Page 15 - DMGT501_OPERATIONS_MANAGEMENT

Unit 1: Introduction to Operations Management

4. Economy improvement. Sometimes and some kinds of automation implies improves in Notes
economy of enterprises, society or most of humankind.

1.5.2 Disadvantages of Automation

1. It faces technology limits. Technology is not able to automate all the desired tasks.
2. The cost of automation is difficult to predict. The research and development cost of
automating a process is difficult to predict accurately beforehand. Since this cost can have
a large impact on profitability, it's possible to finish automating a process only to discover
that there's no economic advantage in doing so.

3. The initial costs involved are relatively high. The automation of a new product required
a huge initial investment in comparison with the unit cost of the product, although the
cost of automation is spread in many product batches. The automation of a plant required
a great initial investment too, although this cost is spread in the products to be produced.

Caselet Toyota Kirloskar Looking at Higher Level of
Automation

— by K Giriprakash
T higher capacity and hence may need fewer workers to run the operations.
oyota-Kirloskar may increase the automation in its second plant because of its

The existing plant at Bidadi, 40 km from Bangalore, has the capacity to manufacture 60,000
vehicles and is one of the least automated plants of the world's largest car maker, Toyota
Motor Corporation. The new plant, which will also come up near the existing plant, will
manufacture the mass market compact cars and will have a capacity of one lakh units.
Higher Automation

Toyota Kirloskar Motor's Deputy Managing Director (Commercial), Mr Shekar
Viswanathan, told Business Line that with the company looking to turn out more cars
from the second plant, the auto major was studying the feasibility of automating the plant
to a level higher than at the existing plant. "Given the higher volume that the new factory
will have, plans to have a higher level of automation in the new factory is under study,"
Mr Viswanathan said. However, if the cost of automating the new plant is much higher,
the company might look at a slightly lower level of automation and hire more workers.

Mr Viswanathan said the company is using the downturn in the auto sector to multi-skill
its workers. It is reducing the assembly line speed so that the same number of workers
carries out multiple tasks and learns more about taking advantage of the reduction in
production because of the slowdown in the automobile market.

Toyota has slowed down production at its plant considerably and expects the plant will
return to full capacity in a couple of months. Mr Viswanathan said kaizen (continuous
improvement) was an effective process - both during the downturn as well as when the
plant is running at full capacity. He said during the downturn, workers will have the

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