universiti putra malaysia barriers to cim...
TRANSCRIPT
UNIVERSITI PUTRA MALAYSIA
BARRIERS TO CIM IMPLEMENTATION FOR SMES IN THE KLANG VALLEY
LIM THIAM LAI.
FK 2004 19
BARRIERS TO CIM IMPLEMENTATION FOR SMES IN THE KLANG VALLEY
LIM THIAM LA1
MASTER OF SCIENCE UNIVERSITI PUTRA MALAYSIA
BARRIERS TO CIM IMPLEMENTATION FOR SMES IN THE KLANG VALLEY
BY
LIM THIAM LA1
Thesis Submitted to the School of Graduate Studies, Universiti Putra Malaysia, in Fulfilment of the Requirements for the Degree of Master of
Science
March 2004
DEDICATIONS
To: My Mother,
My Wife,
My sons.
Abstract of thesis presented to the Senate of Universiti Putra Malaysia in fulfilment of the requirement for the degree of Master of Science
BARRIERS TO CIM IMPLEMENTATION FOR SMES IN THE KLANG VALLEY
LIM THIAM LA1
March 2004
Chairman: Associate Professor Abdel Magid Hamouda, Ph.D.
Faculty: Engineering
Small and Medium Enterprises (SMEs) in Malaysia play a very important
role in the country's economic development. In the year 2002, SMEs
comprised 90.0% of the total manufacturing establishments in Malaysia
and contributing to 33.3% of total employment in the country.
Undoubtedly, in the new millennium, the Malaysia SMEs will face new
opportunities as well as challenges, particularly in view of the
liberalization of trade and investment under the ASEAN Free Trade Area
(AFTA), the ASEAN Investment Area (AIA), the European Union (EU)
and the emerging market economies of Eastern Europe and China.
The increasing global competition, technology advances, social changes,
changes in government trade and investment policies and changing
consumers markets will be some of the difficulties facing the Malaysian
3
SMEs. Therefore, the SMEs must formulate and implement new strategies
that will enable them to cope with these new challenges.
It is essential to conduct research and study on the Malaysian SMEs to
provide useful information so to enhance effort to transform the
manufacturing industry into a more dynamic sector with high value
added, capital intensive, high technology as well as skill and knowledge
intensive industries.
The purpose of this study is to investigate how the SMEs perceive
automation like computer integrated manufacturing system and how the
factors like management mindset; company size and level of computer
literate of the workforce can influence on the decision to implement
computer integrated manufacturing, CIM.
This study gathered information on the barriers of implementing CIM.
The research is an empirical study on the SMEs within Klang Valley. The
method of the research is the questionnaire survey method. A total of 290
questionnaires were mail to the selected SMEs companies listed in the SMI
Directory 2001 and the FMM Directory 2001. Selection of SMEs was based
on stratified sampling method on the basis of 25%. A total of 56 responses
were collected and data was analysed using SPSS version-10.0 software.
4
Analysis techniques used were the test of correlation (Chi-square) and
linear regression.
Result of the findings shows that the management understanding and
knowledge of CIM and level of computer literate operator has a
significant influence to the decision to implement CIM. But, the size of
company does not have significant influence on the implementation of
CIM. The findings also indicate that to improve the adaptation of CIM,
SMEs needs to improve the level of computer integration. Training has
been identified as the key issue before the implementation of CIM.
Therefore, in order to make implementation successful in SMEs a
comprehensive and effective training program is required.
Keywords: CIM, SMEs, Management Mindset, Technical strength
Abstrak tesis yang dikemukakan kepada Senat Universiti Putra Malaysia sebagai memenuhi keperluan untuk ijazah Master Sains
HALANGAN KEPADA PELAKSANAAN SISTEM PEMBUATAN BERINTEGRASI KOMPUTER BAG1 PEKILANG-PEKILANG KECIL
DAN SEDERHANA DI LEMBAH KLANG
Oleh
LIM THIAM LA1
March 2004
Pengerusi: Profesor Madya Abdel Magid Hamouda, Ph.D.
Fakulti: Ke juruteraan
Pekilang kecil dan sederhana memainkan peranan penting dalam pekembangan
ekonomi negara. Pada tahun 2002, pekilang kecil dan sederhana merangkumi
90.0% daripada keseluruhan pertubuhan kilang pembuatan di Malaysia dan
menyumbangkan 3 3.3% pekerj aan negara.
Tidak boleh dinafikan, pada abad baru ini, pekilang kecil dan sederhana akan
menghadapi peluang dan juga cabaran baru, terutamanya, dari segi pengliberasasi
dagangan dan pelaburan dibawah Rantau Perdagangan Bebas ASEAN (AFTA),
Rantau Pelaburan ASEAN (AIA), Perpakatan Eropah (EU) dan pasaran ekonomi
baru seperti Eropah timur dan China.
