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Empirical Study

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International Journal of Global Business and Competitiveness 2006, Vol. 2, No 1, pp 1-8

Advanced Manufacturing Technology: A Way of Improving Technological Competitiveness


G. S. Dangayach, S. C. Pathak and A. D. Sharma
Department of Mechanical Engineering Malaviya National Institute of Technology, Jaipur, India

Abstract
Survival and success in present turbulent times increasingly depends on competitiveness. Competitiveness comes through an integrated effort across different functions and deployment of advanced manufacturing technologies. Advanced manufacturing technology (AMT) plays a major role in quality and flexibility improvements in manufacturing organizations. The automated factory of the future is seen as the essential ingredient for increasing the competitive advantages in the global market. The concept of technology as a competitive weapon is also gaining momentum because of the rapid introduction of new products with the high complexity and accuracy, new manufacturing process, changing in customer needs and expectations, including varying extents of product support. AMT provides benefits and advantages in areas that would enable manufacturers to maintain quality, operational, organizational, financial performances to improve technological competitiveness. This research reports findings of an empirical study of process sector companies through questionnaire survey. Responses from 58 manufacturing managers are analyzed and presented.

Keywords: Advanced Manufacturing Technology, Process Sector Companies, Technological Competitiveness,


Direct AMT, Indirect AMT, Administrative AMT

Introduction
Role of technology for competitiveness is increasing in emerging context. While the role was always been well understood in the developed countries, it is increasingly being touched by progressive firms in developing countries also. The importance of technology for business success and competitiveness has been confirmed empirically in several contexts. Competitiveness is a multidimensional concept. It includes core technology competence, human resource processes, operations management processes, and technology management processes (Banwet et al., 2003; Ambastha and Momaya, 2004). Competitiveness of a firm can be derived through these four factors (Figure 1). Technology plays a key role in creating and maintaining competitiveness in the global arena. Technology may be defined as all the knowledge, products, processes, tools, methods and systems employed in the creation of goods or in providing services. It consists of three important interdependent, co-determining and dynamic components (Momaya and Ajitabh, 2005): Hardware the physical and logical equipment that is used to carry out the required tasks Software the knowledge of how to use the hardware in order to carry out the required tasks Brainware the reasons for using the technology in a particular way. Core technology competence can be assessed by importance given to advanced manufacturing technology (AMT) and its deployment. AMT is an enabler of popular manufacturing objectives such as quality, delivery,

flexibility, and cost. The quest for lower operating costs and improved manufacturing efficiency has forced a large number of manufacturing firms to embark on advanced manufacturing technology (AMT)

Figure 1. A Conceptual Framework for Competitiveness in Context of Manufacturing

projects of various types. Advanced manufacturing technologies have been heralded as new way for manufacturing companies to gain a competitive advantage (Pagell et al., 2000; Dangayach & Deshmukh, 2004). The dramatic developments in AMT at various organizational levels can be attributed to numerous benefits that improve the competitive position of the adopting companies. AMT can impact not just manufacturing, but the whole business operations, giving new challenges to a firms ability to manage both manufacturing and information technologies.
2006, Global Institute of Flexible Systems Management

G. S. Dangayach, S. C. Pathak and A. D. Sharma


technologies, including computer-aided design (CAD), computer numerical control (CNC) machines, direct numerical control (DNC) machines, robotics (RO), flexible manufacturing systems (FMS), automated storage and retrieval system (AS/RS), automated material handling systems (AMHS), automated guided vehicles (AGV), bar coding (BC), rapid prototyping (RP), material requirement planning (MRP), statistical process control (SPC), manufacturing resource planning (MRP II), enterprise resource planning (ERP), activity based costing (ABC), and office automation (OA). Numerous studies have been reported in the literature on advanced manufacturing technologies (Swamidass and Waller, 1991; Putterill et. al., 1996; Chan et. al., 2001; Chen and Small, 1994; Small and Yasin, 1997; Dean et al., 2000). All these studies were in context to developed economies. It seems that no study has been reported in context of developing country like India.

