7-1 Manufacturing, Service Industries & IT Technology.
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Transcript of 7-1 Manufacturing, Service Industries & IT Technology.
7-1
Manufacturing, Service Industries
& IT Technology
7-2
Purpose: To Show How Technology
is related to organizational structure
improves the response time of organization to needs of retailers & customers
Gives new competitive advantage in terms of cost, time, quality and price.
7-3
What is Technology Technology refers to the tools,
techniques, machines & actions used to transform organizational inputs (material, information, ideas) into outputs (products & services).
Technology is organization’s production process & includes work procedures as well as machinery.
7-4
What Technology Does for Different Depts. R&D:transforms ideas into product
proposals Mkt: transforms inventory into sales HR: transforms attitudes which is
reflected in behavior Production: converts raw materials
in to products
7-5
Core Transformation Process for a Manufacturing Company
ENVIRONMENT
Organization
Raw MaterialInputs
Product or ServiceOutputs
Core Work Processes
MaterialsHandling
Milling Inspection
Assembly
7-6
Woodward’s Study Joan Woodward: a British Industrial sociologist Study in 1950’s Objective: how manufacturing firms were organized and the
amount of mechanization Sample: 100 manufacturing firms Methodology: industry visit, interview of managers, examining
company records and direct observation of manufacturing operations
Information was organized in terms of structural characteristics (span of control, levels of management), managerial styles (written vs. verbal, rewards), type of manufacturing process and commercial success of firms.
A continuum of technical complexity developed, defined as the amount of mechanization of manufacturing process
High technical complexity: work performed by machines Low technical complexity: work performed by workers
7-7
Woodward’s Classification Based on System of Production
Group I Small-batch and unit Custom work is the norm Relies on human operator Not highly mechanized though computerized machinery used for
some parts but final assembly done by human operators Production (e.g. jewelry, assembled PC, DC cars)
Group II Output goes in to the inventory from where orders are fulfilled Large-batch and mass production (e.g. assembly lines of cars &
cigarettes) Group III
Entire process is mechanized There is no starting or stopping Continuous process production (e.g. production of electricity,
nuclear plants, oil refineries, distilleries)
7-8
Relationship between Technical Complexity & Structural Characteristics:Unit production
Overall structure Written
communication Verbal communication Centralization Formalization Worker’s skill level supervisor span of
control
Organic Low High Low Low High 23 (medium)
7-9
Relationship between Technical Complexity &Structural Characteristics: Mass Production Overall structure Written
communication Verbal
communication Centralization Formalization Worker’s skill level supervisor span of
control
Mechanistic High Low High High Low 48 (wide)
7-10
Relationship between Technical Complexity &Structural Characteristics: Continuous Production
Overall structure Written
communication Verbal
communication Centralization Formalization Worker’s skill level supervisor span of
control
Organic Low High Low Low High 15 (narrow)
7-11
Woodward’s Conclusion Different types of technology impose different
kinds of demands on individual & organization. These demands are met by appropriate
structure Successful firms had complementary structure &
technology Structural characteristics could be grouped
either as mechanistic or organic Successful small batch and continuous process
organizations had organic structures Successful mass production organization had
mechanistic structures.
7-12
Flexible Manufacturing Systems
Computer-aided design (CAD)
Computer-aided manufacturing (CAM)
Integrated Information Network
7-13
CAD Computers are used to assist in the
drafting,design and engineering of new parts.
Computers are guided to draw specified configuration on the screen including dimension and component details
Alternative designs can also be explored & can also be scaled up or down
7-14
CAM Greatly increases the speed at which
items can be manufactured Permits a production line to shift rapidly
from producing one product to any variety of other products by changing the instruction to the computer
Enables the production line to quickly honor customer requests for changes in product design & mix
7-15
Integrated Information Network
Links all the aspects of the firm (accounting, purchasing, marketing,inventory etc.)
Enables managers to make decisions & direct manufacturing process in a truly integrated fashion
7-16
Flexible Manufacturing System or Computer Integrating Manufacturing
Uses combination of CAD(in design) & CAM(in manufacturing)
Gives precision,speed,faster switching from one product to another,quality customer service and cost cutting.
