Page 255 - Operations Strategy

230 CHAPTER 6 • PRoCEss TECHnology sTRATEgy
conditions. But it is also important to recognise that, even if market and resource con-
ditions are exactly as expected, other conditions that impact on financial outcomes
could be unexpected. For example, the availability of credit, interest rates, stock market
sentiment and currency exchange rates can all affect the financial outcome of a project.

summARy AnsWERs To KEy QuEsTions

What is process technology strategy?
Here, technology is defined as the practical ‘appliance of science’, and ‘process technol-
ogy’ is technology as applied to operational processes (as opposed to product/service
technology). This distinction is inevitably less clear in many service operations where
the product is the process. We can further classify two types of process technology: the
first is that contributing ‘directly’ to the production of goods and services; the second
type is the ‘indirect’ or ‘infrastructure’ technology that acts to support core transfor-
mation processes. Process technology strategy is the set of decisions that define the
strategic role that direct and indirect process technology can play in the overall opera-
tions strategy of the organisation, and sets out the general characteristics that help to
evaluate alternative technologies. Any technology strategy is likely to be planned in
consultation with other parts of the firm, maybe using some kind of formal planning
process such as technology roadmapping. 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.

What are suitable dimensions for characterising process technology?
Although generic dimensions will always fail to capture completely the rich detail of
any individual piece of process technology, it is normally useful to describe scale (capac-
ity of each technology unit), automation (what the machine can do) and coupling
(how much is or can be joined together) characteristics. Although these three dimen-
sions are unlikely to be equally relevant for all types of technology, they do offer a useful
categorisation for comparing a range of process technology options.
We can modify our original dimensions (scale, automation and integration) to more
accurately reflect the characteristics of IT-rich process technology. More suitable char-
acteristics are therefore scalability, analytical content and connectivity. We argued that
these new characteristics were overcoming the traditional flexibility/cost trade-off, and
that new process technologies were able to enhance operational flexibility while still
retaining reasonable underlying efficiency, and vice versa.

How do market volume and variety influence process technology?
There is often a ‘natural’ diagonal-fit relationship between the volume/variety and
process technology dimensions. For example, the larger the unit of capacity, the more
likely that it is capital-intensive rather than labour-intensive, which gives more oppor-
tunity for high coupling between its various parts. Where flexibility is unimportant
but achieving dependable high volumes and low unit costs is critical, such inflexible
systems come into their own. Conversely, small-scale technologies, combined with
skilled staff, tend to be more flexible than large-scale, capital-intensive, closely coupled
systems. As a result, these systems can cope with a high degree of variety.

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