Operations Strategy 5a

Process Technology Strategy

Ch 5 Slack & Lewis
 Process Technology
• Process technology is the appliance of science
to any operations process. It is distinct from
product and service technology.
– In service operations it is difficult to distinguish
process from product/service technology
• Direct or Indirect process technology
– Manufacturing & service opns rely on indirect
process technology – information technology
• Material, Information, Customer processing
 Issues covered in this chapter
Resource usage

Issues include,
• Characterising process
technologies.

Market competitiveness
Quality • Understanding the
general characteristics
of process
Speed technologies over time.
• The effect of new
Performance
objectives

forms of technology on
performance.
Dependability
• Evaluating process
technology.
• The impact of process
Flexibility
technology on
performance
objectives.
Cost

Process Technology Development

Capacity Supply definition and And
network characteristics Organisation

Decision areas
 Process Technology Strategy
• Process technology strategy is defined as the
set of decisions that define the strategic role
that direct and indirect process technology
can play in the overall operations strategy of
the organization and sets out the general
characteristics that help to evaluate
alternative technologies.
 Process Technology Strategy
• What does the technology do which is different from
other similar technologies?
• How does it do it?
• What constraints does using the technology place on
the operation?
• What skills will be required from the operations staff
in order to install, operate and maintain the
technology?
• What capacity does each unit of the technology have?
• What is the expected useful lifetime of the
technology?
 Process Technology Strategy
• Process technology should reflect volume and variety
– High variety low volume process technology that is
general purpose with wide range of processing
activities that high variety demands
– High volume low variety process technology that
requires narrow range of processing & high volume
• Spectrum from general purpose to dedicated
technology
– Scale & Scalability
– Automation
– Coupling & Connectivity
 Scale and Scalability
Factors that affect scale of process technology
• What is the capital cost of technology?
• Can the process technology match the
demand over time?
• How vulnerable is the operation?
• What scope exists for new technological
developments?
 Scale and Scalability
• Scalability is the ability to shift to a different level of
useful capacity quickly, cost-effectively and flexibly.
• This is true for product manufacture where the
process technology is customer facing and demand is
uncertain and variable.
– Less capacity may lead to customer dissatisfaction
– High capacity means excess invested capital to serve
few customers
• Critical drivers of scalability
– The system architecture
– Underlying process standardisation
 Scale and scalability are important characteristics
of technology

Few, large units Many, small

of process High Scale/Scalability Low units of process
technology technology

Scale issues… Scaleability issues… Scale issues… Scaleability issues…

Higher capital costs Customised, legacy systems Lower capital costs Reliable architecture
Economies of scale Specific expertise required Demand matching Dispersed system skills
Vulnerable to failure Idiosyncratic processes Failure redundancy Standard processes
‘All or nothing’ change In-house development Upgrading easier Outsourced?
 Automation and Analytic content
• Degree of automation of technology is the relative
balance between human intervention and the
technological effort.
– Low automation means higher direct costs and
automated process leads to lower direct costs
• Factors to be considered are :
– What degree of support is required? The cost of
maintaining the automatic system may be much costlier
than the direct labor replaced.
– How flexible is the process?
– How dependable is the process? Is the system robust?
 Automation and Analytic content
• Making a choice between the power, speed and
general physical abilities of automation against
flexible, intuitive and analytic abilities of human
beings.
• The characterizing dimension for technology that
can cope with increasingly complex tasks is the
degree of analytical content that the system can
bring to bear on a task. (Eg. Vending machines)
• The drivers are :
– The amount of parallel processing required
– The level of customer interaction
 Automation and ‘Analytical content’ are
important characteristics of technology

Process Process
(technology plus (technology
humans) has low plus humans)
High Automation/‘Analytical content’ Low
acuity and has high acuity
judgement and judgement

Automation issues… Analytical content issues… Automation issues… Analytical content issues…
What degree of Higher capital cost Higher direct costs Lower capital cost
support is required? Parallel processing Human control and Simple sequential rules
How flexible is the process? Complex connectivity judgement Often single point of
How dependable is the process? Human creativity connection
 Coupling and Connectivity
• Process technologies are being coupled together for
cost and quality advantages – the benefits are derived
from the integration (coupling) of activities that were
previously separated.
• Coupling could be physical links between equipments
(robot moving semi finished jobs between machines) or
merging of managerial tasks.
• Integration of separate processes involve high capital
costs but close coupling can lead to synchronization
reducing WIP and costs.
 Coupling and Connectivity
• Coupling in information processing technology
meant hard wiring two disparate processes
– Viable for high volumes, lacked flexibility for variety
• Platform independent systems allow entities to
communicate irrespective of their specifications
allowing greater degree of Connectivity
– Connected IT systems have to access to a common
data portal for real time information
• Drivers of Coupling and Connectivity
– Hardware development and Software development
 Coupling and connectivity are important
characteristics of technology

Technology is Technology is
High Coupling/Connectivity Low
integrated separated

Coupling issues… Connectivity issues… Coupling issues… Connectivity issues…

High capital costs Platform independence Lower capital costs Customised, legacy
Speed or rigidity? Bandwidth available Fragmentation or flexibility? systems
Better synchronisation Reliable middleware Control flexibility Hard-wired
System efficiency Security concerns System robustness Restricted access
 Product Process Matrix
• All three technology dimensions are related
• Larger the unit of capacity, more it is capital than
labour intensive;
– More opportunity for coupling of its various parts
– For standardised, low cost, high volume products requiring
less flexibility
• Small scale technologies, highly skilled staff, tend to be
more flexible;
– High degree of product variety or service customisation
• The three technology dimensions may be related, they
do not match perfectly
 The three dimensions of process technology are often
closely linked
Few, large SCALE Many, small
units of High Low units of process
process technology
technology
Process Process
(technology AUTOMATION (technology
plus humans) High Low plus humans)
has low acuity has high acuity
and judgement and judgement
COUPLING

Technology is High Low Technology is

integrated separated

Flexibility performance

Cost performance

Characteristics of Process Technology affect cost and flexibility