© Nigel Slack and Michael Lewis 2003

Quality

Per

form

ance

o

bje

ctiv

es

Dependability

Developmentand

Organization

Speed

Flexibility

Cost

Resource Usage

Mar

ket

Co

mp

etit

iven

ess

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 Rate of innovation

Time Time 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

LOWHIGH

Many, small units of process technologyIssues:

Lower capital costsDemand matchingFailure redundancyUpgrading easier

Fewer, larger units of process technologyIssues:

Higher capital costsEconomies of scaleVulnerable 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 IntensiveIssues include:

Higher direct costsControl intensiveHuman creativity

Capital IntensiveIssues include:

Lower direct costsDesign intensiveMaintenance 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-aloneIssues include:

Lower capital costsFragmentation or flexibility?Control flexibilitySystem robustness

IntegratedIssues include:

Higher capital costsSpeed or rigidity?Designed

synchronisationSystem efficiency

Slide 8.6

© Nigel Slack and Michael Lewis 2003

The three dimensions of process technology are often closely linked

COUPLINGHIGH LOWIntegrated

RigidLooseSeparated

AUTOMATIONHIGH LOWLow acuity

and judgment

High acuity and judgement

SCALEHIGH LOWFew, large

units

Many, small units

Flexibility performance

Cost performance

Slide 8.7

© Nigel Slack and Michael Lewis 2003The product-process matrix and the technology dimensions

Market requirements

Low volumeHigh variety

High volumeLow variety

High Cost Low

Lo

wF

lex

ibil

ity

Hig

h

A

B

C

Off the diagonalhigh flexibilityredundant capabilityhigh costs

Off the diagonallow flexibilityinsufficient capability

high costs

Co

up

ling

Au

tom

atio

n

Sca

le

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]

Incr

easi

ng

sca

le

Incr

easi

ng

au

tom

atio

n

Incr

easi

ng

co

up

ling

Low volumeHigh variety

High volumeLow variety

Low volumeHigh variety

High volumeLow variety

[2]

Slide 8.9

Individual branches

Voucher processing

centers

© Nigel Slack and Michael Lewis 2003

Lo

wF

lexi

bil

ity

Hig

h

High LowCost

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

SCALABILITYLOW HIGH

Issues:

Bespoke, legacy systems

Specific expertise requiredIdiosyncratic processesIn-house

Issues:

Reliable architectureDispersed system skillsStandard processesOutsourced?

In some technologies scalability is as important as scale

Slide 8.11

© Nigel Slack and Michael Lewis 2003

ANALYTICAL CONTENTLOW HIGH

Low analytical resourceIssues include….

Lower capital costSimple sequential rulesData input

predominatesOften single point of connection

High analytical resourceIssues include….

Higher capital costParallel processingData 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-wiredRestricted access

High connectivityIssues include:

Platform independence (HTML, Java etc.)Bandwidth availableReliable middlewareSecurity 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

COUPLINGIntegrated

RigidLooseSeparated

AUTOMATIONLow acuity and

judgment

High acuity and judgement

SCALEFew, 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 volumeHigh variety

High volumeLow variety

High Cost Low

Lo

wF

lex

ibil

ity

Hig

h

Co

up

ling

Au

tom

atio

n

Sca

le

Loose Separated

High acuity and judgement

Many, small units

Integrated Rigid

Low acuity and

judgement

Few, large, units

Co

nn

ecti

vity

An

alyt

ical

co

nte

nt

Sca

lab

ility

Slide 8.15