The benefits of AMT have been widely reported in the literature and can help classified as tangible and intangible (Kaplan, 1986). The tangible benefits, which are easily quantifiable, include: inventory savings, less floor space, improved return on equity (ROE) and reduced unit cost of production. The intangible benefits, which are difficult to quantify, include: an enhanced competitive advantage, increased flexibility, improved product quality and quick response to customer demand. The potential benefits which can accrue from investments in advanced manufacturing technologies, have become increasingly evident with growing global competition (Swamidass and Waller, 1991; Primrose 1991; Small and Chen, 1995). Advanced Manufacturing Technology plays a major role in quality and flexibility improvements in process sector companies. Evaluating capital investments for the Installation of advanced manufacturing technologies is a critical task faced by manufacturing management due to the high capital investment and the high degree of uncertainty involved in these investments.

These advanced manufacturing technologies are classified into Direct AMT, Indirect AMT, and Administrative Indian manufacturing industry is made up of many AMT. These terms correspond to the hardware (Direct AMT), different sectors, each of which is influenced by the overallsoftware (Indirect AMT), and brainware (Administrative manufacturing climate. From the Indian perspective, the AMT) as used by Momaya and Ajitabh (2005). It must be major manufacturing mentioned that this set sectors are is by no means an Role of technology for competitiveness is increasing in a u t o m o b i l e , exhaustive set of emerging context. While the role was always been well e l e c t r o n i c s , activities. However, it understood in the developed countries, it is increasingly machinery, and captures the essence of being touched by progressive firms in developing countries process industries. improvement activities Process sector is the as practiced by Indian also. The importance of technology for business success largest sector and companies. Hardware and competitiveness has been confirmed empirically in includes companies base technologies several contexts. manufacturing termed as Direct AMT. cement, steel, Software based petrochemicals, fertilizers, drugs and medicine. Therefore this technologies used for product design and scheduling are sector is considered in our research. termed as Indirect AMT, however Administrative AMT are used for integration and simplification of business processes. The objective of this research is to assess the status of advanced manufacturing technologies in process sector Direct AMT: Technology used on the factory floor to cut, companies, to identify advanced manufacturing technologies join, reshape, transport, store or modify materials e.g. relevant to Indian process companies, assess the degree of CNC, DNC, robotics, FMS, AS/RS, AMHS, AGV, RP etc. investment in advanced manufacturing technologies, and Indirect AMT: Technology used to design products and identify AMT implementation steps. schedule production e.g. CAD, MRP, SPC, BC, MRP II etc. Advanced Manufacturing Technologies AMT appeared to represent a perfect marriage between technological potential and the manufacturing challenges. AMT refers to manufacturing process technologies that use computers to store and manipulate data (Dean et al., 1992, Zammuto and OConnor, 1992, Sanchez, 1996; Saleh and Randhawa, 2001). Advanced manufacturing technologies (AMT) is a term that covers a broad spectrum of computercontrolled automated process technologies. AMT is an umbrella term used to describe a wide range of automation and related technologies, which have emerged during the past two decades as a consequence of developments in information technology (Bessant, 1991). More specifically, AMT can be described as a group of computer-based Administrative AMT: Technology used to give administrative support to the factory and integrate its operations with the rest of the organization e.g. ERP, ABC, OA etc.

Manufacturing Objectives
Manufacturing objectives have been referred as measures of competitiveness (Vickery et al., 1993). Manufacturing objectives capture how capabilities-based competition will evolve. Manufacturing objectives represent a holistic set of tasks, which should be performed by the manufacturing function in order to support the business strategy (Roth, 1996).

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Advanced Manufacturing Technology: A way of Improving Technological Competitiveness

Quality

questionnaires were administered to leading practitioners, consultant and academicians. Based on their feedback the Quality refers to all physical aspects of the process and present form has been evolved and final version of the product or service delivered. He suggested a list of questionnaire was sent to the CEOs of 120 companies of dimensions of quality: performance, features, reliability, process sector. A random sample of 120 companies was drawn conformance, durability, serviceability, aesthetics, and from the CII Industrial perceived quality. directory (2004). The Quality has been cited AMT can impact not just manufacturing, but the whole questionnaire was as an issue of strategic administered in first business operations, giving new challenges to a firms importance (Garvin quarter of 2004. 58 ability to manage both manufacturing and information 1993). valid responses in the technologies. Delivery form of filled questionnaire have Delivery refers to faster been received. The response rate is 48.3%. Table 1 shows delivery of product in correct time. Two dimensions of average statistics of the respondents. delivery i.e. dependable delivery, and delivery speed have been identified in the literature.