Peningkatan persaingan antarabangsa, peningkatan teknologi, pertukaran social,
pertukaran polisi dagangan dan pelaburan kerajaan serta pertukaran pasaran
pengguna akan merupakan masalah yang dihadapi oleh pekilang kecil dan
sederhana di Malaysia. Maka, pekilang kecil dan sederhana mesti membentuk
dan melaksanakan strategi baru yang akan menolong mereka menghadapi cabaran
baru ini.
Adalah difikirkan menjadi suatu keperluan untuk melaksanakan penyelidikan dan
kajian mengenai pekilang kecil dan sederhana di Malaysia, supaya dapat memberi
maklumat berguna untuk memperkukuhkan usaha untuk menukar industri
pembuatan kepada satu sektor yang bernilai tambahan yang tinggi, modal yang
intensif, berteknologi tinggi dan juga industri yang berdasarkan ilmu d m
kemahiran yang intensif.
Tujuan penyelidikan ini adalah untuk mengkaji apakah pandangan pekilang kecil
dan sederhana terhadap automasi seperti sistem pembuatan berintegrasi komputer
dan bagaimana faktor-faktor seperti pemikiran pihak pengurusan; saiz syarikat
dan tahap kefahaman mengenai komputer antara pekerja-pekerjanya dapat
mempengaruhi keputusan untuk melaksanakan sistem pembuatan berintegrasi
komputer, CIM.
Kajian ini mengumpul maklumat-maklumat mengenai halangan-halangan bagi
pelaksanaan CIM. Penyelidikan ini merupakan suatu kajian empirikal bagi
pekilang-pekilang kecil dan sederhana di Lembah Klang. Kaedah penyelidikan
adalah secara soal selidik. Sejumlah 290 borang kajian telah dikirim kepada
pekilang-pekilang kecil dan sederhana yang tersenarai dalam SMI Directory 2001
dan FMM Directory 2001. Pemilihan nama-nama pekilang ini adalah
7
berdasarkan kaedah pesampelan stratified dengan peratus pemilihan sebanyak
25%. Sejumlah 56 jawapan telah diterima dan dianalisa dengan perisian SPSS
Ver. 10. Teknik analisa adalah ujian korelasi, iaitu chi-square dan regrasi linear.
Keputusan kajian ini menunjukkan bahawa pengetahuan dan kefahaman pihak
pengurusan mengenai CIM dan tahap kefahaman pekerja mengenai komputer
mempunyai pengaruh yang nyata terhadap keputusan untuk melaksanakan CIM.
Tetapi, saiz syarikat tidak menunjukkan kaitan yang nyata terhadap pelaksanaan
CIM. Keputusan kajian juga menunjukkan bahawa untuk meningkatkan
pelaksanaan CIM, pekilang-pekilang perlu meningkatkan integrasi komputer di
dalam kilang mereka. Latihan merupakan faktor utama sebelum pelaksanaan
CIM. Maka, untuk memastikan kejayaan pelaksanaan CIM, suatu program
latihan yang menyeluruh dan berkesan adalah suatu keperluan.
Perkataan Utarna: CIM, pekilang-pekilang kecil dan sederhana, pemikiran
pihak pengwusan, kefahaman komputer
ACKNOWLEDGEMENTS
I wish to thank God for giving me health and strength to complete this
research, which I hope will contribute to the welfare of mankind.
I wish to record and express all my sincere thanks to my supervisor,
Associate Professor Dr. Abdel Magid Hamouda. This thesis would not be
completed without the support, encouragement and comments from him.
I would also like to extend my thanks and appreciation to the member of
my supervisory committee, Associate Professor Dr. Megat Mohamad
Hamdan Megat Ahmad and Associate Professor Dr. Napsiah Ismail.
I also wish to thank all librarians in SMIDEC, MITI MIDA and UPM
library for giving me lots of helps in finding necessary information.
Finally, I would like to thank my mother, wife, brothers and sisters who
have given me lots of support and motivation towards my study.