E.g. Boeing 777 first paperless jetliner , IBM’s laptop being made with robots only.
Has led to mass customization.
7-17
Lean Manufacturing FMS can give the best results when all the
aspects of technology are combined with flexible management process to result in lean manufacturing
Lean manufacturing involves highly trained employees who take a painstaking approach to details and problem solving to cut waste and improve quality
The heart of lean manufacturing is not machine but people involvement
Employees are taught to think lean which means attacking waste and striving for continuous improvement
7-18
Toyota Production System (TPS) Toyota Motor Corporation pioneered lean manufacturing TPS combined techniques like just in time inventory, continuous work flow, quick change over of assembly lines, continuous improvement, preventive maintenance, with a management system
that encourages employee involvement and problem solving,
designing equipment to stop automatically so that defect can be fixed.
This has led to mass customization where factories are able to mass produce products as per customer specification
7-19
NEW CHOICES TRADITIONAL CHOICES
MassProduction
Small batchFlexible
ManufacturingMass
Customization
ContinuousProcess
Relationship of Flexible Manufacturing Technology to Traditional Technologies
BATCH SIZESmall Unlimited
Customized
Standardized
PR
OD
UC
T F
LEX
IBIL
ITY
7-20
Comparison of Organizational Characteristics Associated with Mass Production and
Flexible Manufacturing Systems: Structural Implications
Characteristic Mass Production FMS
Structure:
Span of Control Wide Narrow
Hierarchical levels Many Few
Tasks Routine, repetitive Adaptive, craft-like
Specialization High Low
Decision making Centralized Decentralized
Overall Bureaucratic, mechanistic
Self-regulating, organic
7-21
Service Firms Refer to those organizations which accomplish
their primary purpose through production & provision of services
Service produces an intangible output Service is abstract and often consists of
knowledge and ideas rather than a physical product
A manufacturers product can be inventoried for later selling, services are characterized by simultaneous production and consumption
Eg. Education, healthcare, transportation, banking & hospitality
7-22
Differences Between Manufacturing and Service Technologies
Manufacturing Technology1. Tangible product2. Products can be inventoried for later
consumption 3. Capital asset intensive4. Little direct customer interaction5. Human element may be less
important6. Quality is directly measured7. Longer response time is acceptable8. Site of facility is moderately
important
Service Technology1. Intangible product2. Production and consumption take
place simultaneously 3. Labor and knowledge intensive4. Customer interaction generally high5. Human element very important6. Quality is perceived and difficult to
measure7. Rapid response time is usually
necessary8. Site of facility is extremely important
SSS: 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
7-23
Configuration and Structural Characteristics of Service Organizations vs.
Product Organizations
Service ProductStructure:
Geographical dispersion Much (outlets) Little
Decision making Decentralized Centralized
Formalization Lower Higher
Human Resources:
Employee skill level Higher Lower
Skill emphasis Interpersonal Technical
7-24
Departmental Technology Analyses the nature of
departmental technology & its relationship with other departmental structure.
Developed by Charles Perrow
7-25
Departmental Technology (Perrow)
Task Analyzability Refers to whether work can
be reduced to mechanical steps to solve problems.
Problem solution can involve use of standard procedures like manuals,
Some problems are so complex that they cannot have right/wrong answer
Final solution is based on wisdom & experience
Task Variety Refer to to the frequency
of unexpected and novel events that occur in the conversion process.
Higher the frequency of unexpected events higher the variety
7-26
Departmental Technologies (Perrow) Craft Analyzability low Variety low Requires extensive
training and experience and use of wisdom and intuition
E.g.performing arts, fine goods
(pattern makers in apparel firm) ,manufacturing
Routine Variety low Analyzability high (use of
objective, computational procedures)
Task is formalized and standardized
e.g.auditing , clerical, sales
7-27
Engineering High analyzability
(problems handled based on formulae, procedures and techniques)
High variety Examples:
Legal Engineering
Nonroutine Low analyzability High variety Examples:
Strategic planning Social science
research Applied research
Departmental Technologies (Perrow)
7-28
Appropriate Departmental Technology High scores for analyzability and
low scores for variety means routine technology and vice versa for non routine
Low variety and low analyzability means craft
High variety and high analyzability means engineering.
