Dynamic Situation and Social
Change in Front of Present
Enterprises
Hua Hongming
Professor of Fudan University
Visiting Fellow in MEEM, City
University, Hong Kong
1
Dynamic Situation and Social
Change in Front of Present
Enterprises
1。Dynamic Situation in Front of Existing
Enterprises
2。Predominant Change of Society at Present
Time
2
1. Dynamic Situation in Front
of Existing Enterprises
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
General Trend of Development
Evolution of business situation of enterprises
Manufacturing as a Service Business
The change of manufacturing technology,
Systems and Strategies
Change of business condition of enterprises
Change of business rules of enterprises
A new Competitive Environment
The new “Good Factory” criteria
3
1.1 General Trend of Development
“Reform the traditional enterprises with computerized
technology into modernized enterprises and establish a
new management system to adapt the requirement of
the modernized enterprises
• Characteristics
responsiveness
materials”.
• Characteristics
responsiveness
materials”.
of modernized enterprises:“high efficiency, high
to the market change, low consumption of energy and
of traditional enterprises: “low efficiency, low
to the market change, high consumption of energy and
The above difference between traditional and modernized
enterprise is basically caused by technological base and
managerial style.
4
1.2. Evolution of business
situation of enterprises
1. Change of competitive condition
During 40s-50s of 20th century, as market of selling party, the
competitive advantage of enterprises depended on
productivity.
In 60s of 20th century, goods on the market were much
abundant in quantity, the competitive advantage of
enterprises depended on productivity + quality.
From 70s up to now, the goods on the market are even more
rich not only the quantity but also in variety. Customers’
choice depends not only on the quality of the product but
also on their hobby. In such market of buying party, the
competitive advantage of enterprises depended on
productivity + quality + flexibility.
5
(2)
Flexibility required by present enterprises
Process
flexibility
Global
production
flexibility
Product
flexibility
Infrastructure
flexibility
New
technological
base
Advanced
management
6
1.3 Manufacturing as
a Service Business
In recent decades, manufacturing is increasingly impacted by
CIM. CIM changes the focus of manufacturing from
physical and mechanical operations on materials to
knowledge work utilizing a variety of computer and
communications technologies. In effect, manufacturing has
become an “information intensive” activity.
Service concept of manufacturing is a customer oriented
focus that shifts competitive advantage from factor costs to
the firms’ ability to innovate and to identify customer
needs. Computerized flexible technology makes it possible
by enabling high variety of production and high ability of
responsiveness of change.
7
1.4 The change of manufacturing
technology, Strategies and
management
(1)
Change on manufacturing technology
(2)
Change of competitive strategy
(3)
Change of management connotation.
8
(1) Change on manufacturing
technology
• From single function for precise operation to
multi-function for flexible operation;
 Substituting from only part of manual labor to part
of both mental and manual labor.
 From hard and local automation to soft and
general automation.
 From realizing excellent physical and chemical
transformation to further realizing excellent
logical use of space and time.
9
(2) Change of competitive strategy
From economies of scale to economies
of scope caused by the combination of
flexibility and accuracy realized by
flexible technology and the
requirement of market.
10
(3)Change of management connotation
Management target from a predominant mechanical system
to one predominantly based on information.
Management purpose from coordination and management
of people, materials and costs to the effective management
of information, change and speed.
Management mode from emphasizing on “division of labor”
to emphasizing “integration” for unified management, by
substituting information for tooling, inventory, space, labor,
supervision, time movement, and vertical integration.
11
1.5 Change of business
condition of enterprises
(1) Diminishing of some traditional constraints
(2) Formation of conditions for supporting
economies of scope
12
(1) Diminishing of some
traditional constraints
The application of information technology and electronic
sensors and controls to all aspects of design and
manufacturing means that product variety is possible at the
same operating cost as product standardization. New
technology, such as CIM, creates the possibility of
addressing market and survival risks, without unreasonable
costs per unit. Traditional constraints and tradeoffs of
innovation against productivity, capital investment against
innovation, cost against flexibility, volume production runs
against product variety no longer apply.
