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product life cycle and the technological life cycle. It was introduced by Robert H.
Hayes and Steven C. Wheelwright in two classic management articles published
in Harvard Business Review in 1979, entitled "Link Manufacturing Process and
Product Life Cycles" and "The Dynamics of Process-Product Life Cycles." The
authors used this matrix to examine market-manufacturing congruence issues and
to facilitate the understanding of the strategic options available to a company. The
matrix itself consists of two dimensions, product structure/product life cycle and
process structure/process life cycle. The production process used to manufacture a
product moves through a series of stages, much like the stages of products and
markets, which begins with a highly flexible, high-cost process and progresses
toward increasing standardization, mechanization, and automation, culminating in
an inflexible but cost-effective process. The process structure/process life cycle
dimension describes the process choice (job shop, batch, assembly line, and
continuous flow) and process structure (jumbled flow, disconnected line flow,
connected line flow and continuous flow) while the product structure/product life
cycle describes the four stages of the product life cycle (low volume to high volume)
and product structure (low to high standardization). Later writers on the subject
sometimes insert an additional stage in the extreme upper-left corner of the matrix:
the project.
A company can be characterized as occupying a particular region on the matrix (see
accompanying Figure). This region is determined by the firm's stage in the product
life cycle and the firm's choice of production process. At the upper left extreme, firms
are characterized as process oriented or focused while the lower right extreme holds
firms that are said to be product focused. The decision of where a firm locates on the
matrix is determined by whether the production system is organized by grouping
resources around the process or the product. Note from the figure that the vertices of
the matrix result in four distinct types of operations (described by the appropriate
process choice) located on the diagonal of the matrix.
PROCESS CHOICES
PROJECT.
Projects are briefly included in the discussion since they are sometimes found at the
extreme upper-left corner of the matrix (depending on the author). These include
large-scale, one-time, unique products such as civil-engineering contracts, aerospace
programs, construction, etc. They are also customer-specific and often too large to
be moved, which practically dictates that project is the process of choice.
JOB SHOP.
If a manufacturer had broken a large cog on an outdated (i.e., replacement parts are
no longer available) but still useful machine, she would take the
Product-Process Matrix
Process
Product
Low
Low
Higher
Very high
structure
volume
volume
Process life
Product
cycle stage
life cycle
stage
a kind)
product
(Project)
Jumbled flow
(job shop)
Job shop
Disconnected
line flow
Batch
(batch)
Connected line
flow (assembly
Assembly line
line)
Continuous
flow
Continuous
(continuous)
broken cog to a machine shop where they would manufacture a new one from
scratch. This machine shop (along with tool and die manufacturers) is probably the
primary example of manufacturing job shops. A job shop is the producer of unique
products; usually this product is of an individual nature and requires that the job
shop interpret the customer's design and specifications, which requires a relatively
high level of skill and experience. Once the design is specified, one or a small number
of skilled employees are assigned to the task and are frequently responsible for
deciding how best to carry it out. Generally, resources for processing have limited
availability with temporary in-process storage capability needed while jobs wait for
subsequent processing. If the product is not a one-time requirement, it is at least
BATCH.
Firms utilizing batch processes provide similar items on a repeat basis, usually in
larger volumes than that associated with job shops. Products are sometimes
accumulated until a lot can be processed together. When the most effective
manufacturing route has been determined, the higher volume and repetition of
requirements can make more efficient use of capacity and result in significantly
lower costs.
Since the volume is higher than that of the job shop, many processes can be utilized
in repetition, creating a much smoother flow of work-in-process throughout the
shop. While the flow is smoother, the work-in-process still moves around to the
LINE.
When product demand is high enough, the appropriate process is the assembly line.
Often, this process (along with continuous; both are in the lower-right quadrant of
the matrix) is referred to as mass production. Laborers generally perform the same
operations for each production run in a standard and hopefully uninterrupted flow.
The assembly line treats all outputs as basically the same. Firms characterized by
this process are generally heavily automated, utilizing special-purpose equipment.
Frequently, some form of conveyor system connects the various pieces of equipment
used. There is usually a fixed set of inputs and outputs, constant throughput time,
and a relatively continuous flow of work. Because the product is standardized, the
process can be also, following the same path from one operation to the next.
Routing, scheduling, and control are facilitated since each individual unit of output
does not have to be monitored and controlled. This also means that the manager's
span of control can increase and less skilled workers can be utilized.
The product created by the assembly-line process is discrete; that is, it can be
visually counted (as opposed to continuous processes which produce a product that
is not naturally divisible). Almost everyone can think of an example of assembly-line
manufacturing (automobile manufacturing is probably the most obvious). Examples
of assembly lines in services are car washes, class registration in universities, and
many fast food operations.
