Manufacturing and Service Technologies

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1 Chapter Seven Manufacturing and Service Technologies Thomson Learning © 2004 

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Core Transformation Process for a Manufacturing Company ENVIRONMENT ae Technol [Organization oe "elem > Material Handling Milling Thomson Learning © 2004 72 

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Woodward's Classification Based on System of Production = Group | * Small-batch and unit production = Group Il " Large-batch and mass production =" Group Ill = Continuous process production Thomson Learning © 2004 

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Flexible Manufacturing Systems = Computer-aided design = (CAD) = Computer-aided manufacturing = (CAM) = Integrated Information Network Thomson Learning © 2004 

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Relationship of Flexible Manufacturing Technology to Traditional Technologies Customized| PRODUCT FLEXIBILITY Standardized BATCH SIZE > Unlimited sess Thomson Learning +1994, 15859.@ 2004 75 

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Comparison of Organizational Characteristics Associated with Mass Production and Flexible Manufacturing Systems FMS Narrow Few Adaptive, ۵8 like Low Decentralized Self-regulating, organic 76 Mass Production Wide Many Routine, repetitive High Centralized Bureaucratic, mechanistic Characteristic Structure: Span of Control Hierarchical levels Tasks Specialization Decision making Overall ‘Minufactrng Orgentzatons.Inpleatins fr Stategy Formulation Se Jeeny MFomson Learning © 2004 

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Comparison of Organizational Characteristics Associated with Mass Production and Flexible Manufacturing Systems (cont.) FMS Teamwork Broad, frequent Cognitive, social Solve problems 737 Mass Production Standalone Narrow, one time Manual, technical » fhomson Learning © 2004 Characteristic Human Resources: Interactions Training Expertise 

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Comparison of Organizational Characteristics Associated with Mass Production and Flexible Manufacturing Systems (cont.) FMS Changing Few, close relations 78 Mass Production Stable Many, arm’s length fhomson Learning © 2004 Characteristic Interorganizational: Customer Demand Suppliers 

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Differences Between Manufacturing and Service Technologies Manufacturing Technolog: 2 Tangible product 2. Products can be inventoried for later consumption 3 Capital asset intensive 0 4 Little direct customer 2, Intangible product eee 0 2. Production and consumption imran clement may te: lees: take place simultaneously es 1 oo Quality is directly measure ‏یت‎ 7. Longer response time Is ی یت ‎Customer interaction‏ ,4 لاه م9۵ وا واه اوه ‎nian‏ یر 5. Human element very 9 important 6. Quality is perceived and difficult to measure 7 Banid responce ti usually necessary ‘hirlinitquafdacitisndsiexteemely fast-food outlets, Cosmetics, _Soft drink companies, Helmpedant aw firms Real estate, Stockbrokers, Steel companies, Retail stores Auto manufacturers, ‘Sources aso on F.F Reichl and W. E. Sasser, Food processing plants لا سل ‎Desjnin Schauer, "x FraacwersTTOMSON Learning‏ بت ‎Bonen caren seh‏ ‎Sy en a ee) ODM, 79‏ 

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Configuration and Structural Characteristics of Service Organizations vs. Product Many Little Centralized Higher Lower Technical 7-10 Service Few Much Decentralized Lower Higher Interpersonal Product Organizations Structure: Separate boundary roles Geographical dispersion Decision making Formalization Human Resources: Employee skill level Skill emphasis Thomson Learning © 2004 

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Departmental Technologies =" ROUTINE = CRAFT = High analyzability = Low analyzability = Low variety = Low variety = Examples: = Examples: = Sales * Performing arts = Clerical " Trades = Drafting * Fine goods = Auditing manufacturing Thomson Learning © 2004 71 

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Departmental Technologies =" ENGINEERING =" NONROUTINE = High analyzability = Low analyzability = High variety = High variety = Examples: = Examples: = Legal " Strategic planning = Engineering * Social science = Tax accounting research = General accounting " Applied research Thomson Learning © 2004 712 

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Relationship of Department Technology to Structural and Management Characteristics Organic Structure Low formalization Low centralization . Training plus experience |. Moderate to narrow span . Horizontal communications meetings NONROUTINE T مسري سح م 1 Mostly Mechanistic Structure Moderate formalization Moderate centralization |. Formal training . Moderate span - Written and verbal ‘communications ENGINEERING ۳۳۹3 Mostly Organic Structure Moderate formalization . Moderate centralization . Work experience Moderate to wide span Horizontal, verbal ‘communications CRAFT. 1 1 Mechanistic Structure High formalization High centralization |. Little training or experience Wide span Vertical, written ‘communications ROUTINE Thomson Learning © 2004 

