Operations Management
Process Technology
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Process Technology
What is process technology and why is it getting more
important?
The idea of harnessing technology to make operations
more effective is not new. What is new, is the sheer scope,
sophistication and combination of technologies that are
being deployed or developed to be part of operations
activities in almost all parts of the economy.
How operations managers deal with process technology is
now one of the most important decisions that will shape
the capabilities of operations.
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Process Technology
Process technology versus product technology
Product/service and process technologies are, in effect, the
same thing. It is worth noting, however, that the
distinction between what is a ‘product/service’ technology
and what is a ‘process’ technology can depend on context.
What is one business’s product/service technology is
another’s process technology.
Process technology is pervasive in all types of operations.
It has a very significant effect on quality, speed,
dependability, flexibility and cost. That is why it is so
important to operations managers.
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Process Technology
What is ‘new’ in new technologies?
Why is new process technology becoming so important?
One can argue that it is, mainly for two reasons.
✓The first is that most new process technologies have a
greater capability than what they are replacing.
✓Second, these increased capabilities have a greater scope
of application.
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Process Technology
New technologies often have increased capabilities
It is not surprising that labour substitution accounts for
some of the motive for adopting new technologies. Even
technologies, such as robots, that have become common
place in many operations are becoming cheaper, more
proficient and more adaptable.
But do not assume that it is always the main driver. Other
performance benefits can be even more important.
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Process Technology
New technologies can increasingly be applied in all types
of operation
There used to be a simple division between those
operations that used a lot of process technology, usually
manufacturing operations, and those that used little or no
process technology, usually service operations. But now
the scope and capabilities of so many technologies have
expanded to the point where there are very few, if any,
types of enterprise that are not actively using some kind of
technology to support their operations processes.
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Process Technology
Process technology and transformed resources
One common method of distinguishing between different
types of process technology is by what the technology
actually processes – materials, information or customers.
Material-processing technologies
These include any technology that shapes, transports,
stores, or in any way changes physical objects.
Information-processing technology
Information-processing technology is the most common
single type of technology within operations, and includes
any device which collects, manipulates, stores or
distributes information. 7
Process Technology
Customer-processing technology
Although customer-processing operations were once seen
as ‘low-technology’, now process technology is very
much in evidence in many services.
Integrating technologies
Of course, some technologies process more than one type
of resource, and/or are combinations of other technologies.
These technologies are called ‘integrating technologies’.
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Process Technology
How should operations managers manage process
technology?
✓First, they need to understand the technology to the
extent that they are able to articulate what it should be
able to do.
✓Second, they should be able to evaluate alternative
technologies.
✓Third, they must be able to manage – that is, develop,
plan and implement – the technology so that it can reach
its full potential in contributing to the performance of the
operation as a whole.
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Process Technology
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Process Technology
Understanding the potential of new process technology
The first responsibility of operations managers is to gain
an understanding of what a process technology can do. But
‘understanding process technology’ does not (necessarily)
mean knowing the details of the science and engineering
embedded in the technology. It means knowing enough
about the principles behind the technology to be
comfortable in evaluating some technical information,
capable of dealing with experts in the technology and
confident enough to ask relevant questions.
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Process Technology
The four key questions
✓What does the technology do which is different from
other similar technologies?
✓How does it do it? That is, what particular characteristics
of the technology are used to perform its function?
✓What benefits does using the technology give to the
operation?
✓What constraints or risks does using the technology
place on the operation?
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Process Technology
Emerging technologies–understand their primary capabilities
The four questions listed above are universal, in the sense
that they can help to understand the implications for
operations management of any new or emerging technology.
But operations managers are not immune from more general
public perceptions of the importance of new technologies,
which is why it is worthwhile considering how technologies
are seen.
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Process Technology
General perceptions of new technologies
Sometimes it is difficult to separate the reality of a new
technology from the publicity and speculation that
surrounds it, especially when its potential is not yet fully
understood.
One attempt to illustrate how perceptions of a
technology’s usefulness develop over time is the ‘Gartner
hype cycle’ created by Gartner, the information technology
research and consultancy company.