13
(2) Formation of conditions for
supporting economies of scope
The conditions that formerly supported economy-of-scale
logic are gone. In their place, conditions now support and
reward factories that exhibit economy-of-scope and
strategies that utilize flexibility. This change can be seen
on the base of following facts:
 Market is changing from selling party to buying party.
 Technology is changing from single function, which could
only realize production for large volume of single product,
to flexible and multi-function, which can realize
production not only for large volume of single product, but
also for small volume of various products and rather large
volume of various products.
14
1.6 Change of business rules
of enterprises
Table 1. Old rules versus new rules of manufacturing
Old rules
New rules
"Bigger is better"
"Smaller may be faster, cheaper,
and more strategic"
Long production runs
Short runs, short cycles
Standard products
Custom variants, many new products
Change is expensive
Change is cheap; stability may be
most expensive of all
Resist variation
Embrace change
Rigidity is the price of speed,
accuracy and volume
Flexibility and quality, speed,
accuracy required for survival.
Inventory buffers uncertainty in
demand, smooths production
Inventory is risky and may simply mask
ineffciency and outdated products
15
1.7 A new Competitive Environment
• The markets and customers have also changed in a
significant and irreversible manner. Market
changes reinforce the emphasis on variety.
• The new technology - using machine intelligence
and telecommunications to control physical
process and automate a major, discontinuous,
structural change. It affects not only factory design,
but also the organizational relationships between
R&D, engineering , marketing, and manufacturing;
the structure of industry segments and the basis of
competition; relationships with customers and
suppliers; and the ability of a firm to secure a
competitive advantage in world markets.
16
1.8 The new “Good Factory”criteria
 Minimum changeover costs and time for make-to-order
production;
 Maximum flexibility and quick turnaround capability
for steep new product “ramps”;
 Minimum downtime - maximize effective capacity;
 Maximum product family “range” and variety of design
that can be produced in a continuous flow;
 The ability to adapt to variability in materials and
process conditions;
 The ability to handle increasingly complex product
design and technology;
 The ability to integrate new process technology into the
existing system with minimum disruption and cost.
17
2.
Predominant Change of
Society at Present Time
2.1 Technology evolution ----integration of
computers and communication
2.2 The change of development mode of
social economy ------from “industry
economy” to knowledge economy”
18
2.1 Technology evolution ---integration of computers and
communication
Fig 2. C&C : The Integration of computers and communications
years
Computer
technology
before 1995
Electronic
Computer
1950
1960
SingleFunction
1970
Multi-Function
1980
Centralized
Processing
1990
Distributed
Processing
2000 and after
Intelligent
Processing
systematization
Semi-conductor
technology
Tube
IC
Tr
Analog
transmission
LSI
digital
transmission
communication
technology
Telephone
crossbar
switching
data
communications
space division
electronic
switching
facsimile
integration
0f
computers
VLSI
and
communications
digital
transmission
network
time division
electronic
switching
integrated
communications
network
image
communications
digitalization
19
2.2 The change of development mode
of social economy -----from “industry economy”
to knowledge economy”
(1)
(2)
(3)
(4)
(5)
The development mode of “industry
economy”
The development mode of knowledge
economy
The relationship between knowledge
economy and industry economy
Three supporting pillars for the
development of “knowledge
economy”
People’s qualification required for
the development of knowledge
economy
20
(1) The development mode of
“industry economy”
1) mode
human activities:
•production
natural
resource
•service
•consumption
industrial
and social
wastes
environmental
pollution
Fig.3. development mode of traditional industrial economy
2) Characteristics
The traditional industry economy is an irreversible linear development mode.
A long with this mode, natural resource will gradually diminish from year to
year, up to be completely used. At the same time, the wastes are getting more
and more, pollution is getting more serious day after day. The resources and
space available to people’ s surviving are getting less and less up to
ultimately be insufficient for maintaining people’ s living. So that this is an
unsustainable way of economic development.