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Thompson’s Classification of Interdependence and Management Implications Demands on Priority for Form of Horizontal Type of Locating Units Interdependence | Communications, Coordination Close Together Decision Making Required Pooled (bank) Standardization, rules, procedures 5 5 8 ‏لا‎ tow ۳ Divisional Structure Sequential Plans, schedules, feedback (assembly ine) Medium DE) BD BD cient) communication Medium Task Forces Rey ital) Matual adjustment, High cross-departmental 8-8-8 ‏ا مهس‎ earwork vi 7 ‏ات‎ Horizontal Structure Thomson Learnin 8 714 © 2004 

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Primary Means to Achieve Coordination for Different Levels of Task Interdependence in a Manufacturing Firm COORDINATION High lorizontal structure, ross-functional teams Mutual e-to-face communication(” agiuctment nscheduled meetings, ull-time integrators eduled meetings, task forces Planning tical communication 65 Standardization Thomson Learning © 2004 715 

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Interdependence and Other Characteristics of Team Play Basketball Reciprocal Low Mutual adjustment and shared responsibility Influence flow of game 7-16 Relationships Among Football Sequential Medium Game plan and position roles Prepare and execute game Baseball Pooled High Rules that govern the sport Select players and develop their skills ‘Thomson Learning © 2004 Interdependence: Physical dispersion of players: Coordination: Key management job: 

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Sociotechnical Systems Model The Social System The Technical ۴ Individual and team Type of production behaviors technology (small bgt 1 mass production, FMB; Organizational/team . Design for ۳ 7 culture Joint Optimization Level of interdepen (pooled, sequential, Management practices ork roles, tasks, reciprocal) workflow Leadership style Physical work settin, Goals and values Degree of communic Complexity of produ and openness kills and abilities process (variety an | Individual needs and desires Nature of raw mate Time pressure thomson Learning ‏نج‎ neon ee 7-17 

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Comparison Family Restaurant 7-18 Subway McDonald's Thomson tear © 2004 Workbook Activity Technolo Organization Goals Authority Structure Woodward’s Technology Type Mechanistic vs. Organic Teamwork vs. Individual Interdependence Routine vs. Nonroutine tasks Task Specialization Task Standardization Technical vs. Social Expertise Centralized vs. 

