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Quality

Resource Usage. Issues include:. The impact of process technologies on operations Understanding the general characteristics of process technologies over time The effect of new forms of technology on performance. Quality. Speed. Performance objectives. Dependability.

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Quality

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  1. Resource Usage Issues include: • The impact of process technologies on operations • Understanding the general characteristics of process technologies over time • The effect of new forms of technology on performance Quality Speed Performance objectives Dependability Market Competitiveness Flexibility Cost Process Technology definition and characteristics Development and Organization Supply Network Capacity Decision areas Issues covered in this chapter Slide 8.1

  2. process innovation Rate of innovation Rate of innovation Rate of innovation product innovation Time Time Time (a) (b) (c) Generic product/process life cycle (assembled, non-assembled products and services) Slide 8.2

  3. Information Indirect process technology Infrastructural services Materials Information Customers Products and services Direct process technology Direct and indirect process technology Slide 8.3

  4. SCALE Few, large units Many, small units HIGH LOW Fewer, larger units ofprocess technology Issues: Higher capital costs Economies of scale Vulnerable to failure ‘All or nothing’ change Many, small units of process technology Issues: Lower capital costs Demand matching Failure redundancy Upgrading easier Scale is usually an important dimension of process technology Slide 8.4

  5. AUTOMATION Low acuity and judgement High acuity and judgement LOW HIGH Capital Intensive Issues include: Lower direct costs Design intensive Maintenance costs Labor Intensive Issues include: Higher direct costs Control intensive Human creativity Automation is usually an important dimension of process technology Slide 8.5

  6. COUPLING Integrated Rigid Loose Separated LOW HIGH Stand-alone Issues include: Lower capital costs Fragmentation or flexibility? Control flexibility System robustness Integrated Issues include: Higher capital costs Speed or rigidity? Designed synchronisation System efficiency The degree of coupling between individual units is usually an important dimension of process technology Slide 8.6

  7. COUPLING Loose Separated Integrated Rigid LOW HIGH AUTOMATION High acuity and judgement Low acuity and judgment LOW HIGH SCALE Many, small units Few, large units LOW HIGH Flexibility performance Cost performance The three dimensions of process technology are often closely linked Slide 8.7

  8. High volume Low variety Low volume High variety High acuity and judgement Many, small units Loose Separated Market requirements High Cost Low Off the diagonal high flexibility redundant capability high costs High A Automation Coupling Scale Flexibility B Off the diagonal low flexibility insufficient capability high costs C Low Low acuity and judgement Integrated Rigid Few, large, units The product-process matrix and the technology dimensions Slide 8.8

  9. Low volume High variety High volume Low variety Low volume High variety High volume Low variety [2] [1] [2] Voucher processing centers Individual branches Increasing scale Increasing automation Increasing coupling [3] Moving down the diagonal of the product-process matrix in retail banking Slide 8.9

  10. Competitive pressure to reduce costs High Flexibility Market fragmentation making flexibility more valuable Low High Low Cost Market pressures are requiring operations to be both flexible and low cost Slide 8.10

  11. SCALABILITY HIGH LOW Issues: Bespoke, legacy systems Specific expertise required Idiosyncratic processes In-house Issues: Reliable architecture Dispersed system skills Standard processes Outsourced? In some technologies scalability is as important as scale Slide 8.11

  12. ANALYTICAL CONTENT HIGH LOW Low analytical resource Issues include…. Lower capital cost Simple sequential rules Data input predominates Often single point of connection High analytical resource Issues include…. Higher capital cost Parallel processing Data manipulation (expert systems, artificial intelligence (AI) etc.) Complex connectivity ‘Analytical content’ is the equivalent of automation for information-rich technologies Slide 8.12

  13. CONNECTIVITY HIGH LOW High connectivity Issues include: Platform independence (HTML, Java etc.) Bandwidth available Reliable middleware Security concerns Low connectivity Issues include: Customized, legacy systems (black-box) Hard-wired Restricted access The degree of connectivity is the equivalent of coupling in information-rich technologies Slide 8.13

  14. COUPLING Loose Separated Integrated Rigid CONNECTIVITY AUTOMATION Low acuity and judgment High acuity and judgement ANALYTICAL CONTENT SCALE Many, small units Few, large units SCALABILITY Some flexibility advantage retained in spite of adoption of ‘efficient’ technology Flexibility performance Cost performance Some cost advantage retained in spite of adoption of technological flexibility The effect of technology change on the three dimensions Slide 8.14

  15. Low volume High variety High volume Low variety High acuity and judgement Many, small units Loose Separated Market requirements High Cost Low High Automation Coupling Scale Flexibility Scalability Connectivity Analytical content Low Low acuity and judgement Few, large, units Integrated Rigid New developments in process technology can change the cost-flexibility trade-off Slide 8.15

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