Manufacturing and Service Technologies Chapter Six Manufacturing and Service Technologies ©2001 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e 6 -

Transformation Process for a Manufacturing Company ENVIRONMENT Organization Technology Raw Material Inputs Product or Service Outputs Transformation Process Materials Handling Assembly Milling Inspection Departments

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

Computer-Integrated Manufacturing Computer-aided design (CAD) Computer-aided manufacturing (CAM) Integrated Information Network

Relationship of Computer-Integrated Manufacturing Technology to Traditional Technologies Small batch Flexible Manufacturing Mass Customization NEW CHOICES Customized Mass Production PRODUCT FLEXIBILITY TRADITIONAL CHOICES Continuous Process Standardized BATCH SIZE Small Unlimited 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.

Comparison of Organizational Characteristics Associated with Mass Production and Computer Integrated Manufacturing Characteristic Mass Production CIM 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.

Comparison of Organizational Characteristics Associated with Mass Production and Computer Integrated Manufacturing Characteristic Mass Production CIM Human Resources: Interactions Stand alone 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.

Comparison of Organizational Characteristics Associated with Mass Production and Computer Integrated Manufacturing Characteristic Mass Production CIM 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.

Differences Between Manufacturing and Service Technologies Manufacturing Technology 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 Technology 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 Service: 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 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.

Configuration and Characteristics of Service Organizations vs Configuration and 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 Skill emphasis Interpersonal Technical

Departmental Technologies ROUTINE High analyzability Low variety Examples: Sales Clerical Drafting Auditing CRAFT Low analyzability Low variety Examples: Performing arts Trades Fine goods manufacturing

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

Relationship of Department Technology to Structural and Management Characteristics Mechanistic Structure 1. High formalization 2. High centralization 3. Little training or experience 4. Wide span 5. Vertical, written communications ROUTINE Mostly Mechanistic Structure 1. Moderate formalization 2. Moderate centralization 3. Formal training 4. Moderate span 5. Written and verbal ENGINEERING Mostly Organic Structure 3. Work experience 4. Moderate to wide span 5. Horizontal, verbal CRAFT Organic Structure 1. Low formalization 2. Low centralization 3. Training plus experience 4. Moderate to narrow span 5. Horizontal communications meetings NONROUTINE

Thompson’s Classification of Interdependence and Management Implications Form of Interdependence Demands on Horizontal Communications, Decision Making Type of Coordination Required Priority for Locating Units Close Together Pooled (bank) Low communication Standardization, rules, procedures Divisional Structure Sequential (assembly line) Medium Plans, schedules, feedback Task Forces Reciprocal (hospital) High Mutual adjustment, cross-departmental meetings, teamwork Horizontal Structure Client Client Client

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 Face-to-face communication, Unscheduled meetings, Full-time integrators Scheduled meetings, task forces Vertical communication Plans Rules Mutual Adjustment Sequential (product manufacture) Planning Pooled (product delivery) 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.

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.

Sociotechnical Systems Model The Social System Individual and team behaviors Organizational/team culture Management practices Leadership style Degree of communication and openness Individual needs and desires The Technical System Type of production technology (small batch, mass production, CIM, etc.) Level of interdependence (pooled, sequential, reciprocal) Physical work setting Complexity of production process (variety and analyzability) Nature of raw materials Time pressure Design for Joint Optimization Work roles, tasks, workflow Goals and values Skills and abilities 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.

Technology Comparison Workbook Activity Technology Comparison McDonald’s Burger King 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