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Chapter Seven

Chapter Seven. Manufacturing and Service Technologies. Core Transformation Process for a Manufacturing Company. ENVIRONMENT. Organization. Core Technology. Raw Material Inputs. Product or Service Outputs. Core Work Processes. Materials Handling. Assembly. Milling. Inspection.

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Chapter Seven

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  1. Chapter Seven Manufacturing and Service Technologies

  2. Core Transformation Process for a Manufacturing Company ENVIRONMENT Organization Core Technology Raw Material Inputs Product or Service Outputs Core Work Processes Materials Handling Assembly Milling Inspection

  3. Woodward’s Classification Based on System of Production • Group I • Small-batch and unit production • Group II • Large-batch and mass production • Group III • Continuous process production

  4. Flexible Manufacturing Systems • Computer-aided design • (CAD) • Computer-aided manufacturing • (CAM) • Integrated Information Network

  5. Small batch Mass Customization Mass Production Continuous Process Relationship of Flexible Manufacturing Technology to Traditional Technologies Flexible Manufacturing NEW CHOICES Customized PRODUCT FLEXIBILITY TRADITIONAL CHOICES Standardized BATCH SIZE Small Unlimited Source: Based on Jack Meredith, “The Strategic Advantages of New Manufacturing Technologies For Small Firms.” Strategic Management Journal 8 (1987): 249-58; Paul Adler, “Managing Flexible Automation,” California Management Review (Spring 1988): 34-56; and Otis Port, “Custom-made Direct from the Plant.” Business Week/21st Century Capitalism, 18 November 1994, 158-59.

  6. Comparison of Organizational Characteristics Associated with Mass Production andFlexible Manufacturing Systems (FMS) Source: Based on Patricia L. Nemetz and Louis W. Fry, “Flexible Manufacturing Organizations: Implications for Strategy Formulation and Organization Design.” Academy of Management Review 13 (1988); 627-38; Paul S. Adler, “Managing Flexible Automation,” California Management Review (Spring 1988); 34-56; Jeremy Main, “Manufacturing the Right Way,” Fortune, 21 May 1990, 54-64.

  7. Comparison of Organizational Characteristics Associated with Mass Production andFlexible Manufacturing Systems (cont.) Source: Based on Patricia L. Nemetz and Louis W. Fry, “Flexible Manufacturing Organizations: Implications for Strategy Formulation and Organization Design.” Academy of Management Review 13 (1988); 627-38; Paul S. Adler, “Managing Flexible Automation,” California Management Review (Spring 1988); 34-56; Jeremy Main, “Manufacturing the Right Way,” Fortune, 21 May 1990, 54-64.

  8. Comparison of Organizational Characteristics Associated with Mass Production andFlexible Manufacturing Systems (cont.) Source: Based on Patricia L. Nemetz and Louis W. Fry, “Flexible Manufacturing Organizations: Implications for Strategy Formulation and Organization Design.” Academy of Management Review 13 (1988); 627-38; Paul S. Adler, “Managing Flexible Automation,” California Management Review (Spring 1988); 34-56; Jeremy Main, “Manufacturing the Right Way,” Fortune, 21 May 1990, 54-64.

  9. Manufacturing Technology • Tangible product • Products can be inventoried for later consumption • Capital asset intensive • Little direct customer interaction • Human element may be less important • Quality is directly measured • Longer response time is acceptable • Site of facility is moderately important • Service Technology • Intangible product • Production and consumption take place simultaneously • Labor and knowledge intensive • Customer interaction generally high • Human element very important • Quality is perceived and difficult to measure • Rapid response time is usually necessary • Site of facility is extremely important Service: Airlines, Hotels,Consultants, Healthcare, Law firms Product and Service: Fast-food outlets, Cosmetics, Real estate, Stockbrokers, Retail stores Product: Soft drink companies, Steel companies, Auto manufacturers, Food processing plants Differences Between Manufacturing and Service Technologies Sources: Based on F. F. Reichheld and W. E. Sasser, Jr., “Zero Defections: Quality Comes to Services,” Harvard Business Review 68 (September-October 1990): 105-11; and David E. Bowen, Caren Siehl, and Benjamin Schneider, “A Framework for Analyzing Customer Service Orientations in Manufacturing,” Academy of Management Review 14 (1989): 75-95.