Because the work-in-process equipment is organized and sequenced according to the
steps involved to produce the product and is frequently connected by some sort of
each individual product. By incorporating this dimension into its strategic planning
process, the firm encourages more creative thinking about organizational
competence and competitive advantage. Also, use of the matrix provides a natural
way to involve manufacturing managers in the planning process so they can relate
their opportunities and decisions more effectively with those of marketing and of the
corporation itself, all the while leading to more informed predictions about changes
in industry and the firm's appropriate strategic responses.
Each process choice on the matrix has a unique set of characteristics. Those in the
upper-left quadrant of the matrix (job shop and batch) share a number of
characteristics, as do those in the lower-right quadrant (assembly line and
continuous). Upper-left firms employ highly skilled craftsmen (machinists, printers,
tool and die makers, musical instrument craftsmen) and professionals (lawyers,
doctors, CPAs, consultants). Hence upper-left firms can be characterized as labor
intensive. Since upper-left firms tend to utilize general-purpose equipment, are
seldom at 100 percent capacity, and employ workers with a wide range of skills, they
can be very flexible. However, there is a difficult trade-off between efficiency and
flexibility of operations. Most job shops tend to emphasize flexibility over efficiency.
Since efficiency is not a strong point of upper-left firms, neither is low-cost
production. Also, the low volume of production does not allow upper-left firms to
spread their fixed costs over a wide enough base to provide for reduced costs.
Finally, upper-left firms are also more likely to serve local markets.
Lower-right firms require production facilities that are highly specialized, capital
intensive, and interrelated (therefore, inflexible). Labor requirements are generally
unskilled or semi-skilled at most. Much of the labor requirement deals with merely
monitoring and maintaining equipment. Lower-right firms are also more likely to
serve national markets and can be vertically integrated.
Hayes and Wheelwright relate three areas affected by the use of the product-process
matrix: distinctive competence, management, and organization.
DISTINCTIVE COMPETENCE.
very short period of time (e.g., overnight), then service as a distinctive competence
would belong to lower-right firms.
Finally, remember that high volume, economies of scale, and low cost are
characteristics of firms in the lower-right quadrant of the matrix. Upper-left firms
produce low volumes (sometimes only one) and cannot take advantage of economies
of scale. (Imagine, for instance, what you would have to pay for a handcrafted
musical instrument.) Therefore, it is obvious that price or cost competitiveness is
within the domain of lower-right firms.
MANAGEMENT.
In general, the economics of production processes favor positions along the diagonal
of the product-process matrix. That is, firms operating on or close to the diagonal are
expected to outperform firms choosing extreme off-diagonal positions. Hayes and
Wheelwright provide the example of a firm positioned in the upper-right corner of
the matrix. This would appear to be a commodity produced by a job shop, an option
that is economically unfeasible. A firm positioned in the lower-left corner would
represent a unique one-time product produced by a continuous process, again not a
feasible option. Both examples are too far off the diagonal. Firms that find
themselves too far off the diagonal invite trouble by impairing their ability to
compete effectively. While firms operating in the near vicinity, but not exactly on the
diagonal, can be niche players, positions farther away from the diagonal are difficult
to justify. Rolls Royce makes automobiles in a job shop environment but they
understand the implications involved. Companies off the diagonal must be aware of
traps it can fall into and implications presented by their position.
Also, a firm's choice of product-process position places them to the right or left of
competitors along the horizontal dimension of the matrix and above or below its
competitors along the vertical dimension of the matrix. The strategic implications
are obvious. Of course, a firm's position on the matrix may change over time, so the
firm must be aware of the implications and maintain the capability to deal with them
appropriately. The matrix can provide powerful insights into the consequences of
any planned product or process change.
Use of the product-process matrix can also help a firm define its product. Hayes and
Wheelwright relate the example of a specialized manufacturer of printed circuit
boards who produced a low-volume, customized product using a highly connected
assembly-line process. Obviously, this would place them in the lower-left corner of
the matrix; not a desirable place to be. This knowledge forced the company to realize
that what they were offering was not really circuit boards after all, but design
capability. So, in essence, they were mass-producing designs rather than the boards
themselves. Hence, they were not far off the diagonal at all.
ORGANIZATION.
Firms organize different operating units so that they can specialize on separate
portions of the total manufacturing task while still maintaining overall coordination.
Most firms will select two or more processes for the products or services they
produce. For example, a firm may use a batch process to make components for
products, which are constructed on assembly lines. This would be especially true if
the work content for component production or the volume needed was not sufficient
for the creation of a dedicated line process. Also, firms may need separate facilities
for different products or parts, or they may simply separate their production within
the same facility. It may even be that a firm can produce the similar products
through two different process options. For example, Fender Musical Instruments not
only mass produces electric guitars (assembly line) but also offers customized
versions of the same product through the Fender Custom Shop (job shop). Again, the
matrix provides a valuable framework for diagnostic use in these situations.