A methodology to assess the strategic benefits of new production technologies

Abstract: "In this paper, we develop a formal methodology to enable firms to assess the economic benefits of new production technologies, particularly, the integrated design and manufacturing systems. The methodology accounts for the benefits of new technologies that are not captured or quantified using the current methods of capital investment. Many new production technologies have been developed to help meet long term strategic goals such as product quality, delivery speed, reliability, and rapidity of new product introduction. Traditional economic analysis, with its focus on reducing labor costs, does not capture these strategic advances that make new technologies attractive.Our methodology integrates investments in new production technologies into the business strategy of a firm. By creating a formal description of the role of new technologies in improving a firm's competitive position, the economic benefits of new technology can be assessed systematically. The methodology stresses the connections between competitiveness of the firm and the limitations imposed by its existing technological capability.