Chapter Seven

Manufacturing and Service

Technologies

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© 2004 7-1
 Core Transformation Process for a
Manufacturing Company
ENVIRONMENT
Organization

Raw Material Core Product or Service

Inputs Work Processes Outputs

Materials Assembly
Handling

Milling Inspection

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© 2004 7-2
 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
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 Flexible Manufacturing Systems
 Computer-aided design
 (CAD)

 Computer-aided manufacturing
 (CAM)

 Integrated Information Network

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 Relationship of Flexible Manufacturing
Technology to Traditional Technologies
Flexible Mass
Small batch
Manufacturing Customization

Customized NEW CHOICES

TRA
D ITI
ON Mass
AL
PRODUCT FLEXIBILITY

Production

Continuous
CH Process
OIC
ES

Standardized
Small BATCH SIZE Unlimited
Source: Based on Jack Meredith, “The Strategic Advantages of New

Thomson Learning
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.”
© 2004
Business Week/21st Century Capitalism, 18 November 1994, 158-59. 7-5
 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, craft-
like
Specialization High Low
Decision making Centralized Decentralized
Overall Bureaucratic, Self-regulating,
mechanistic organic
Source: Based on Patricia L. Nemetz and Louis W. Fry, “Flexible
Manufacturing Organizations: Implications for Strategy Formulation

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and Organization Design.” Academy of Management Review 13
(1988); 627-38; Paul S. Adler, “Managing Flexible Automation,”

7-6
California Management Review (Spring 1988); 34-56; Jeremy Main,

© 2004
“Manufacturing the Right Way,” Fortune, 21 May 1990, 54-64.
 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

Thomson Learning
and Organization Design.” Academy of Management Review 13
(1988); 627-38; Paul S. Adler, “Managing Flexible Automation,”

7-7
California Management Review (Spring 1988); 34-56; Jeremy Main,

© 2004
“Manufacturing the Right Way,” Fortune, 21 May 1990, 54-64.
 Comparison of Organizational Characteristics Associated
with Mass Production and
Flexible Manufacturing Systems (cont.)

Characteristic Mass Production FMS

Interorganizational:
Customer Demand Stable Changing
Suppliers Many, Few, close
arm’s length relations

Source: Based on Patricia L. Nemetz and Louis W. Fry, “Flexible

Manufacturing Organizations: Implications for Strategy Formulation

Thomson Learning
and Organization Design.” Academy of Management Review 13
(1988); 627-38; Paul S. Adler, “Managing Flexible Automation,”

7-8
California Management Review (Spring 1988); 34-56; Jeremy Main,

© 2004
“Manufacturing the Right Way,” Fortune, 21 May 1990, 54-64.
 Differences Between Manufacturing and
Service Technologies
Manufacturing Technology
1. Tangible product
2. Products can be inventoried for later
consumption
3. Capital asset intensive
Service Technology 4. Little direct customer interaction
5. Human element may be less
1. Intangible product
important
2. Production and consumption take
6. Quality is directly measured
place simultaneously
7. Longer response time is acceptable
3. Labor and knowledge intensive
8. Site of facility is moderately
4. Customer interaction generally high
important
5. Human element very important
6. Quality is perceived and difficult to
measure
7. Rapid response time is usually
necessary
8. Site of facility is extremely important

Service: Product and Service: Product:

Airlines, Hotels,Consultants, Fast-food outlets, Cosmetics, Soft drink companies,
Healthcare, Law firms Real estate, Stockbrokers, Steel companies,
Retail stores Auto manufacturers,
Sources: Based on F. F. Reichheld and W. E. Sasser, Jr., Food processing plants
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“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

© 2004
for Analyzing Customer Service Orientations in Manufacturing,”
Academy of Management Review 14 (1989): 75-95.
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 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
Human Resources:
Employee skill level Higher Lower
Skill emphasis Interpersonal Technical

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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

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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

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Relationship of Department Technology to
Structural and Management
Characteristics
Mostly Organic Structure Organic Structure
1. Moderate formalization 1. Low formalization
2. Moderate centralization 2. Low centralization
3. Work experience 3. Training plus experience
4. Moderate to wide span 4. Moderate to narrow span
5. Horizontal, verbal 5. Horizontal communications
communications meetings

CRAFT NONROUTINE

Mechanistic Structure Mostly Mechanistic Structure

1. High formalization 1. Moderate formalization
2. High centralization 2. Moderate centralization
3. Little training or experience 3. Formal training
4. Wide span 4. Moderate span
5. Vertical, written 5. Written and verbal
communications communications

ROUTINE ENGINEERING
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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,
Low procedures
communication Low
Client Divisional Structure
Sequential Plans, schedules, feedback
(assembly line) Medium
Client communication Task Forces Medium

Reciprocal (hospital) Mutual adjustment, cross-

High departmental meetings,
teamwork
communication High

Client Horizontal Structure

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 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
Mutual
Face-to-face communication, Adjustment
Sequential
Unscheduled meetings,
(product manufacture) Full-time integrators

Scheduled meetings, task forces

Planning
Vertical communication
Pooled
(product delivery) Plans
Rules Standardization

Low
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Source: Adapted from Andrew H. Van de Ven, Andre Delbecq, and

© 2004
Richard Koenig, “Determinants of Communication Modes Within
Organizations,” American Sociological Review 41 (1976): 330.
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 Relationships Among Interdependence
and Other Characteristics of Team Play

Baseball Football Basketball

Interdependence: Pooled Sequential Reciprocal
Physical dispersion of High Medium Low
players:
Rules that Game plan Mutual
Coordination: govern the and position adjustment and
sport roles shared
responsibility
Select players Prepare and Influence flow of
Key management job: and develop execute game
their skills game

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Source: Based on William Passmore, Carol E. Francis, and Jeffrey
Halderman, “Sociotechnical Systems: A North American Reflection

© 2004
On the Empirical Studies of the 70’s,” Human Relations 35 (1982):
1179-1204. 7-16
 Sociotechnical Systems Model
TheSocial
The SocialSystem
System TheTechnical
TechnicalSystem
System
The
Individualand
Individual andteam
team Typeofofproduction
production
Type
behaviors
behaviors technology(small
(smallbatch,
batch,
technology
Organizational/team
Designfor
Design for massproduction,
mass production,FMS,
FMS,etc.)
etc.)
Organizational/team
culture
culture JointOptimization
Joint Optimization Levelofofinterdependence
Level interdependence
(pooled,sequential,
(pooled, sequential,
Managementpractices
Management practices Workroles,
Work roles,tasks,
tasks, reciprocal)
reciprocal)
workflow
workflow
Leadershipstyle
Leadership style Physicalwork
worksetting
setting
Physical
Goalsand
Goals andvalues
values
Degreeofofcommunication
Degree communication Complexityofofproduction
production
Complexity
andopenness
and openness Skillsand
Skills andabilities
abilities process(variety
process (varietyand
and
analyzability)
analyzability)
Individualneeds
Individual needsand
and
desires
desires Natureofofraw
rawmaterials
materials
Nature
Timepressure
Time pressure

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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.

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Slocum, and Richard W. Woodman, Organizational Behavior, 8th ed. (Cincinnati, Ohio:

© 2004
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.
Workbook
Activity

Technology Comparison
Family
McDonald’s Subway 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. Decentralized

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© 2004 7-18