I certify that an Examination Committee met on 25" March 2004 to conduct the final examination of Lim Thiarn Lai on his Master of Science thesis entitled "Barriers to CIM Implementation for SMEs in the Klang Valley" in accordance with Universiti Pertanian Malaysia (Higher Degree) Act 1980 and Universiti Pertanian Malaysia (Higher Degree) Regulation 1981. The committee recommends that the candidate be awarded the relevant degree. Members of the Examination Committee are as follows:
MD. YUSUF ISMAIL, Ph.D. Associate Professor Faculty of Engineering Universiti Putra Malaysia (Chairman)
ABDEL MAGID HAMOUDA, Ph.D. Associate Professor Faculty of Engineering Universiti Putra Malaysia (Member)
MEGAT MOHAMAD HAMDAN MEGAT AHMAD, PkD. Associate Professor Faculty of Engineering Universiti Putra Malaysia (Member)
NAPSIAH ISMAIL, Ph.D. Associate Professor Faculty of Engineering Universiti Putra Malaysia (Member)
Professor/ ~ e ~ u t y a e a n School of Graduate Studies Universiti Putra Malaysia
Date: 1 7 JUN 2004
This thesis submitted to the Senate of Universiti Putra Malaysia and has been accepted as fulfilment of the requirement for the degree of Master of Science. The members of the Supervisory Committee are as follows:
ABDEL MAGID HAMOUDA, Ph.D. Associate Professor Faculty of Engineering Universiti Putra Malaysia (Chairman)
MEGAT MOHAMAD HAMDAN MEGAT AHMAD, Ph.D. Associate Professor Faculty of Engineering Universiti Putra Malaysia (Member)
NAPSIAH ISMAIL, Ph.D. Associate Professor Faculty of Engineering Universiti Putra Malaysia (Member)
AINI IDERIS, Ph.D. Professor/ Dean School of Graduate Studies Universiti Putra Malaysia
Date: 0 9 JUL 2004
DECLARATION
I hereby declare that the thesis is based on my original work except for quotations and citations which have been duly acknowledged. I also declare that it has not been previously or concurrently submitted for other degree at UPM or other institutions.
- LIM THIAM LA1
TABLE OF CONTENTS
DEDICATION ABSTRACT ABSTRAK ACKNOLEDGEMENTS APPROVAL DECLARATION LIST OF TABLES LIST OF FIGURES LIST OF ABBREVIATIONS LIST OF GOVERNMENT AGENCIES
CHAPTER
INTRODUCTION 1.1 Introduction 1.2 SMEs in Malaysia 1.3 Problem Statement 1.4 Objectives 1.5 Hypothesis 1.6 Thesis Overview
LITERATURE REVIEW 2.1 Introduction 2.2 Overview of CIM 2.3 Historical Development of CIM 2.4 Manufacturing Innovation 2.5 CIM Wheel 2.6 Challenges in the Past and Today's
Manufacturing Enterprise 2.7 Development of CIM Research 2.8 Stages of CIM adaptation 2.9 CIM and SMEs 2.10 Barrier to CIM Implementation 2.11 Merits of CIM 2.12 Summary
Page
METHODOLOGY 3.1 Overview 3.2 Design and Development of the Survey 3.3 Research Flow Chart
RESULTS Respondent and Industry Years of Incorporation Annual Sales Turnover Level of Automation Product Market Number of Product Types Summary for the profile of the respondents Stages of CIM Adaptation Chi-square test and Linear Regression Analysis Management Mindset and the Implementation of CIM Company Size and the Implementation of CIM Level of Computer Literate and the Implementation of CIM Merits of CIM Barriers of CIM Preparation Prior to CIM Implementation Assistance Measures to Help the Implementation of CIM
DISCUSSION 5.1 Overview of Findings 5.2 Limitations
CONCLUSION 6.1 Conclusion 6.2 Recommendations 6.3 Thesis Contribution
REFERENCES APPENDICES BIODATA OF THE AUTHOR
LIST OF TABLES
Table
Grouping of questionnaire
Grouping of selected SMEs by industries
Industries and respondent
Descriptive statistic (years since incorporation)
Descriptive statistic (annual sales turnover)
Descriptive statistic (level of automation)
Descriptive statistic (product market)
Descriptive statistic (number of product types)
Page
50
50
56
Question related to the stages of CIM implementation 64
10 Stages of adaptation
11 Result of regression analysis
12 Descriptive statistic (merits of CIM)
13 Descriptive statistic (barriers of CIM)
14 Descriptive statistic (preparation measures)
15 Descriptive statistic (assistance measures)
Figure
LIST OF FIGURES
Manufacturing Innovation
CIM Wheel
Research flow chart
Page
AHS:
AMT :
ASRS:
CAD:
CAM:
CAP:
CAPM:
CAPP:
CAQ:
CAT:
CIM:
CNC :
ERP:
FMS:
LIST OF ABBREVIATIONS
Automated handling system
Advanced manufacturing technology
Automated storage and retriever system
Computer-aided design
Computer-aided manufacturing
Computer-aided planning
Computer-aided production management
Computer-aided process planning
Computer-aided Quality Assurance
Computer-aided technology
Computer integrated ,manufacturing
Computer numerical control
Enterprise resources planning
Flexible manufacturing system
17
GT:
IRM:
ISA:
IT:
MNC :
MRP:
MRP 11:
OMT:
PPS:
QC:
ROI :
SADT:
SCM:
Group technology
Integrated resource management
Integrated system architecture
Information technology
Multi national company
Material requirement planning
Manufacturing resources planning
Object oriented technology
Operating system
Production planning systems
Quality circle
Return of investment
Structural analysis and design technique
Supply chain management
SME:
VM:
Small and medium enterprises
Work in progress
Virtual manufacturing
1. FMM
LIST OF GOVERNMENT AGENCIES
2. MATRADE
3. MIDA
4. MIDF
6. MTDC
7. NPC
8. SMIDEC
Federation of Malaysian Manufacturers
Malaysia External Trade Development Corporation
Malaysian Industrial Development Authority
Malaysia Industrial Development Finance Berhad
Ministry of International Trade and Industry
Malaysian Technology Development Corporation
National Productivity Corporation
Small and Medium Industries Development Corporation
CHAPTER 1
INTRODUCTION
1.1 Introduction
Malaysia has transformed herself from an agriculture based economy to
an economy that is based on industrialization. For more than two
decades, the Malaysian economy has experienced tremendous growth due
to industrialization. Today, Malaysian manufacturing industries are
facing increasing competition from other emerging industrialized
countries, like Thailand, China and Eastern Europe (Hashim, M.K. and
Wafa, S.A., 2002). Furthermore, introduction of trade liberalization like
ASEAN Free Trade Area (AFTA), ASEAN Investment Area (AIA) would
mean that Malaysian industries have to be better prepared to face greater
challenges ahead. In the global market, the characteristics of order-
qualifiers for manufacturing industries is the capability of producing high
quality products with shorter delivery lead time and the ability to produce
according to the diverse requirements of the customers (Nagalingam, S.V.
and Lin, G.C.I., 1999). Hence, in order to overcome the above issues, it is
necessary for Malaysian industries to adopt advanced manufacturing
technology (AMT) and computer integrated manufacturing (CIM).
The concept of CIM was coined by Dr. Joseph Harrington in 1973 in the
book called "Computer Integrated Manufacturing" (Harrington, J., 1973).
CIM only became commonly known from early 1980. The proposal of
CIM in the early 1970s might have appeared to be over futuristic. Today,
with the tremendous developments in computer, electronics and
mechanical technologies, CIM became a reality that can be achieved
without much difficulty.
Small and Medium Enterprise (SMEs) as compared to large firms, produce
much smaller quantity of products in batches. In order to compete with
the larger firms, they must always look for niche market by customized
their products according to the changing needs of their customers.
Therefore, by adopting CIM, it will certainly help to enhance flexibility to
meet the above goal. In the wave of globalization, CIM was named as the
factor that, not only determine the development but also the survival of
many companies (Luong, L.H.S., 1998). The benefits of CIM are well
documented. Some of these benefits include, shorter lead time, gain in
productivity, reduce in work-in-progress, lower cost and improve
competitiveness (Quantz, P.A., et al., 1984; Babbar, S. and Rai, A., 1990
and Bedworth, D.D., et al., 1991). Clive Vassell urge the SMEs to adopt
CIM (Vassell, C., 1999).
SMEs in Malaysia
Small and Medium Industries is defined as the company that is
incorporated under the Companies Act 1965, having less than 150 full
time employees and with an annual sales turnover that is less than RM25
million. A small-scale enterprise referred to a company with an annual
sales turnover of less than RM 10 million and not more than 50 full-time
employees and a medium-scale enterprise was referred to a company with
an annual sales turnover between RMlO million to RM25 million and has
between 51 to 150 full-time employees (SMIDEC, 2001).
In many developed countries, the small and medium industries
contributed substantially to the economic development of the countries as
well as providing job opportunities to the job market. SMEs in Japan
comprised 99.7 per cent, Taiwan 98.1 per cent and Germany 99.0 per cent
of total manufacturing establishments. In Malaysia, based on the media
statement by Y.B. Dato' Seri Rafidah Aziz, Minister of International Trade
and Industry of Malaysia on 22 August 2002, SMEs comprised 90.0 per
cent of the total manufacturing establishments in Malaysia and
contributing to 33.3 percent of total employment of the country.
Malaysia has set its vision of becoming a fully industrialized nation by the
year 2020. This has initiated the government to emphasize on the effort to