Table 1. Average Statistics of the Respondents


Parameter Age of respondents Experience Number of employees Annual sales Exports Products manufactured Sample average 40.4 years 18.3 years 1350 > 14 million US $ < 9% of total sales Range [27, 52] [5, 30] [100, 5000] [0.25, >25] [0, >30]

Flexibility
Flexibility is the ability to change or react with little penalty in time, effort, cost or performance. Flexibility has long been recognized as a manufacturing capability that has the potential to impact the competitive position and the business performance of an organization. Upton (1995) acknowledged the important role of flexibility in todays competitive environment. Browne et al. (1984) defined eight types of flexibility, which are machine flexibility, process flexibility, product flexibility, routing flexibility, volume flexibility, expansion flexibility, operation flexibility, and production flexibility.

Tyres, paint, cement, fertilizers, Fabric and textiles, paper, and medicine

Cost
The task of the manufacturing function is to provide low cost product and to support the business (Hill, 1989). Low cost is a well-established manufacturing objective.

Research Methodology
The research methodology is based on empirical data collected through a questionnaire survey. The survey methodology is used for study and focus of study is crosssectional. The objective of this survey is to examine the status of AMT in Indian process sector companies. A structured questionnaire has been developed on five point Likert scale. Annexure was given in the end of questionnaire, which contained key for responses and explained in brief the terminology used in the questionnaire to avoid unknown bias. Likert scale is well-established interval scale in management research (Malhotra and Grover, 1998). Explanation of five points is as under: 1 Least important 2 Important 3 Not decided 4 Very important 5 Most important To assess content validity a dry run was made and few

Inter-item analysis is used to check the scales for internal consistency or reliability. Chronbachs coefficient alpha is calculated for each scale, as recommended for empirical research in operations management (Flynn et al. 1990, Malhotra and Grover 1998, Forza, 2002). Table 2 shows Cronbachs Alpha values calculated (through SPSS 10 for windows) for scales used. Cronbachs alpha values for each scale is more than 0.5, which is considered adequate for exploratory research (Nunally 1978).

Table 2. Cronbach's Alpha for Scales Used


Scales Used AMT implementation Steps Direct AMT Indirect AMT Administrative AMT Cronbachs Alpha 0.95 0.85 0.87 0.83

Measures
AMT Implementation Steps (AIS)
Based on literature (Badiru,1990; Schroder and Sohal,1999) eight steps are identified for effective AMT implementation. Respondents were asked to give importance to these eight implementation steps on five point Likert scale. Table 3 gives mean and standard deviation values. These eight steps are planning (AIS 1), concept development (AIS 2),
2006, Global Institute of Flexible Systems Management

G. S. Dangayach, S. C. Pathak and A. D. Sharma

Respondents were asked to indicate degree of investment requirement analysis (AIS 3), cost/benefit analysis (AIS 4), in direct AMT (eight items), indirect AMT (five items), and technology assessment (AIS 5), development & administrative AMT (three items) in their companies on five implementation (AIS 6), training (AIS 7), postpoint Likert scale (where implementation evaluation (AIS 8). It is These advanced manufacturing technologies are classified 1- No investment and 5 observed from Table 3, into Direct AMT, Indirect AMT, and Administrative AMT. Heavy investment). Table 5 shows mean and that cost/benefit analysis standard deviation values of all three AMT. It is observed (AIS 4) and technology assessment (AIS 5) are the more from Table 5 that, process sector companies are investing important AMT implementation steps and requirement more in administrative AMT (Overall mean = 2.98). It reflects analysis (AIS 3) is the least important AMT implementation that companies are investing more in administrative and step for process industry. Indirect AMT in place of direct AMT.

