Slide 6.

Chapter 6
Process technology strategy

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Slide 6.2

Process technology strategy

Resource usage

Issues include:
• Characterising
process
Quality technologies

Market competitiveness
• Understanding the
general
Speed characteristics
Performance
objectives

of process
technologies over
Dependability time.
• The effect of new
forms of technology
Flexibility on
performance
• Evaluating process
Cost
technology
• The impact of
Supply Process
process technology
technology Development
Capacity network definition and and
oncharacteristics organisation
performance
Decision areas
objectives

Figure 6.1 This chapter looks at process technology strategy

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Slide 6.3

What is technology?
The Oxford Dictionary defines it as: ‘The application of scientific knowledge
for practical purposes, especially in industry.’

Focus of this chapter is process technology

For example, the
product technology: of a computer is related to its hardware and
software.
process technology: is the technology that manufactured the
computer that assembled all the different components.
DIRECT
Processing of products/services

INDIRECT
processing of supporting information, forecasting, scheduling, billing,
infrastructural elements etc.

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Slide 6.4

Process technology strategy

We define process technology strategy as:

‘the set of decisions that define the strategic role that direct and indirect
process technology can play in the overall operations strategy of the
organisation and sets out the general characteristics that help to evaluate
alternative technologies’.

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Slide 6.5

Process Technology types

Material, information and customer processing

Example of integrated materials and information processing

A machine, while processing materials, may also decide tooling changes,
adjust rate of processing, etc.

Example of integrated customer, materials and information processing

Check-in gate counters at airports integrate processing of airline
passengers (customers), flight details, destination, and seating
preference (information) and the number and nature of their items
of luggage (materials).

Technologies are increasingly ‘overlapping’ to become integrating technologies.

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Slide 6.6

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Slide 6.7

Key Questions

• What is process technology strategy?

• What are suitable dimensions for characterising
process technology?
• How do market volume and variety influence
process technology?
• What are some of the challenges of information
technology?
• How can process technology be evaluated
strategically?

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Slide 6.8

Involvement of Operations managers

with process technology
• Need to involve with process technologies on
a day-by-day basis

• Understand how technology can improve

operational effectiveness.

• Do not necessarily need to be experts in the

core science behind the technology

• But need to know enough to evaluate

technical information and ask relevant
questions of the technical experts.

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Slide 6.9

Questions that operations managers can ask

technical experts?
These questions include the following.
• What does the technology do that is different
from other similar technologies?
• How does it do it?
• What constraint does using the technology
place on the operation?
• What skills will be required from the
operations staff in order to install, operate
and maintain the technology?
• What capacity does each unit of technology
have?
• What is the expected useful lifetime of the
technology?

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Slide 6.10

Technology characteristics: automation, scalability and

coupling depend on volume and variety
High variety–low volume: general purpose process technology
to perform the wide range of processing activities.
High volume–low variety processes: more dedicated or special
purpose to suit its narrower range of processing requirements.

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Slide 6.11

The three dimensions of process technology

are often closely linked
Few, large Scale Many, small
units of High Low units of
technology technology

Process Process
Automation (technology
(technology
plus humans) High Low plus humans)
has low acuity has high
and judgement acuity and
judgement

Coupling
Technology is High Low Technology is
integrated separated

Flexibility performance

Cost performance

Figure 6.4 The three dimensions of process technology are often closely linked
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Slide 6.12

The product–process matrix and

the technology dimensions
Low volume High volume
High variety Low variety
High acuity Many,
Loose and small Market requirements
Separated judgement units
High Cost Low
Off the diagonal

High
High flexibility
A
Redundant capability
High costs
Automation
Coupling

Flexibility
Scale

Off the diagonal

Low flexibility C
Insufficient capability
Low

High costs
Integrated Low acuity Few,
Rigid and large
judgement units

Figure 6.5 The product–process matrix and the technology dimensions

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Slide 6.13

Market pressures are requiring operations

to be both flexible and low cost
Competitive
pressure to
reduce costs

High
Traditional trade- The need to
off ‘diagonal’ overcome the
between cost
Flexibility

traditional cost–
and flexibility flexibility trade-off
and achieve high
levels of performance
in both
Low