It is mainly depended on land, capital and labor
21
(2)
The development mode of
knowledge economy
1) Mode
supplementing
natural
resource
cyclical economy
4
human
5
natural
resource
1
activi ties:
production,
service,
industrial
2
and social
wastes
3
environmental
pollution
consumption.
Fig.4. development mode of knowledge economy
22
2)Function: to solve the problems caused by the traditional
mode:
 Diminishing the human consumption and increasing their
effective application to natural resource, and continuously
develop new natural resources;
 Reducing the discharge of wastes;
 Reducing the pollution of the wastes to environment;
 Turning the wastes into regenerated and re-applicable
resources to supplement the natural resources and to
realize so-called cyclical economy.
 Changing the mode of human activity, and leading the
human activity into development direction of “low
consumption of energy and materials, high efficiency and
high ability of adapting the change of the world.
3) Characteristics: cyclical and sustainable, mainly
depended on advanced science and technology,
information devices and management methods.
23
(3) The relationship between
knowledge economy and
industry economy
• The essential difference between them is their dependence
on different nature of S&T.
• We may say, when the technology in industry economy has
developed to the point in which it started to have ability to
replace human mental labor, it means that human
economic activity started its transformation from industry
economy to knowledge economy.
• The transformation of industry economy to knowledge
economy is unavoidable development trend of human
society. It is an objective law. Recognizing this law, people
can start their efforts from solving the five subjects
mentioned above to push the development of knowledge
economy and to speed up the progress of human society,
depending on S&T, information and management.
24
(4) Three supporting pillars
for the development of
“knowledge economy”
1)
2)
3)
The first supporting pillar
——Science and technology
Second supporting pillar
──advanced information technology
Third supporting pillar
──advanced management methods
25
1)
The first supporting pillar
——Science and technology
I.
Function of science and technologies
in all fields
II.
Function of new social-technical
system in our time
26
I.
Function of science and
technologies in all fields
A.
The new material technology
B.
Biological technology
C.
Space technology
D.
New energy technology
E.
Technology for exploiting the resources in
deep ocean
F.
A few comments on the function of
technology in all fields
27
A.
The new material technology
It provides an important way for reasonable application of
energy, saving of raw and semi-finished materials, and
reducing costs.
Now it is focused on discovering:
 materials with the high effectiveness for transformation of solar energy
into electricity;
 structured ceramics;
 super-conductor materials
The development trend of the new materials is :
 to reduce direct application of natural materials, which are increasingly
replaced by man-made materials;
 to have more and more metals replaced by non-metals or compounded
materials;
 to have more and more scientific methods used in material production.
28
B.
Biological technology
4 pillars of biological technology:
 Genetic engineering, or Gene engineering, or reformation
technology of DND;
 Biological catalyzing engineering, or ferment engineering.
It applies some special catalyzing function of ferment in
the process of chemical reaction.
 Micro-biological engineering. It utilizes some functions of
micro-biology, through modern engineering technologies,
to produce applicable materials, or some other industrial
products, such as biological insecticide, bacterium mining,
re-generated energy, and so on.
 Cell engineering. This is a kind of hybrid at the level of
cells.
29
C.
Space technology
• In 4th October 1957, the former Soviet Union launched
its first man-made satellite, No.1 Spunk.
• Now it is developing the technologies for utilizing
space, such as space communication, satellite
broadcasting, climatic and military reconnaissance.
• The direction of further development of space
technology is to establish space station, static terrace,
space factory, space power station, lunar base and etc,
in the purpose to using the special condition and
resources in the space to serve people on the earth.
30
D.
New energy technology
Development trend of new energy technology:
 to change energy from finite mineral fuel to
infinite re-generated energy and nuclear energy,
and to raising utilization rate of energy resource.
 to turn the “primer energy” in the nature, such as
solar energy, subterranean heat, ocean energy,
nuclear fusion energy, etc, into the “secondary
energy”, such as electricity, optical and heat
energy which can be stored and transformed for
multi-purpose use.
 to develop the technology which can directly use
the air and water as fuel.
