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3-1McGraw-Hill/IrwinOperations Strategy Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.
Process Technology
Chapter 3
3-2
Process technology strategy addresses several issues
Experience and learning Matching technology to business needs
Product-process and service-process matrix Impacts of new technologies Innovator or followerOutsource or insourceAutomation
Centralization and Standardization
3-3
Process Technology: In Manufacturing Companies
Sources: Left photo: Reprinted with permission from Dallas Auto Painting & Collision Repair.Right photo: Reprinted with permission from Carnegie Mellon University, Biorobotics Lab.
3-4
Process Technology: In Manufacturing Companies
Source: Reprinted with permission from General Motors Corporation.
3-5
Process Technology: In Manufacturing Companies
Source: Reprinted with permission from Scharffen Berger Chocolate Maker.
3-6
Process Technology: In Service Companies
Source: Reprinted with permission from Amazon.com.
3-7
Process Technology: In Service Companies
Source: Reprinted with permission from Vanderlande Industries.
3-8
The Experience and Learning Curves
Experience: Relationship between unit cost and total number of units produced
Learning: Relationship between total labor hours and total number of units produced
3-9
The Experience Curve: Strategic implications
Understanding and capitalizing on sources Improved labor efficiency Process yields and improvements Increased standardization, specialization Process automation Product or service redesign Increased scale or volume Improved value chain performance Shared experience effects
Distinguishing between human resource and capital sources of improvement
3-10
Sources of improvement: ITT example
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Example from Boeing
3-12
The Experience Curve: Competitive Effects
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Market Volume
Company Volume
Unit Cost
Unit Price
Unit Profit
3-13
Process technology strategy addresses several issues
Experience and learning Matching technology to business needs
Product-process and service-process matrix Impacts of new technologies Innovator or followerOutsource or insourceAutomation
Centralization and Standardization
3-14
Matching technology to business needs Types of manufacturing processes
Project Job Shop Batch Repetitive or continuous flow Mass customization
Types of service processes Demand-sensitive services
e.g., banks, restaurants, retail stores Delivered services
e.g., fire and police protection Quasi-manufacturing
e.g., banks’ back offices, call centers
3-15
Product-Process Matrix: Matching Processes to Product Needs
3-16
Product-Process Matrix: Mapping to Product Requirements Over Time
3-17
Service-Process Matrix: Adaptation of Product-Process Matrix
3-18
Service-Process Matrix: Labor Intensity, Interaction and Customization
3-19
Impacts of new technologies Incremental improvements in efficiency, quality, etc. Degree of flexibility
FMS systems Modularity Postponement Set-up time reduction Lean concepts
Major changes in business model Skill levels Scale inconsistent with plant network
Risks in both adoption and in not adopting
3-20
Managing Process Technology in the Face of Dynamic Change
3-21
Technology Choices: Innovate or Follow, Develop In-House or Outside
Innovation: Relationship of process and product innovation
Outsourcing: Use VI framework Importance of technology in competitive position Market impact of technology leader
3-22
Factors in automation Business issues such as flexibility and fit with
strategy Operational issues such as repeatability and precision
and effect on performance drivers such as time to market (e.g Pharmaceutical)
Regulatory issues Social issues such as technological environment and
workforce implications Labor costs Sources of improvement and performance drivers
3-23
Process technology strategy addresses several issues
Experience and learning Matching technology to business needs
Product-process and service-process matrix Impacts of new technologies Innovator or followerOutsource or insourceAutomation
Centralization and Standardization
3-24
Intel and copy exactly
Run multiple sites identically to lead plant Process parameters Equipment sets Maintenance Training Specifications/documentation
Started when fab start-up yields lagged behind development fabs
3-25
Copy exactly requires additional structure
Structure Joint engineering teams and control boardsSenior management reviewProblem is problem for entire team
Issues?
3-26
Standardization factors
Product standardization (does it vary by market)
Stability of technology (do new technologies leapfrog or evolve)
Basis for learning (technology or worker based)
Levels of volume (eg cars in Brazil) Ranges of technologies and impact of labor
(can you use manual at low volumes)
3-27
Process Technology Strategy Development Approach
Understand the business strategy and competitive environment
Understand the technology trends in the industry Understand the internal capabilities of the
organization Identify and assess process technology investment
alternatives, including multi-plant and automation options, outsourcing, etc.
Develop an implementation plan Implement, assess and measure benefits