Market
fragmentation
making
flexibility more
High Cost Low
valuable

Figure 6.6 Market pressures are requiring operations to be both flexible and low cost
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Slide 6.14

The product–process matrix and

the technology dimensions
Low volume High volume
High variety Low variety
High acuity Many,
Loose and small
Separated judgement units Market requirements
High Cost Low

High
Analytical content
Automation
Connectivity

Scaleability
Coupling

Flexibility
Scale

Low

Integrated Low acuity Few, large

Rigid and units
judgement

New developments in process technology can change the cost–flexibility

Figure 6.7
trade-off
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Slide 6.15

Scalability
• Separate and partially connected systems and patched
and inconsistent architectures TO stable and consistent
platforms that can be easily connected to scale up
operations

Connectivity
• ‘hard-wiring’ together disparate process elements TO
platform independent connectivity between
geographically remote computing resources

Analytical content
• Parallel processing
• Degree of customer interaction

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Slide 6.16

Broad categories of evaluation

criteria for assessing concepts

What INVESTMENT
Feasibility – How (both managerial and
difficult is it? financial) will be
needed?
The criteria Overall
What RETURN (in
for Acceptability – evaluation
terms of benefits to the
screening How worthwhile is of the
operation) will it give?
concepts it? concept

Vulnerability – What RISKS do we

what could go run if things go wrong?
wrong?

Figure 6.9 Broad categories of evaluation criteria for assessing concepts

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Slide 6.17

Assessing the ‘acceptability’ of a

process technology
Operations resource Market
capabilities requirements
Is the process How does the process
technology… technology affect…
Proposed
process
Scarce? technology Quality?
Difficult to move? Speed?
Difficult to copy? Dependability?
Difficult to Flexibility?
substitute for? Cost?

Financial evaluation
Does the process
technology give an
acceptable return on the
investment necessary
for its adoption?

Figure 6.11 Assessing the ‘acceptability’ of a process technology

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Slide 6.18

Cash inflows, outflows and requirements

up to the finish of the project (€s)
Cash requirements
(€s)

3,000
2,000
1,000

Start 12 24 36 48 Time
Finish (months)
-1,000

All figures in €s
Six month periods 0 1 2 3 4 5 6 7 8
Cash inflows 0 1,000 1,000 1,000 1,000 2,000 0 0 3,000
Cash outflows 1,050 800 970 950 700 200 200 200 30
Net cash flow (1,050) 200 30 50 300 1,800 (200) (200) 1,700
Beginning cash
without financing 0 (1,050) (850) (820) (770) (470) 1,330 1,130 930
Ending cash
without financing (1,050) (850) (820) (770) (470) 1,330 1,130 930 2,630

Figure 6.10 Cash inflows, outflows and requirements up to the finish of the project (€s)
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Slide 6.19

Performance of laboratory analysis

and data-based systems
Target Current
performance performance
Excellent Poor
Notes
Quality Data allows statistical tracking of
Confidence in analysis cases over time. Tool for internal
process improvement and
Number of tests possible enhanced crime solving
Improvement potential

Speed
Reduced time to analyse case
Analysis time material and product reports
Report lead-time

Dependability Increased % on-time delivery of

crime reports. Often a critical-path
Proportion on-time reports element in a criminal investigation

Flexibility
Volume fluctuations The new (more scalable) system
allows increased case volume
Range of tests (5% growth predicted) to be
accommodated
Cost
The elimination of paperwork is
Productivity of direct work intended to increase productivity
Productivity of indirect work by freeing staff from non-core
activities
Excellent Poor

Figure 6.12 Performance of laboratory analysis and data-based systems

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Slide 6.20

An airline investing in in-flight

entertainment
technology to enhance the specification of
its
flight services.

An airline investing in maintenance

equipment
that keeps the performance of its aircraft
and
ancillary systems within very tight
tolerances.

• reduces the risk of failure in equipment,

as well as increasing the internal predictability
of the airline’s processes.

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Slide 6.21

The check-in technology

Allows customers’ requests for seating or dietary
requirements to be explored quickly.

Lower turnaround time

Technology that allows the fast loading
of customers’ bags and in-flight catering
supplies, allows fuel to be loaded and engines
to be checked, etc.

