Information technology in manufacturing industry: Its use and impact

Information technology (IT) investments represent a significant percentage of capital budget in any company. Most corporations would like to ensure that the technology is being used to achieve the maximum advantage for the company. It is, therefore, expected that use and impact of IT will differ between manufacturing and service industry. This paper tries to assess the differential impact of IT on manufacturing and service industries and more specifically its impact on purchasing functions of these companies. The study finds that (i) service industry implements EDI for communicating with vendors whereas manufacturing industry does the same for communicating with customers, (ii) availability of capital and requirements of international customers had more impact on manufacturing industries' decision on IT expenditure, (iii) while manufacturing industry's IT expenditure is not focused toward its vendors, it has reduced number of active vendors and believes it has more information sharing with vendors, (iv) larger corporations make more investments on mainframe computers than on personal computers and on telecommunications. IT improves internal communication but is not seen as a tool for enhancing vendor relationship. We do not find any significant improvement in purchasing performance other than improved accuracy and reliability of order processing.