Digital Assignment – 1

Manufacturing Automation
(MEE2012)

Prof Incharge: Boopathi M

Submitted by:
Vigknesh V Rajan
16BME0878

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Problem 1:
During the early 1980s, manufacturing technology changed radically due to factory
automation. Robots made their manufacturing debut, and many, including General
Electric, believed that factory automation was the production industry of the
future. Founded by Thomas Edison and heralded as a cornerstone of American
industry, GE was so confident that factory automation would be a "mega market"
that in 1980 it established the $500-million factory automation division. The
company hoped to have 20% of the factory automation market by 1990.
General Electric's vision included automated systems to augment productivity and
quality. Since automation requires many high-tech devices, such as controllers to
turn on and program machines, cameras and sensors to regulate work, computers
and software for applications, and communication networks to connect the
technology, GE would establish itself as "America's factory-of-the-future
supermarket." Because it did not produce all the necessary products, GE pursued
acquisitions and licensing agreements. The first purchase, for $150 million, was a
produced of computer-aided design (CAD) equipment, followed by licensing
agreements with a total of 11 Japanese, German, and Italian robotics companies.
What resulted, however, was a catastrophe, because the separate units did not
work well together.
GE had conservatively forecast that sales would reach $1 billion. However, by the
end of 1982 customer interest in GE's factory-of-the-future was waning and the
company had landed only nine projects, almost half of them within GE. Although it
had hoped for 20% of this market, GE was forced to all but halt its robotics division
in 1983. The products required extensive customizing to prevent the improperly
designed system from paralyzing production. Also, robots were difficult and
laborious to install. These and other obstacles resulted in low sales figures
industrywide and about $10 million per year in losses at GE. Additionally, GE lost
its position as the largest seller of numerical controls in the U.S. This business unit
produced highly specialized computers that assist and guide large machine tools in
cutting, drilling, and shaping parts. Annual sales of numerical controls declined
from $86 million to $60 million, with losses equalling about $10 million. The CAD
equipment division was also in disarray due to key personnel losses in the areas of
sales and engineering. Further, the company neglected to focus the business on its
primary product lines, resulting in inaccurate planning and development of new
products. By 1984, the division was suffering losses of roughly $40 million per year.

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1. What was GE’s factory-of-the-future vision?

General Electric's vision included automated systems to augment productivity and quality.
Since automation requires many high-tech devices, such as controllers to turn on and
program machines, cameras and sensors to regulate work, computers and software for
applications, and communication networks to connect the technology, GE would establish
itself as "America's factory-of-the-future supermarket." Because it did not produce all the
necessary products, GE pursued acquisitions and licensing agreements.

They projected that it will have a 20/20 effect which make the factories:
 20 percent faster product development cycle.
 20 percent improvement in manufacturing and supply chain efficiency.
In the 20th century, manufacturing growth was largely driven by the growth and capability of
machines and tools. More recently, manufacturers have complemented these with smarter
processes and more innovative systems-level thinking to get higher productivity out of their
plants.
But now in the 21st century, the Internet revolution and the quantum advances in software
and information technology already have transformed our everyday lives as consumers.
Now, GE is bringing the power of the Internet and the digital world to our factory floors and
the factories of the suppliers to improve the productivity of the plants. They are creating an
ecosystem of product designers, virtual manufacturing engineers, factory floor operators, and
our supply chain partners to communicate seamlessly. The infrastructure and technology
exists, but it needs to be brought together and connected. But as anyone who understands
manufacturing knows, that’s easier said than done. That’s what GE is currently dealing with a
very complex system that has a mix of both connected and disparate parts.

2. What went wrong in GE’s pursuit of its vision?

The idea of GE was very unique and had a lot of potential but where they lacked was at the
implementation of the idea. Their idea required a lot of variety of components and because
it did not produce all the necessary products, GE pursued acquisitions and licensing
agreements. The first purchase, for $150 million, was a produced of computer-aided design
(CAD) equipment, followed by licensing agreements with a total of 11 Japanese, German, and
Italian robotics companies. What resulted, however, was a catastrophe, because the separate
units did not work well together.

The main area where they failed was due to lapse in proper leader and some top management
blunders to raise funds and relying a lot on short term funds. They also were not able to
predict the market trend properly.

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3. What lessons are learned from GE’s experience?

There are various lessons that could be learnt from the GE’s journey from being one of the
Fortune 500 to being removed from the list as it did not predict the market trend. One of the
major takeaways from it is that however great an idea could be but lack of proper
implementation could wreck catastrophe to the company.

This is what happened at GE with a lot of major lapses from the top management side and
some of the biggest blunders committed by them whose repercussions are still being faced
by the company.

One of biggest takeaways from the company would be that however good and sound a person
maybe technically but without proper implementation and guidance (Top Management) a
company won’t be able to sustain in today’s world.

4. What would you do differently if you were GE?

Clearly we know the reason for the GE’s failure to implement their vision is lack of top
management’s commitment towards that field and the greed to diversify too quickly which
they completely mismanaged and lead to their downfall.
If I was their then I would analyse the market completely before jumping into the conclusion
of acquiring some company. This is where their downfall began only weren’t known at that
time. They started acquiring companies which were completely unrelated to their field so that
they could diversify only to sell those after a few years, but not getting the returns as
expected.
Even the then CEO wanted to abolish the image of the company of being related to electric
and wanted to change the name of the company only to ‘GE’. He forgot the core value of why
the company was found and the field of expertise. They started diversifying faster than what
they could handle.
The CEO also lacked people’s skills and the way he handled the employs only lead to a kind of
hate wave in the organisation where stringent norms were introduced and whoever did not
meet it was fired.
These all instances show how an incapable top management lead an organisation to failure.
All these point to instances how they shouldn’t have and how I would not have approached
the running of the organisation. Even if the vision of the CEO was good to diversify the
organisation but the way he carried it out was too harsh for the companies own good.