Manufacturing and Service Technologies technology refers to the work processes, techniques, machines, and actions used to transform organizational inputs into outputs. One important theme in this chapter is how core technology influences organization structure. Understanding core technology provides insight into how an organization can be structured for efficient performance. Core technology is the work process that is directly related to the organization’s mission. A non-core technology is a department work process that is important to the organization but is not directly related to its primary mission.
Woodward developed a scale and organized the firms according to technical complexity of the manufacturing process. Technical complexity represents the extent of mechanization of the manufacturing process. High technical complexity means most of the work is performed by machines. Woodward’s scale consists of ten categories and these categories were further consolidated into three basic technology groups: The groups are consisted of small-batch and unit production, large-batch and mass production, and continuous-process production.
Small-batch production relies heavily on the human operator; it is thus not highly mechanized. The large-batch is manufacturing process characterized by long production runs of standardized parts. In continuous-process production, the entire process is mechanized. Overall, the management systems in both unit-production and continuous -process technology are characterized as organic, as defined in Chapter 4. Mass production, however, is mechanistic, with standardized jobs and formalized procedures.
When adopting a new technology, realign strategy, structure, and management process to achieve top performance. Lean manufacturing uses highly trained employees at every stage of the production process, who take a painstaking approach to details and problem solving to cut waste and improve quality. Lean manufacturing techniques have been implemented in hundreds of organizations all over the world and have led to dramatic improvements in quality, productivity, and efficiency. Service technologies are different from manufacturing technologies and, in turn, require a different organization design.
The most obvious difference is that service technology produces an intangible output, rather than a tangible product. Hence, service organizations may have an organization structure with fewer boundary roles, greater geo-graphical dispersion, decentralization, highly skilled employees in the technical core, and generally less control than in manufacturing organizations. The feature of service technologies with a distinct influence on organizational structure and control systems is the need for technical core employees to be close to the customer.
The impact of customer contact on organization structure is reflected in the use of boundary roles and structural disaggregation. The text also introduces Non-Core Departmental technology, as the section that shifts to the department level of analysis for departments not necessarily within the technical core. The framework that has had the greatest impact on the understanding of departmental technologies was developed by Charles Perrow. Perrow specified two dimensions of departmental activities: Variety and Analyzability.
Variety is the frequency of unexpected and novel events that occur in the conversion process. Analyzability is when the work can be reduced to the mechanical steps and participants can follow an objective, computational procedure to solve problems. The dimensions of variety and analyzability form the basis for four major categories of technology: routine, craft, engineering, and nonroutine. (Daft) The text discusses both core and non-core work processes and their relationship to designing organization structure.
The nature of the organization’s work processes must be considered in designing the organization for maximum efficiency and effectiveness. The text illustrates that forces affecting organization design come from both outside and inside the organization. External strategic needs create top-down pressure for designing the organization in such a way as to fit the environment and accomplish goals. This illustrates that today’s companies is that strategy, structure, and technology need to be aligned, especially when competitive conditions change. For example, several years ago, Dell created a business model to uild personal computers faster and cheaper, other computer manufacturers had to realign strategy, structure, and technology to stay competitive. Dell made PCs to order for each customer and sold most of them directly to consumers without expense of distributers or retailers. IBM for example, tried to differentiate their products and charge a premium price switched to a low-cost strategy, adopted new technology to enable them to customize PCs, revamped supply chains, and began outsourcing manufacturing to other companies that could do the job more efficiently.