7-29
Relationship of Department Technology to Structural and Management Characteristics
(Perrow)
Mechanistic Structure1. High formalization2. High centralization 3. Little training or experience4. Wide span5. Vertical, written communications
ROUTINE (high analyzability,low variety)
Mostly Mechanistic Structure1. Moderate formalization2. Moderate centralization 3. Formal training4. Moderate span5. Written and verbal communications
ENGINEERING (high analyzability, high variety)
Mostly Organic Structure1. Moderate formalization2. Moderate centralization 3. Work experience4. Moderate to wide span5. Horizontal, verbal communications
CRAFT (variety low,analysalility low)
Organic Structure1. Low formalization2. Low centralization 3. Training plus experience4. Moderate to narrow span5. Horizontal communications meetings
NONROUTINE (analyzability Low, variety high)
7-30
Workflow Interdependence among Depts.
Interdependence refers to the extent to which departments depend on each other for resources or material to accomplish their tasks
7-31
Workflow Interdependence among Depts.(Thomson)
Form of Interdependence
Demands on Horizontal
Communications, Decision Making
Type of Coordination
Required
Priority for Locating Units Close Together
Pooled (bank branches)Low
communication
Standardization, rules, procedures
Divisional StructureLow
Sequential (assembly line) Medium
communication
Plans, schedules, feedback
Task ForcesMedium
Reciprocal (hospital)High
communication
Mutual adjustment, cross-departmental meetings, teamwork
Horizontal Structure
High
Client
Client
Client
7-32
Primary Means to Achieve Coordination for Different Levels of Task Interdependence in
a Manufacturing Firm
Reciprocal(new product development)
Sequential(product manufacture)
Pooled(product delivery)
COORDINATIONINTERDEPENDENCEHigh
Low
Horizontal structure,cross-functional teams
Face-to-face communication,Unscheduled meetings,Full-time integrators
Scheduled meetings, task forces
Vertical communication
Plans
Rules
MutualAdjustment
Planning
Standardization
7-33
Information as a Strategic Weapon
Intranet ERP Knowledge Management
7-34
Two Approaches to Knowledge Management
ExplicitProvide high-quality, reliable, and fast
information systems for access of codified, reusable knowledge
TacitChannel individual expertise to provide creative advice
on strategic problems
KnowledgeManagement
Strategy
People-to-documents
Develop an electronic document system thatcodifies, stores,disseminates, and allowsreuse of knowledge
Invest heavily in informationtechnology, with a goal ofconnecting people withReusable, codified knowledge
Person-to-person
Develop networks forlinking people so thattacit knowledge canbe shared
Invest moderately ininformation technology,with a goal of facilitatingconversations and the ex-change of tacit knowledge
Technology
Source: Based on Morten T. Hansen, Nitin Nohria, and Thomas Tierney,“What’s Your Strategy for Managing Knowledge?” Harvard BusinessReview, March-April 1999, 106-116.
7-35
Impact of Technology on Job Design Job Design includes assignment of goals
& tasks to be accomplished by employees
Job Rotation (moving from job to job)
Job simplification (variety and difficulty level of task is reduced)
Job enlargement (expansion of the number of different tasks performed by each individual is increased)
Job enrichment (greater responsibility, recognition and opportunity for growth and development)
7-36
Design for Joint Optimization
Work roles, tasks,workflow
Goals and values
Skills and abilities
Design for Joint Optimization
Work roles, tasks,workflow
Goals and values
Skills and abilities
Sociotechnical Systems Model
The Social SystemIndividual and teambehaviors
Organizational/teamculture
Management practices
Leadership style
Degree of communicationand openness
Individual needs and desires
The Social SystemIndividual and teambehaviors
Organizational/teamculture
Management practices
Leadership style
Degree of communicationand 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
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