models no longerwork. Today’s competitive environment leaves no room for error. The dynamics of change isshifting the context of business over night, hence leaderships approach in setting the strategicdirection has to be guided by a sensitive radar. Six sigma strategy tools and framework actsas such a long range radar that guides and develops a balanced insight and at the same time

37


provides for the flexibility of options needed for strategic corrections in journey to growthand excellence.

Glossary of Terms and Definitions

DFSS – (Design for Six Sigma) is a systematic methodology utilizing tools, training andmeasurements to enable us to design products and processes that meet customer expectationsand can be produced at Six Sigma quality levels.

DMAIC – (Define, Measure, Analyze, Innovate and Control) is a process for continuedimprovement. It is systematic, scientific and fact based. This closed-loop process eliminatesunproductive steps, often focuses on new measurements, and applies technology forimprovement.

Six Sigma – A vision of quality which equates with only 3.4 defects per million opportunitiesfor each product or service transaction. Strives for perfection.

Quality Tools

Associates are exposed to various tools and terms related to quality. Given below are just afew of them.

Control Chart – Monitors variance in a process over time and alerts the business tounexpected variance which may cause defects.

Defect Measurement – Accounting for the number or frequency of defects that cause lapsesin product or service quality.

Pareto Diagram – Focuses on efforts or the problems that have the greatest potential forimprovement by showing relative frequency and/or size in a descending bar graph. Based onthe proven Pareto principle: 20% of the sources cause 80% of any problems.

Process Mapping – Illustrated description of how things get done, which enables participantsto visualize an entire process and identify areas of strength and weaknesses. It helps reducecycle time and defects while recognizing the value of individual contributions.

Root Cause Analysis – Study of original reason for nonconformance with a process. Whenthe root cause is removed or corrected, the nonconformance will be eliminated.

Statistical Process Control – The application of statistical methods to analyze data, studyand monitor process capability and performance.

Tree Diagram – Graphically shows any broad goal broken into different levels of detailedactions. It encourages team members to expand their thinking when creating solutions.

Black Belt – Leaders of team responsible for measuring, analyzing, improving and controllingkey processes that influence customer satisfaction and/or productivity growth. Black Beltsare full-time positions.

Control – The state of stability, normal variation and predictability. Process of regulatingand guiding operations and processes using quantitative data.

CTQ : Critical to Quality (Critical “Y”) – Element of a process or practice which has a directimpact on its perceived quality.

Customer Needs, Expectations – Needs, as defined by customers, which meet their basicrequirements and standards.

Defects – Sources of customer irritation. Defects are costly to both customers and tomanufacturers or service providers. Eliminating defects provides cost benefits.

Green Belt – Similar to Black Belt but not a full-time position.

Master Black Belt – First and foremost teachers. They also review and mentor Black Belts.Selection criteria for Master Black Belts are quantitative skills and the ability to teach andmentor. Master Black Belts are full-time positions.

Variance – A change in a process or business practice that may alter its expected outcome.

Innovating Growth through “Six Sigma”: A Strategic Approach for Combining Robustness with Flexibility

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Introduction

Third GLOGIFT International Conference with the themeon “Technology Transfer, Innovation and Flexibility forReshaping the world” is an effort to bring togetherleading representatives of academic, business andgovernment sectors worldwide to present and discusscurrent and future issues of critical importance related totechnology management. It will provide a platform totechnology researchers, practitioners, developers and usersto explore cutting edge ideas and to exchange techniques,tools and experiences.

Conference Coverage

GLOGIFT International Conference invites researchers andpractitioners to submit papers in areas such as technologyflexibility, technology transfer, innovation systems andhuman aspects of innovation management. The ProgramCommittee encourages practical papers on experienceor on the validation of implementation. The broad areasthat will be of interest for the conference are as follows:

l Technology Flexibility

l Technology Acquisition and Transfer

l Innovation Management

l Culture of Innovation and Flexibility

l Technology Practices in Developing Countries

Who Should Attend

Following the GLOGIFT tradition, this conference will setthe stage and define the directions of technologymanagement for decades to come. Leading experts fromacademic institutions, industrial corporations andgovernment agencies will participate in the discussions.

Important Dates for Papers

The papers are invited from professionals, executives,practitioners and researchers from the world of businessand academics on the topics related to the theme of theconference. A spectrum of relevant areas has beenexhibited under the coverage.

Submission of abstracts (250 words) December 10, 2003

Acceptance of abstracts December 20, 2003

Submission of full papers January 30, 2004

Acceptance of full papers February 15, 2004

All submissions through e-mail at:[email protected]

Registration Details

Registration Fee within India Overseas

Delegates (Academic /R & D) Rs.3000/- US$ 150

Delegate (others) Rs.5000/- US$ 200

Students Rs.2000/- US$ 100

Note - Delegates/Authors will be offered one-yearcomplimentary membership of GIFT - 10% discount toAnnual Members of GIFT, and 15% discount to LifeMembers & Corporate Members of GIFT. Registration feeincludes a copy of the conference proceedings, registrationkit, tea, lunch and attendance in session services. Theregistration fee does not include the cost of boarding/lodging etc.

