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Chapter 7- Manufacturing and Service Technologies

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on 4 November 2014

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Transcript of Chapter 7- Manufacturing and Service Technologies

Chapter 7

Manufacturing and Service Technologies
Justin Zuehl
Lauryn Bogert
Issac Lozano
Francis Garner
Donesha Winters
Alex Peters
Ziad Alsalman
Differences in Manufacturing
and Service Technologies
Service Firms
• Whereas manufacturing organizations achieve their primary purpose through the production of products, service organizations accomplish their primary purpose through the production and provision of services such as education, health care, transportation, banking, and hospitality
• Examples
– Airlines
– Insurance
– Automotive services
– Health care
– Legal service
– Etc;

Service Technology
• Technology characterized by simultaneous production and consumption, customized output, customer participation, intangible output and being labor intensive
Product vs. Service
• Most obvious difference from Product firms is that service technology provides an intangible output
• A service is abstract and consist of knowledge and ideas
• Production and consumption take place simultaneously
• Human element is very important, Labor and knowledge intense
• Quality is perceived and difficult to measure

• Tangible Product
• Products can be inventoried for later consumption
• Little direct customer interaction, human element less important
• Quality is directly measured

Education Teachers:
A teacher must attain many certifications before they are qualified to instruct a classroom full of students (intense knowledge). As they instruct the class the students immediately are gaining their knowledge and expertise (production and consumption take place simultaneously). Teachers also deal with their students on a day to day basis, sometimes on a one to one basis (customer interaction very high, human element is very important).
• Service
• Product:
Coca-Cola must purchase many machines in order for them to produce their first can of Coke that is not purchased by the customer until later on. (Capital Asset-Intensive and Tangible Product and products can be inventoried for later consumption). There is no customer interaction when producing these cans of Coke (little direct customer interaction and human element is less important). Since there is no customers seeing your production you can place your plant where you find is most convenient for your company. (site of facility is moderately important)
Technology Framework
• Each department in an organization has a production process that consists of a distinct technology

= tools, techniques, and actions used to transform organizational inputs into outputs

• Perrow specified 2 dimensions of departmental activities that are relevant to organizational structure and process

Task variety
: concerns whether work processes are performed the same way every time or differ from time to time as employees transfer the organization’s inputs into outputs

Task analyzability
: task can be reduced to mechanical steps or specified with a computational procedure

Technology Framework

characterized by little task variety & very standardized processes
– Ford Motors assembly line

: characterized by high task variety, analyzing of problems & activities
– The Godfather ‘Strategic planning’

characterized by fairly stable stream of activities, reliance on intuition
– Break Bad or any TV series

substantial variety of tasks performed on the basis of established formulas, procedures & techniques
– Accounting office
Mechanistic Design
. High formalization
. High centralization
. Little training or experience
. Wide span
. Vertical, written communications

Mechanistic Structures Include:

. Belief upper management is better capable of making decisions
. Management instructions must be followed
. Communication and control must proceed through hierarchical routes
. More emphasis toward completing a task opposed to achieving company goals
. Employees are more jobs specialized and placed into certain departments
. Low differentiation of tasks

Known as the bureaucratic structure

Examples include
healthcare, universities, and governmental organizations.

Organic Design
An organization system marked by free-flowing, adaptive process, an unclear hierarchy of authority, and decentralized decision making
- Nonroutine technologies are associated with an organic design
- Department management is more flexible and free flowing
- Low formalization
- Low centralization
- Training plus experience
- Moderate to narrow span
- Horizontal communications, meetings

Example of Organic Design:
When the Godfather is in the hospital, instead of just one person making all the decisions it was a group effort

Workflow Interdependence among Departments
There are three types of interdependence that influence organization structure.
Pooled Interdependence
is the lowest form of interdependence among departments. In this form the work does not flow between units. Each department is part of the organization and contributes to the common good of the organization, but works independently.
• It would on work with firms that have a mediating technology that provides products or services that mediate or link clients from the external environment and in doing so, allows each department to work independently such as banks, brokerage firms and real estate offices.
Sequential interdependence

is of serial form, with parts produced in one department and becoming inputs to another department. This is a higher level of interdependence than pooled interdependence because departments exchange resources and depend on others to perform well.
• It will only occur when long linked technology because of the combination in one organization of successive stages of production; each stage of production uses as its inputs the production of the preceding stage and produces inputs for the following stage.
Reciprocal interdependence

is when the output of operation A is the input of operation B, and the output of operation B is the input back input back again to operation A. the outputs of departments influence those departments in reciprocal fashion.
• It occurs when intensive technologies which provide a variety of products or services in combination to a client such as firm developing new products.
There are three types of interdependence that influence organization structure:
Mechanistic vs Organic Design
Workflow Interdependence Among Departments
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