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Process Technology
It has five sequential (but sometimes overlapping) stages.
Stage 1 – ‘technology trigger’: The early stages of a
technology; it probably exists in a theoretical or prototype
stage (which has aroused media interest), but there are no
working practical demonstrations.
Stage 2 – ‘peak of inflated expectations’: The technology
has developed to the point where it is implemented by
some more adventurous ‘early adopter’ operations. There
is press coverage describing both successful and
unsuccessful experiences. 15
Process Technology
Stage 3 – ‘trough of disillusionment’: The difficulties of
using the technology in practical situations start to
demonstrate its shortcomings. This results in something of
a backlash, leading to disappointment and disillusionment
with the technology.
Stage 4 – ‘slope of enlightenment’: Problems with the
technology are slowly solved and its potential becomes
more realistically understood.
Stage 5 – ‘plateau of productivity’: The technology, in its
developed form, becomes widely adopted, probably with
technical standards being shared by users and suppliers.
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Process Technology
Classifying technologies by their primary capabilities
Any in-depth understanding of a technology calls for a
knowledge of what, in general terms, it actually does. In
other words, what is its ‘primary capability? What is it
better at than the technology that it replaces? Figure 8.3
shows some technologies that, at the time of writing, were
new(ish). This is certainly not a fully comprehensive list.
It is to demonstrate how operations managers have to look
‘behind’ the technology in order to start to understand
what it is intended to do. 17
Process Technology
The figure positions the technologies relative to five
‘primary capabilities’:
✓Technologies that can think, or reason
✓Technologies that can see, or sense
✓Technologies that can communicate, or connect
✓Technologies that can move physical objects
✓Technologies that can process materials
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Process Technology
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Process Technology
How can new process technologies be evaluated?
The most common technology-related decision for
operations managers is likely to be whether to adopt an
alternative technology to whatever is currently being used.
Yet, with the emergence of so many new process
technologies with sometimes ambiguous capabilities, the
evaluation process becomes both more difficult and more
important. Added to this are new types of technological
risk – security, obsolescence, implementation problems
and the tendency of some organizations to get carried
away with new technology for its own sake.
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Process Technology
But, whatever the difficulties, evaluation is necessary, so
the characteristics of alternative technologies need to be
evaluated so that they can be compared. Here we use three
sets of criteria for evaluation.
✓Does the technology fit the volume–variety
characteristics of the task for which it is intended?
✓What aspects of the operation’s performance does the
technology improve?
✓Does the technology give an acceptable financial return?
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Process Technology
Does the process technology fit the volume–variety
characteristics of the task?
Within the spectrum from general purpose to dedicated
process technologies, three dimensions in particular tend
to vary with volume and variety.
✓Its degree of ‘automation’
✓The capacity of the technology to process work: that is,
its ‘scale’ or ‘scalability’
✓The extent to which it is integrated with other
technologies: that is, its degree of ‘coupling’ or
‘connectivity’. 22
Process Technology
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Process Technology
The degree of automation of the technology
To some extent, all technology needs human intervention.
Generally, processes that have high variety and low
volume will employ process technology with lower
degrees of automation than those with higher volume and
lower variety.
The scale / scalability of the technology
There is usually some discretion as to the scale of
individual units of technology.
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Process Technology
The advantage of large-scale technologies is that they can
usually process items more cheaply than small-scale
technologies, but usually need high volume and can cope
only with low variety. By contrast, the virtues of smaller-
scale technology are the nimbleness and flexibility that is
suited to high-variety, lower-volume processing. Small
scale technologies are also more robust.
The equivalent to scale for some types of information-
processing technology is scalability. By scalability we
mean the ability to shift to a different level of useful
capacity quickly and cost-effectively. 25
Process Technology
The coupling/connectivity of the technology
Coupling means the linking together of separate activities
within a single piece of process technology to form an
interconnected processing system.
Tight coupling usually gives fast process throughput. Tight
coupling also means that flow is simple and predictable.