Table 3. AMT Implementation Steps (AIS)


Description Planning Concept development Requirement analysis Cost/benefit analysis Technology assessment Development & implementation Training Post-implementation evaluation (N = 58) Mean 3.36 3.31 3.17 3.53 3.46 3.43 3.27 3.38 SD

Table 5. Investment in AMT


AMT Direct AMT Computer Numerical Control (CNC) Direct Numerical Control (DNC) (N = 58) Mean SD 2.36 2.05 1.71 2.12 2.60 2.03 2.16 1.90 Overall mean Indirect AMT Computer Aided Design (CAD) Material Requirement Planning (MRP) Statistical Process Control (SPC) Bar Coding (BC) Manufacturing Resource Planning (MRPII) Overall mean Administrative AMT Enterprise Resource Planning (ERP) Activity Based Costing (ABC) Office Automation (OA) Overall mean 2.11 2.45 2.77 3.17 2.14 2.49 2.60 2.53 2.68 3.73 2.98 1.54 1.40 1.15 1.33 1.50 1.02 1.44 1.22 1.53 1.29 1.27 1.34 1.48 1.36 1.46 1.24

AIS AIS 1 AIS 2 AIS 3 AIS 4 AIS 5 AIS 6 AIS 7 AIS 8

1.15 1.06 1.08 1.04 0.17 1.03 1.19 1.03

Robotics (RO) Flexible Manufacturing Systems (FMS) Automated Material Handling Systems (AMHS) Automated Guided Vehicle (AGV) Automated Storage & Retrieval System (AS/RS) Rapid Prototyping (RP)

On five point Likert scale (Interval scale 1-5: 1 - least important and 5 - most important) Bold: Highest Mean, Italics: Lowest Mean

Correlation between eight AMT implementation steps is given in Table 4. It is observed that all AMT implementation steps are positively correlated. Correlation between planning (AIS 1) and concept development (AIS 2) is the highest (0.74), however correlation between requirement analysis (AIS 3) and training (AIS 7) is the lowest (0.34). It seems true because concept development is not possible without proper planning.

Table 4. Pearson Correlation Between AMT Implementation Steps


AIS 1 1.00 AIS 2 0.74* 1.00 AIS 3 0.45* 0.54* AIS 4 0.53* 0.46* AIS 5 0.44* 0.47* AIS 6 0.50* 0.52* AIS 7 0.39* 0.35* AIS 8 0.56* 0.62* 1.00 0.58* 1.00 0.52* 0.66* 0.46* 0.62* 0.34* 0.38* 0.49* 0.48* 1.00 0.72* 1.00 0.59* 0.61* 0.65* 0.65* 1.00 0.63* 1.00

On five point Likert scale (Interval scale 1-5: 1 No investment and 5 - High investment) Bold: Highest Mean, Italics: Lowest Mean

AIS 1 AIS 2 AIS 3 AIS 4 AIS 5 AIS 6 AIS 7 AIS 8 * Significant at the 0.01 Level (2 Tailed)

Table 6 to 8 gives the correlation values between the items of direct, indirect and administrative AMT. Correlation between eight items of direct AMT is found positive and significant (at the level 0.01) except correlation between robotics (RO) and automated material hand made systems (AMHS). In indirect AMT (Table 7), correlations between computer aided design (CAD) and bar coding (BC), and Statistical process control (SPC) and bar coding (BC) is insignificant. It is observed from Table 8 that correlation between activity based costing (ABC) and Enterprise resource planning (ERP) is only significant at 0.01 level.

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Advanced Manufacturing Technology: A way of Improving Technological Competitiveness

Table 6 . Correlation Between Direct AMT


CNC DNC RO FMS 1.00 0.47* 1.00 0.36* 0.50* 1.00 0.29* 0.35* 0.28* 1.00 1.00 0.42* 0.35* 0.39* 1.00 0.49* 0.37* 1.00 0.51* 1.00

advantages by adopting direct, indirect, and administrative AMT. It is important for the management to understand the usage and applicability of these systems to their companies. The result of data analysis (Table 5) indicates that automated material handling systems and stand-alone technologies such as CNC have attracted more to the Indian process industry to invest in direct AMT. It seems that there are three main AMT implementation steps (AIS) i.e. cost benefit analysis, technology assessment, and development & implementation has attracted practitioners attention, because appropriateness of AMT should be based on their ability to meet the manufacturing strategies and organizational objectives (Table 3). This is achieved through a systematic technological justification analysis. However requirement analysis, training, and concept development factors have treated less important AMT implementation steps by Indian process industry, which are rather more important to get more yield from AMT investment. Requirement analysis gives more in-depth justification to invest in a AMT, however post implementation evaluation tells about proper implementation and use of a AMT. It can be observed from Table 5 that Indian process companies are investing more in indirect AMT and administrative AMT as compared to direct AMT. Investment in the direct AMT is the least as its mean value is 2.11 on a five point Likert scale. However it is the direct AMT, which provide maximum flexibility to the manufacturing system.