Chapter Seven Manufacturing and Service Technologies Thomson Learning © 2004 7-1 Core Transformation Process for a Manufacturing Company ENVIRONMENT Organization Raw Material Inputs Core Work Processes Materials Handling Product or Service Outputs Assembly Milling Thomson Learning © 2004 Inspection 7-2 Woodward’s Classification Based on System of Production  Group I   Group II   Small-batch and unit production Large-batch and mass production Group III  Continuous process production Thomson Learning © 2004 7-3 Flexible Manufacturing Systems  Computer-aided design   Computer-aided manufacturing   (CAD) (CAM) Integrated Information Network Thomson Learning © 2004 7-4 Relationship of Flexible Manufacturing Technology to Traditional Technologies Flexible Manufacturing Small batch NEW PRODUCT FLEXIBILITY Customized Mass Customization CHOICES TR Mass AD ITI Production ON AL Continuous Process Standardized Small BATCH SIZE 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/21 st Century Capitalism, 18 November 1994, 158-59. Thomson Learning © 2004 Unlimited CH OI 7-5 CE S Comparison of Organizational Characteristics Associated with Mass Production and Flexible Manufacturing Systems Characteristic Mass Production FMS Structure: Span of Control Wide Narrow Hierarchical levels Many Few Tasks Routine, repetitive Adaptive, like Specialization High Low Decision making Centralized Decentralized Overall Bureaucratic, mechanistic Self-regulating, organic 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. Thomson Learning © 2004 craft- 7-6 Comparison of Organizational Characteristics Associated with Mass Production and Flexible Manufacturing Systems (cont.) Characteristic Mass Production FMS Human Resources: Interactions Standalone Teamwork Training Narrow, one time Broad, frequent Expertise Manual, technical Cognitive, social Solve problems 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. Thomson Learning © 2004 7-7 Comparison of Organizational Characteristics Associated with Mass Production and Flexible Manufacturing Systems (cont.) Characteristic Mass Production FMS Interorganizational: Customer Demand Stable Changing Suppliers Many, arm’s length Few, close relations 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. Thomson Learning © 2004 7-8 Differences Between Manufacturing and Service Technologies Manufacturing Technology 1. 2. 3. 4. Service Technology 1. 2. Intangible product 5. Production and consumption take place simultaneously 6. 3. Labor and knowledge 7. intensive 4. Customer interaction 8. generally high 5. Human element very important 6. Quality is perceived and difficult to measure 7. Rapid response time is usually necessary Service: Product and Service: 8. Site of facility is extremely Airlines, Hotels,Consultants, Fast-food outlets, Cosmetics, importantLaw firms Healthcare, Real estate, Stockbrokers, Retail stores 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. Thomson Learning © 2004 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 Product: Soft drink companies, Steel companies, Auto manufacturers, Food processing plants 7-9 Configuration and Structural Characteristics of Service Organizations vs. Product Organizations Service Product Structure: Separate boundary roles Few Many Geographical dispersion Much Little Decision making Decentralized Centralized Formalization Lower Higher Employee skill level Higher Lower Skill emphasis Interpersonal Technical Human Resources: Thomson Learning © 2004 7-10 Departmental Technologies  ROUTINE     CRAFT High analyzability Low variety Examples:     Sales Clerical Drafting Auditing    Low analyzability Low variety Examples:    Thomson Learning © 2004 Performing arts Trades Fine goods manufacturing 7-11 Departmental Technologies  ENGINEERING     NONROUTINE High analyzability High variety Examples:     Legal Engineering Tax accounting General accounting Thomson Learning © 2004    Low analyzability High variety Examples:    Strategic planning Social science research Applied research 7-12 Relationship of Department Technology to Structural and Management Characteristics Mostly Organic Structure 1. 2. 3. 4. 5. 1. 2. 3. 4. 5. Moderate formalization Moderate centralization Work experience Moderate to wide span Horizontal, verbal communications Organic Structure 1. 2. 3. 4. 5. Low formalization Low centralization Training plus experience Moderate to narrow span Horizontal communications meetings CRAFT NONROUTINE Mechanistic Structure Mostly Mechanistic Structure High formalization High centralization Little training or experience Wide span Vertical, written communications 1. 2. 3. 4. 5. ROUTINE Moderate formalization Moderate centralization Formal training Moderate span Written and verbal communications ENGINEERING Thomson Learning © 2004 7-13 Thompson’s Classification of Interdependence and Management Implications Form of Interdependence Demands on Horizontal Communications, Decision Making Pooled (bank) Low communication Standardization, rules, procedures Low Divisional Structure Client Sequential (assembly line) Client Plans, schedules, feedback Medium communication Medium Task Forces Reciprocal (hospital) High communication Client Type of Coordination Required Priority for Locating Units Close Together Mutual adjustment, cross-departmental meetings, teamwork High Horizontal Structure Thomson Learning © 2004 7-14 Primary Means to Achieve Coordination for Different Levels of Task Interdependence in a Manufacturing Firm INTERDEPENDENCE Reciprocal (new product development) COORDINATION High Horizontal structure, cross-functional teams Mutual Sequential (product manufacture) Face-to-face communication, Adjustment Unscheduled meetings, Full-time integrators Scheduled meetings, task forces Pooled (product delivery) Vertical communication Planning Plans Rules 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. Thomson Learning © 2004 7-15 Relationships Among Interdependence and Other Characteristics of Team Play Baseball Football Basketball Interdependence: Pooled Sequential Reciprocal Physical dispersion of players: High Medium Low Coordination: Rules that govern the sport Game plan and position roles Mutual adjustment and shared responsibility Key management job: Select players and develop their skills Prepare and execute game Influence flow of game 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. Thomson Learning © 2004 7-16 Sociotechnical Systems Model TheSocial SocialSystem System The Individualand andteam team Individual behaviors behaviors Organizational/team Organizational/team culture culture Managementpractices practices Management Leadershipstyle style Leadership Degreeof ofcommunication communication Degree andopenness openness and TheTechnical TechnicalSystem Syste The Designfor for Design JointOptimization Optimization Joint Workroles, roles,tasks, tasks, Work workflow workflow Goalsand andvalues values Goals Skillsand andabilities abilities Skills Individualneeds needsand and Individual desires desires Typeof ofproduction production Type technology(small (smallbatc bat technology massproduction, production,FMS, FMS, mass Levelof ofinterdependen interdependen Level (pooled,sequential, sequential, (pooled, reciprocal) reciprocal) Physicalwork worksetting setting Physical Complexityof ofproductio product Complexity process(variety (varietyand and process analyzability) analyzability) Natureof ofraw rawmaterials materia Nature Timepressure pressure Time 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. Thomson Learning © 2004 7-17 Workbook Activity Technology Comparison McDonald’s Subway Family Restaurant Organization Goals Authority Structure Woodward’s Technology Type Mechanistic vs. Organic Teamwork vs. Individual Interdependence Routine vs. Nonroutine tasks Task Specialization Task Standardization Technical vs. Social Expertise Centralized vs. Thomson Learning © 2004 7-18