© Nigel Slack and Michael Lewis 2003 Quality Performance objectives Dependability Development and Organization Speed Flexibility Cost Resource Usage Market Competitiveness Decision areas Issues covered in this chapter Capacity Supply Network Process Technology definition and characteristics Issues include: The impact of process technologies on operations Understanding the general characteristics of process technologies over time The effect of new forms of technology on performance Slide 8.1

© Nigel Slack and Michael Lewis 2003 product innovation process innovation Rate of innovation Time Generic product/process life cycle (assembled, non- assembled products and services) Rate of innovation (a)(b)(c) Slide 8.2

© Nigel Slack and Michael Lewis 2003 Information Indirect process technology Infrastructural services Direct process technology Materials Information Customers Products and services Direct and indirect process technology Slide 8.3

© Nigel Slack and Michael Lewis 2003 SCALE LOW HIGH Many, small units of process technology Issues: Lower capital costs Demand matching Failure redundancy Upgrading easier Fewer, larger units of process technology Issues: Higher capital costs Economies of scale Vulnerable to failure ‘All or nothing’ change Scale is usually an important dimension of process technology Many, small units Few, large units Slide 8.4

© Nigel Slack and Michael Lewis 2003 AUTOMATION HIGH LOW Labor Intensive Issues include: Higher direct costs Control intensive Human creativity Capital Intensive Issues include: Lower direct costs Design intensive Maintenance costs Automation is usually an important dimension of process technology Low acuity and judgement High acuity and judgement Slide 8.5

© Nigel Slack and Michael Lewis 2003 COUPLING HIGH LOW The degree of coupling between individual units is usually an important dimension of process technology Integrated Rigid Loose Separated Stand-alone Issues include: Lower capital costs Fragmentation or flexibility? Control flexibility System robustness Integrated Issues include: Higher capital costs Speed or rigidity? Designed synchronisation System efficiency Slide 8.6

© Nigel Slack and Michael Lewis 2003 The three dimensions of process technology are often closely linked COUPLING HIGH LOW Integrated Rigid Loose Separated AUTOMATION HIGH LOW Low acuity and judgment High acuity and judgement SCALE HIGH LOW Few, large units Many, small units Flexibility performance Cost performance Slide 8.7

© Nigel Slack and Michael Lewis 2003 The product-process matrix and the technology dimensions Market requirements Low volume High variety High volume Low variety HighCostLow Flexibility High A B C Off the diagonal high flexibility redundant capability high costs Off the diagonal low flexibility insufficient capability high costs Coupling Automation Scale Loose Separated High acuity and judgement Many, small units Integrated Rigid Low acuity and judgement Few, large, units Slide 8.8

© Nigel Slack and Michael Lewis 2003 Moving down the diagonal of the product-process matrix in retail banking [1][2] [3] Increasing scale Increasing automation Increasing coupling Low volume High variety High volume Low variety Low volume High variety High volume Low variety [2][2] Slide 8.9 Individual branches Voucher processing centers

© Nigel Slack and Michael Lewis 2003 Low Flexibility High Low Cost Market fragmentation making flexibility more valuable Competitive pressure to reduce costs Market pressures are requiring operations to be both flexible and low cost Slide 8.10

© Nigel Slack and Michael Lewis 2003 SCALABILITY LOW HIGH Issues: Bespoke, legacy systems Specific expertise required Idiosyncratic processes In-house Issues: Reliable architecture Dispersed system skills Standard processes Outsourced? In some technologies scalability is as important as scale Slide 8.11

© Nigel Slack and Michael Lewis 2003 ANALYTICAL CONTENT LOW HIGH Low analytical resource Issues include…. Lower capital cost Simple sequential rules Data input predominates Often single point of connection High analytical resource Issues include…. Higher capital cost Parallel processing Data manipulation (expert systems, artificial intelligence (AI) etc.) Complex connectivity ‘Analytical content’ is the equivalent of automation for information-rich technologies Slide 8.12

© Nigel Slack and Michael Lewis 2003 CONNECTIVITY LOW HIGH Low connectivity Issues include: Customized, legacy systems (black-box) Hard-wired Restricted access High connectivity Issues include: Platform independence (HTML, Java etc.) Bandwidth available Reliable middleware Security concerns The degree of connectivity is the equivalent of coupling in information-rich technologies Slide 8.13

© Nigel Slack and Michael Lewis 2003 The effect of technology change on the three dimensions COUPLING Integrated Rigid Loose Separated AUTOMATION Low acuity and judgment High acuity and judgement SCALE Few, large units Many, small units Flexibility performance Cost performance CONNECTIVITY ANALYTICAL CONTENT SCALABILITY Some flexibility advantage retained in spite of adoption of ‘efficient’ technology Some cost advantage retained in spite of adoption of technological flexibility Slide 8.14

© Nigel Slack and Michael Lewis 2003 New developments in process technology can change the cost-flexibility trade-off Market requirements Low volume High variety High volume Low variety HighCostLow Flexibility High Coupling Automation Scale Loose Separated High acuity and judgement Many, small units Integrated Rigid Low acuity and judgement Few, large, units Connectivity Analytical content Scalability Slide 8.15