AMHS 0.41* 0.31* 0.22** 0.50* AGB 0.29* 0.37* 0.54* 0.42* 0.34* 0.50* FMS

AS/RS 0.25* 0.47* 0.42* RP 0.31* 0.59* 0.36* CNC * ** DNC RO

AMHS AGB

AS/RS RP

Significant at the 0.01 Level (2 Tailed) Significant at the 0.05 Level ( 2- Tailed)

Table 7. Correlation Between Indirect AMT


CAD MRP SPC BC MRP II
*

1.00 0.25* 0.41* 0.24* CAD 1.00 0.28* 0.34* 0.81* MRP 1.00 0.32* SPC 1.00 0.41* BC 1.00 MRP II

Significant at the 0.01 Level (2 Tailed)

Table 8. Correlation Between Administrative AMT


ERP ABC OA 1.00 0.74* ERP 1.00 ABC 1.00 OA

Implications of the Study


The implications of the findings of this study are several. First, Managers may adopt best practices to achieve manufacturing performance objectives of company. Second, the adoption of AMT will improve competitiveness to win the competition. This study gives parameters to evaluate their competitiveness. Managers may use the framework given in figure 1 to assess their that cost/benefit analysis (AIS competitiveness.

Concluding Remarks

The threat of global competition and the It is observed from Table 3, demand of major 4) and technology assessment (AIS 5) are the more Limitations and customers are forcing the important AMT implementation steps. Future Research Indian process industry Scope to re-evaluate their existing operational and technological capability. The The study was administered only in process sector competitiveness (quality, delivery, flexibility, and cost) of companies. Similar study may be carried out in other some companies has been threatened. As a result, AMT is industrial sectors viz. automotive, machinery, and electronics. considered as a competitive weapon in the Indian process The proposed framework for competitiveness (Figure 1) may industry. AMT appeared to represent a perfect marriage be tested in other industrial environments like developed between technological potential and the manufacturing economies. challenges of 21st century. AMT are a source of strategic References competitive benefits, such as improved quality, greater flexibility, and cost reduction. AMT gives a cutting edge to Ambastha, A. And Momaya, K. (2004) Competitiveness of Frims: Review a company and provides better competitive advantage as of Theory, Frameworks and Models, Singapore Management Review, 26, 1, pp.45-61. compared to the competitors. To achieve those benefits, companies need to carefully manage the implementation of Badiru, A.B. (1990), Strategic Planning for Automated Manufacturing: Some Factors and Dimensions, Edited by Parasaci.et.al., elesevier. Science these technologies (Saleh and Randhawa, 2001). In light of Publichers, pp.17-39. these facts, attention has focused on improving competitive
2006, Global Institute of Flexible Systems Management

G. S. Dangayach, S. C. Pathak and A. D. Sharma


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Advanced Manufacturing Technology: A way of Improving Technological Competitiveness

Appendix Survey on Advanced Manufacturing Technology (AMT)

2006, Global Institute of Flexible Systems Management

G. S. Dangayach, S. C. Pathak and A. D. Sharma

A. D. Sharma is a senior Faculty in Apex College of Engineering and Technology, Jaipur and pursuing Ph. D. at Department of Mechanical Engineering in Malaviya National Institute of Technology (MNIT), Jaipur.

G. S. Dangayach is an Associate Professor in Department of Mechanical Engineering in Malaviya National Institute of Technology (MNIT), Jaipur. He has 17 years of academic and 3 years of industrial experience. He has published 60 research papers in various National and International Journals. He is Guest Editor of International Journal of Manufacturing Technology & Management (IJMTM) and International Journal of Business Performance Management. He is also a reviewer of seven reputed International Journals. He is actively involved in sponsored projects and consultancies. He was a Visiting Professor at School of Management, Asian Institute of Technology (AIT) Bangkok. He can be reached at dangayachgs@yahoo.com

S. C. Pathak is presently working as Professor in Department of Mechanical Engineering in Malaviya National Institute of Technology (MNIT), Jaipur. He has published several research papers in National and International Journals. His present area of research interest are,Total productive maintenance & quality management.

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