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Slide 6.22

Specialist navigation equipment installed in

aircraft can allow them to land in conditions
of poor visibility, thus reducing the possibility
of delays due to bad weather.

Airlines invest in advanced aircraft communications

technology.

Reduces the possibility of miscommunication that

can waste
time and cause confusion.

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Slide 6.23

When an airline considers the mix of

aircraft
types to include in its fleet, it does so
partly
to retain sufficient flexibility to respond
to such things as timetable changes or
unexpected demand.

Some aircraft (notably the Boeing 777)

permit
the precise configuration of cabins and
seating to be changed
• it offers airlines the flexibility to
provide a different mix of services
without having different types of
aircraft.

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Slide 6.24

Investment in new aircraft yield greater

efficiency (€/passenger
mile flown) due to advanced engine
technologies

The ‘yield management’ decision support

systems maximise the revenue from flights by
adjusting capacity and pricing strategies to
match demand patterns.

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Slide 6.25

Scarcity

Such resources might include bespoke

production facilities in industries
such as petrochemicals and
pharmaceuticals, where first-mover
advantage often generates superior
returns.

Capturing customer data over time and

then exploiting this information has long
been a core element of airline competitive
strategies – such
information is extremely scarce.
e.g., SABRE

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Slide 6.26

Difficult to move

The value of resource immobility

• increased emphasis being placed upon
infrastructure development in the
management consulting sector – to facilitate
the retention of skills, knowledge and
experience.

Mobility concerns
• IT sector: more complicated contracts
(constraining
subsequent employment, etc.)
• wage inflation for certain key staff.

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Slide 6.27

Difficult to copy

Learning curve in managing high-volume

processes
• e.g., Semiconductors
manufacturing
can create competitive performance
barriers.

In the competitive confectionery market

• secrecy associated with proprietary
production processes, but very little
recourse to the filing of patents.

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Slide 6.28

Vulnerability 1 Market vulnerability – will the

technology, when developed and
implemented, meet
the needs (real or perceived) of the
market?

2 Regulatory vulnerability – will the

technology conflict with any likely
‘constraining
regulations’ related to the environment,
health or market behaviour (a significant
factor, for example in financial services)?

3 Social and political vulnerability – will the

technology prove acceptable to all the
organisation’s stakeholders?
For example, certain legitimate oil and
gas extraction technologies may provoke social
opposition.

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Slide 6.29

4 Acceptance and legitimacy of

vulnerability – will groups or individuals
who feel themselves
affected by it accept the technology?
Although rationally an improved
technology,
does it threaten existing jobs?

5 Timing vulnerability – will the technology

be implemented either too early or too
late
with respect to parallel developments (for
example, competitors’ new technology)?

6 Response vulnerability – will the

technology provoke hostile competitor
innovations?
Is a ‘technology war’ desirable?
CHATGPT
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Slide 6.30

Resource vulnerability
• Resource dependencies
• Skilled employees taking up
other employment prospects
• Dependencies with suppliers
and customers
• E.g. ML and data science talent
switching jobs

•
Financial vulnerability
• Due to market and resource
vulnerabilities

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Slide 6.31

The generic form of technology roadmaps (TRM)

Market developments
Products/services
Technologies
Capabilities
nd
Business goals Timing of, a
Projects ti on s hip b etween the
Elements rela
For m en ts o f technology
of Process developments ele
technology example planning
planning Knowledge enablers
Intellectual resources
Decision points
External events, e.g. competitor activity

Time

Figure 6.2 The generic form of technology roadmaps (TRM)

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Slide 6.32

Simplified example of a technology roadmap for the

development of products/services, technologies and
processes for a facilities management service
Year 1 Year 2 Year 3 Year 4, etc.

Meet budget limits Integrate with divisions Market launch

Business
goals

Transfer knowledge to
divisions
Products/

Control software Interface integration Client interface portal

services

Website prototype test

Technologies

Digital adaptive Resource planning

CRM implementation
agents algorithms

Establish client
developments

ERP integration
Develop resource response centre
Process

planning model
Develop service teams

Time

Simplified example of a technology roadmap for the development of

Figure 6.3
products/services, technologies and processes for a facilities management service
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