About Jamia Millia Islamia

Jamia Millia Islamia was founded in 1920 during the noncooperation movement. It was elevated to the status of aCentral University vide Jamia Millia Islamia Act 1988Today, Jamia Millia Islamia is one of the most prominentand promising Central University of India

Conference Proceedings

All the accepted papers will be published in the form ofproceedings and shall be available at the time ofconference. Selected papers presented at the conference willalso be considered for publication in “Global Journal ofFlexible Systems Management” after due review process.

Sponsorship

Organizations are invited to sponsor the conference. Thecontribution made will be prominently acknowledged inall promotional and other conference material. Thepayment is to be made in favour of “Jamia Millia Islamia”payable at New Delhi.

Address for Communication

Organizing SecretaryProf. Abid HaleemFaculty of Engineering and Technology,Jamia Millia Islamia, New Delhi 110025, INDIATel: 91-11-26981268, 91-11-26981717 Ext 2551Email: [email protected]

Third Global Conference on Flexible Systems Management‘GLOGIFT’

From March 13 to 15 2004Theme : TECHNOLOGY TRANSFER INNOVATION & FLEXIBILITY

FOR RESHAPING THE WORLDat

Jamia Millia Islamia, Jamia Nagar, New Delhi -25, INDIA

39


Event DiaryThis section will contain events related to flexibility. Only highlights and important dates are provided. For moredetails, please visit the web page or contact the organizers. If you are planning any major flexibility related event(global conference/workshop/seminar), please submit the details (Event title, Dates, Place, Theme, Deadlines, ContactInformation, Email, Web Page, etc.) to Mr Ashish Jain, at email [email protected].

Event : The 12th International Forum on Technology Management

Dates : November 18 - 20, 2003

Place : Shanghai, China

Theme : Technology Leadership in the 21st Century: Global Challenge for East and West

Contact : From China, Mrs Vicky YU at [email protected] all other countries: Prof. J.J. Chanaron [email protected] [email protected] details on the program available on the website: www.iftm.net

Event : Bridging the Gap: Sustainable EnvironmentThe First UN Global Compact Academic Conference. Organized by The Wharton School-SabanciUniversity with the Support of UNEP

Theme : Part 1- Innovation and Diffusion of Environmentally Sound Technologies

Dates : May 31 - June 1, 2004.

Place : Istanbul, Turkey

Theme : Part 2- Globalization, Development and Environmental Management

Dates : September 17-18, 2004

Place : Philadelphia, U.S.A.

Contact : Dr. Oktem , [email protected]

See details in the following Internet address: http://opim.wharton.upenn.edu/gc/

Event : IAMOT 2004

The 13th International Conference on Management of Technology

Theme : New Directions in Technology Management: Changing Collaboration Between Government, Industryand University

Dates : April 3-7, 2004

Place : Washington D.C.

Contact : Program Information: Dr. Yasser Hosni, University of Central Florida: [email protected] or for moreinformation visit www.iamot.org

giftjourn@lGlobal Journal ofFlexible Systems Management2003, Vol. 4, No. 3, pp 39

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Correspondence :All correspondence and membership applications may be

addressed to the Manager of the instituteat the following address:

Ashish JainGlobal Institute of Flexible Systems Management (GIFT)

S-15, LSC, DDA Commercial ComplexMayur Vihar, Phase-I,

Delhi - 110 091

l All individual members will get onecomplimentary copy of the gif t journ@l .

l All corporate/institutional members willget three complimentary copies of theg i f t j ou rn@l , one for library and two fornominees.

About GIFTGIFT (Global Institute of Flexible Systems Management) is a professional society to enhance “flexibility” in business andmanagement.

MissionTo evolve and enrich the flexible systems management paradigm for the new millennium.

VisionEvolving as a global forum for interaction of all interested professionals and organisations in a truly flexible mode so asto help them create more options, faster change mechanisms and greater freedom of choice in their own settings.

SchoolsThe Institute comprises of various schools, which are autonomous bodies, dealing with contemporary areas at the cuttingedge contributing to the flexible systems management paradigm. At any point of time, each member can opt for anassociation with any two of the following schools in the respective thrust areas:* GIFT School of Global Management* GIFT School of Technology and Innovation Management* GIFT School of Information Technology & Knowledge Management* GIFT School of E-Governance* GIFT School of Learning Organisation and Strategic Transformation* GIFT School of Quality, Productivity and Wastivity Management* GIFT School of Environment Management and Sustainable Development* GIFT School of Human Values and Management Ethos

Publications– Book Series on Flexible Systems Management– Quarterly Journal - “Global Journal of Flexible Systems Management” gi f t j ourn@l– Newsletter - “Flexibility”

MembershipThe membership fees for different types of members, unless changed/revised by the Governing Council from time to time,will be as given under:

With in India Overseas

Student (Annual) Rs. 500.00 US$ 25.00

Annual Rs. 1,000.00 US$ 50.00

Life Rs. 10,000.00 US$ 500.00

Corporate/ (a) for corporate bodies having turnover has less than Rs 20 Crore and for non-Institutional business/non-profit making organisations/institutions:

Rs. 50,000.00 US$ 5,000.00

(b) for corporate bodies having turnover more than Rs 20 Crore:

Rs. 1,00,000.00 U$ 5,000.00

Documents

giftjourn@l Indian Institute of Technology Delhi ISSN 0972-2696giftsociety.org/download/gift-journal/4-3.pdf · 2013-04-15 · Editor-in-Chief Sushil Chair, Strategic Management Group