Systems that connect buyers and suppliers are spreading. Xerox gives manufacturing data to suppliers electronically to help them deliver materials. To speed up order entry, Westinghouse Electric Supply Company and American Hospital Supply have furnished their customers with terminals. Among other things, many systems raise the costs of switching to a new partner because of the disruption and retraining required. These systems tend to tie companies more closely to their buyers and suppliers.
Information technology is altering the relationship among scale, automation, and flexibility with potentially profound consequences. Large-scale production is no longer essential to achieve automation. As a result, entry barriers in a number of industries are falling.
At the same time, automation no longer necessarily leads to inflexibility. For example, General Electric rebuilt its Erie locomotive facility as a large-scale yet flexible factory using computers to store all design and manufacturing data. Ten types of motor
frames can be accommodated without manual adjustments to the machines. After installation of a "smart"