  10. Configuration and Structural Characteristics of Service Organizations vs. Product Organizations

  11. CRAFT Low analyzability Low variety Examples: Performing arts Trades Fine goods manufacturing ROUTINE High analyzability Low variety Examples: Sales Clerical Drafting Auditing Departmental Technologies

  12. ENGINEERING High analyzability High variety Examples: Legal Engineering Tax accounting General accounting NONROUTINE Low analyzability High variety Examples: Strategic planning Social science research Applied research Departmental Technologies

  13. Mostly Organic Structure 1. Moderate formalization 2. Moderate centralization 3. Work experience 4. Moderate to wide span 5. Horizontal, verbal communications CRAFT Organic Structure 1. Low formalization 2. Low centralization 3. Training plus experience 4. Moderate to narrow span 5. Horizontal communications meetings NONROUTINE Mechanistic Structure 1. High formalization 2. High centralization 3. Little training or experience 4. Wide span 5. Vertical, written communications ROUTINE Mostly Mechanistic Structure 1. Moderate formalization 2. Moderate centralization 3. Formal training 4. Moderate span 5. Written and verbal communications ENGINEERING Relationship of Department Technology to Structural and Management Characteristics (Exhibit 7.10, p.263) Key: Formalization, Centralization, Staff qualifications, Span of control, Communication and coordination

  14. Department Design • Routine technologies are associated with a mechanistic structure and processes, with formal rules and rigid management processes. • Nonroutine technologies are associated with an organic structure, and department management is more flexible and free-flowing.

  15. Thompson’s Classification of Interdependence and Management Implications Client Client Client

  16. Sequential (product manufacture) Pooled (product delivery) Primary Means to Achieve Coordination for Different Levels of Task Interdependence in a Manufacturing Firm INTERDEPENDENCE COORDINATION High Reciprocal (new product development) Horizontal structure, cross-functional teams Face-to-face communication, Unscheduled meetings, Full-time integrators Scheduled meetings, task forces Vertical communication Plans Rules Mutual Adjustment Planning Standardization Low Source: Adapted from Andrew H. Van de Ven, Andre Delbecq, and Richard Koenig, “Determinants of Communication Modes Within Organizations,” American Sociological Review 41 (1976): 330.

  17. Relationships Among Interdependence and Other Characteristics of Team Play Source: Based on William Passmore, Carol E. Francis, and Jeffrey Halderman, “Sociotechnical Systems: A North American Reflection On the Empirical Studies of the 70’s,” Human Relations 35 (1982): 1179-1204.

  18. Sociotechnical Systems Model The Social System Individual and team behaviors Organizational/team culture Management practices Leadership style Degree of communication and openness Individual needs and desires The Technical System Type of production technology (small batch, mass production, FMS, etc.) Level of interdependence (pooled, sequential, reciprocal) Physical work setting Complexity of production process (variety and analyzability) Nature of raw materials Time pressure Design for Joint Optimization Work roles, tasks, workflow Goals and values Skills and abilities Sources: Based on T. Cummings, “Self-Regulating Work Groups: A Socio-Technical Synthesis,” Academy of Management Review 3 (1978): 625-34; Don Hellriegel, John W. Slocum, and Richard W. Woodman, Organizational Behavior, 8th ed. (Cincinnati, Ohio: South-Western College Publishing, 1998), 492; and Gregory B. Northcraft and Margaret A. Neale, Organizational Behavior: A Management Challenge, 2nd ed. (Fort Worth, Tex.: The Dryden Press, 1994), 551.

  19. Workbook Activity Technology Comparison

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