Page 234 - Operations Strategy

THE PRoduCT–PRoCEss mATRix 209
customisation (‘boutique’ strategy consulting firms are an example of this). Conversely,
where flexibility is of little importance (with standardised, low-cost products such as
industrial fastenings, or a mass transaction service such as letter sorting) but achieving
dependable high volumes and low unit costs is critical, these inflexible systems come
into their own. In IT-rich technologies, scalability generally depends upon connectiv-
ity (hence the emphasis upon standardisation in systems architecture and underlying
operating processes). The analytical functionality that is so central to complex task
automation normally requires different applications and data sources, so the greater
the connectivity, the greater the analytical power, and so on. Remember, though,
although the three dimensions of process technology do often go together in this way,
they do not always match perfectly.
Several authors have also made a further link to the volume and variety requirements
of the market. The logic goes something like this: companies serving high-volume, and
therefore usually low-variety, markets usually have a competitive position that values
low prices, therefore low-cost operations are important and process technologies need
to be large, automated and integrated. Conversely, low-volume, high-variety opera-
tions need the flexibility that comes with small-scale, loosely coupled technologies
with significant human intervention. This idea is incorporated in the product–process
matrix, which was first described by Professors Robert Hayes and Stephen Wheelwright
(both of Harvard Business School). Although they used it to link the volume and vari-
ety requirements of the market with process design in general, here we use it to draw a
link between volume and variety on the one hand and the three dimensions of process
technology on the other. This is shown in Figure 6.6. The relationship between the

Figure 6.6 the product–process matrix and the technology dimensions

Low volume High volume
Process
(technology Many, High variety Low variety
plus humans) small units Market requirements
Technology has high acuity of
is separated and judgement technology
High Cost Low
O the diagonal
High A High flexibility
Redundant capability
High costs

Coupling Automation Scale Flexibility B

O the diagonal
Low flexibility C
Insucient capability
Low High costs
Technology Process Few, large
is integrated (technology units of
plus humans) technology
has low acuity
and judgement

M06 Operations Strategy 62492.indd 209 02/03/2017 13:05