31
E.
Technology for exploiting the
resources in deep ocean
Deepest point in the ocean is over
10,000 meters under the surface of water,
but people only can reach the place 200
meters deep in the ocean. So now, there are
many resources in the ocean which are still
unknown by people and wait for people to
explore and apply.
32
F.
A few comments on the function
of technology in all fields
Above introduction shows the technologies in all
fields have played very important function in
solving first 4 questions, that is to diminish the
human consumption and increase their effective
application to natural resources, and continuously
develop new natural resources; to reduce the
discharge of wastes; to reduce the pollution of the
wastes to environment; and to turn the wastes into
regenerated and re-applicable resources.
33
II.
Function of new social-technical
system in our time
It is social-technical system which determines
the human mode of production, service and
consumption, so that the fifth problem, or
changing the mode of human activities, is
depended on the change of social-technical
system.
A. The formation of new social-technical
system
B. The technological base in the new
social-technical system──flexible
technology
34
A.
The formation of new
social-technical system
• The social-technical system includes two parts: leading
technology and technological base. When the leading
technology of the social-technical system has obviously
changed, and lead the technological base to be changed too,
it means an technological revolution happened. There are
five definite technological revolutions in human history.
• The fifth technological revolution was happened in 70s of
last century when the computer and micro-electronic had a
breakthrough development and their combination has
formed series of computerized technologies which are the
symbols of our time.
35
B.
The technological base in the
new social-technical system
──flexible technology
The new technological base includes advanced manufacturing
technology (such as: CAM, CNC, IR, CPM, CPC, CAD,
CAE, CAPP, MV, AGVs, etc.) and advanced information
technology (like, AI、MI, ES, etc). They have following
characteristics:
 General applicability. They are applicable to all kinds of
industries and enterprises.
 High efficiency. The application of these technologies can
help enterprises to realize various kinds of flexibility. They
can bring a lot of strategic benefits to enterprises, such as
low consumption of energy and materials, high productivity,
high quality, high ability of adapting market change, etc.
36
2) Second supporting pillar
──advanced information technology
I.
Application in the process of production
and service
II. Application in telecommunication
III. Application in supporting activities of
complex social groups
37
I.
Application in the process of
production and service
• Advanced information technologies used in this
aspect includes computerized data-base system,
artificial intelligence and machine intelligence,
and expert system, etc.
• Now China is implementing “Three Golden
Engineering”(Golden bridge, Golden custom and
Golden carts) for connecting different regions and
departments in their economic activities. This is a
typical example of such application.
38
II. Application in telecommunication
Advanced information technologies in such
use include telegram, telephone, telex and
TV,
satellite
communication,
laser
communication, facsimile, super-conductor
communication,
e-mail,
electronic
conference, international interconnecting
web, informational high-speed high way, etc.
39
III. Application in supporting
activities of complex social groups
If the complex social groups wanted to have effective work,
they must have following two conditions:
 Each member of the group can obtain the information
and help from other members just at the time as he
needs and without requirement of other people’s
coming, so his work has no any impacts to other’s at all.
 All members in the group can keep speedy, timely and
precise exchange of information with each other even
in their own office.
In order to meet these two requirements, it is necessary to
have effective cross-time and cross-space communication
tools for the innovation activities at present time.
40
3)
Third supporting pillar ──
advanced management methods
I. Business strategy changing from “economies of
scale” to “economies of scope” and “economies
of integration”
II. Management concepts emphasizing on JIT
III.Management
system
emphasizing
integration and unification.
on
IV. Automation of enterprises
V. Organization structure of enterprises
41
(5) People’s qualification
required for the development
of knowledge economy
The development of knowledge economy
has two trends on the requirement of
people’s qualification:
 The technicians must master certain sort of
management knowledge and ability.
 Managers must have certain knowledge on
technology.
42