Chapter Seven
Manufacturing and Service
Technologies
7-1
Core Transformation Process for a
Manufacturing Company
ENVIRONMENT
Organization
Raw Material
Inputs
Product or Service
Outputs
Core
Work Processes
Materials
Handling
Assembly
Milling
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
7-3
Flexible Manufacturing Systems

Computer-aided design


Computer-aided manufacturing


(CAD)
(CAM)
Integrated Information Network
7-4
Relationship of Flexible Manufacturing
Technology to Traditional Technologies
Flexible
Manufacturing
Small batch
NEW
Customized
Mass
Customization
CHOICES
PRODUCT FLEXIBILITY
Mass
Production
Continuous
Process
Standardized
Small
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/21st Century Capitalism, 18 November 1994, 158-59.
BATCH SIZE
Unlimited
7-5
Comparison of Organizational Characteristics Associated
with Mass Production and
Flexible Manufacturing Systems (FMS)
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
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.
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.
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.
7-8
Differences Between Manufacturing and
Service Technologies
Manufacturing Technology
1.
2.
3.
4.
5.
Service Technology
1.
2.
3.
4.
5.
6.
7.
8.
Intangible product
Production and consumption take
place simultaneously
Labor and knowledge intensive
Customer interaction generally high
Human element very important
Quality is perceived and difficult to
measure
Rapid response time is usually
necessary
Site of facility is extremely important
6.
7.
8.
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
Service:
Product and Service:
Product:
Airlines, Hotels,Consultants,
Healthcare, Law firms
Fast-food outlets, Cosmetics,
Real estate, Stockbrokers,
Retail stores
Soft drink companies,
Steel companies,
Auto manufacturers,
Food processing plants
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.
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:
7-10
Departmental Technologies

ROUTINE



High analyzability
Low variety
Examples:




Sales
Clerical
Drafting
Auditing

CRAFT



Low analyzability
Low variety
Examples:



Performing arts
Trades
Fine goods
manufacturing
7-11
Departmental Technologies

ENGINEERING



High analyzability
High variety
Examples:




Legal
Engineering
Tax accounting
General accounting

NONROUTINE



Low analyzability
High variety
Examples:



Strategic planning
Social science
research
Applied research
7-12
Relationship of Department Technology to
Structural and Management
Characteristics (Exhibit 7.10, p.263)
1.
2.
3.
4.
5.
1.
2.
3.
4.
5.
Mostly Organic Structure
Moderate formalization
Moderate centralization
Work experience
Moderate to wide span
Horizontal, verbal
communications
1.
2.
3.
4.
5.
Organic Structure
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
ROUTINE
1.
2.
3.
4.
5.
Moderate formalization
Moderate centralization
Formal training
Moderate span
Written and verbal
communications
ENGINEERING
Key: Formalization, Centralization, Staff qualifications, Span of
control, Communication and coordination
7-13
Department Design


Routine technologies are associated with a
mechanistic structure and processes, with
formal rules and rigid management processes.
Nonroutine technologies are associated with
an organic structure, and department
management is more flexible and free-flowing.
7-14
Thompson’s Classification of
Interdependence and Management
Implications
Form of
Interdependence
Demands on
Horizontal
Communications,
Decision Making
Pooled (bank)
Low
communication
Client
Sequential
(assembly line)
Client
Medium
communication
Reciprocal (hospital)
High
communication
Client
Type of
Coordination
Required
Priority for
Locating Units
Close Together
Standardization, rules,
procedures
Divisional Structure
Low
Plans, schedules,
feedback
Task Forces
Mutual adjustment, crossdepartmental meetings,
teamwork
Medium
High
Horizontal Structure
7-15
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
Face-to-face communication,
Unscheduled meetings,
Full-time integrators
Sequential
(product manufacture)
Mutual
Adjustment
Scheduled meetings, task forces
Vertical communication
Pooled
(product delivery)
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.
7-16
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.
7-17
Sociotechnical Systems Model
The Social System
The Technical System
Individual and team
behaviors
Organizational/team
culture
Management practices
Leadership style
Degree of communication
and openness
Individual needs and
desires
Design for
Joint Optimization
Work roles, tasks,
workflow
Goals and values
Skills and abilities
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
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.
7-18
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. Decentralized
7-19