Higher variety processing generally requires a more open
and unconstrained level of coupling because different
products and services will require a wider range of
processing activities.
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Process Technology
How does the technology improve the operation’s
performance?
We identified the five operations performance objectives,
on which an operation or process can be judged. So, a
sensible starting point for evaluating the impact of any
process technology on an operation is to assess how it
affects its quality, speed, dependability, flexibility and cost
performance.
However, two refinements are necessary to the normal list
of performance objectives.
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Process Technology
First, given that some process technologies can perform
totally novel tasks, it is worth splitting the criterion of
‘quality’ into ‘specification quality’ and ‘conformance
quality’. Similarly, when considering the flexibility of
technology, it is worth distinguishing between response
flexibility and range flexibility. In addition, again given
the increased capabilities of some new process
technologies, other criteria are worth including in any
evaluation.
These assessment questions can be viewed as a starting
point. The criteria should be adjusted depending on the
operation for which the technology is intended. 28
Process Technology
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Process Technology
Does the technology give an acceptable financial return?
Assessing the financial value of investing in process
technology is in itself a specialized subject. And while it is
not the purpose of this course to delve into the details of
financial analysis, it is important to highlight one
important issue that is central to financial evaluation:
while the benefits of investing in new technology can be
spread over many years into the future, the costs
associated with investing in the technology usually occur
up front. So we have to consider the time value of money.
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Process Technology
How are new process technologies developed and
implemented?
Developing and implementing process technology means
organizing all the activities involved in making the
technology work as intended. No matter how potentially
beneficial and sophisticated the technology, it remains
only a prospective benefit until it has been implemented
successfully. So implementation is an important part of
process technology management. Yet it is not always
straightforward to make general points about the
implementation process because it is very context
dependent. 31
Process Technology
That is, the way one implements any technology will very
much depend on it’s the specific nature, the changes
implied by the technology and the organizational
conditions that apply during its implementation.
We look at four particularly important issues that affect
technology implementation: the way technology is planned
over the long term, the idea of resource and process
‘distance’, the need to consider customer acceptability and
the idea that if anything can go wrong, it will.
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Process Technology
Technology planning in the long term
Operations managers are involved with the development
of process technologies, it is likely to be in consultation
and collaboration with other parts of the firm.
A technology roadmap (TRM) is an approach that
provides a structure that attempts to assure the alignment
of developments (and investments) in technology, possible
future market needs, and the new development of
associated operations capabilities.
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Process Technology
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Process Technology
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Process Technology
Resource and process ‘distance’
The degree of difficulty in the implementation of process
technology will depend on the degree of novelty of the
new technology resources and the changes required in the
operation’s processes. The less that the new technology
resources are understood, the greater their ‘distance’ from
the current technology resource base of the operation.
Similarly, the extent to which an implementation requires
an operation to modify its existing processes, the greater
the ‘process distance’. The greater the resource and
process distance, the more difficult any implementation is
likely to be. 36
Process Technology
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Process Technology
Customer acceptability
When an operation’s customers interact with its process
technology it is essential to consider the customer
interaction when evaluating it. If customers are to have
direct contact with technology, they must have some idea
of how to operate it. Where customers have an active
interaction with technology, the limitations of their
understanding of the technology can be the main
constraint on its use.
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Process Technology
Walley and Amin suggest that the ability of the operation
to train its customers in the use of its technology depends
on three factors: complexity, repetition and the variety of
tasks performed by the customer. If services are complex,
higher levels of ‘training’ maybe needed. Frequency of use
is important because the payback for the ‘investment’ in
training will be greater if the customer uses the technology
frequently. Finally, training will be easier if the customer
is presented with a low variety of tasks.
In other cases, the technology may not be trusted by
customers because it is technology and not a person.
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Process Technology
Anticipating implementation problems
The implementation of any process technology will need
to account for the ‘adjustment’ issues that almost always
occur when making any organizational change.
By adjustment issues we mean the losses that could be
incurred before the improvement is functioning as
intended. This effect has been identified empirically in a
range of operations, especially when new types of process
technology are involved.
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Process Technology
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