string(117) ‘ only a few versions and use a relatively mechanized and linked production method, such as a going assembly line\. ‘
133 Hyperlink manufacturing method and product life cycles Focusing on the process provides new sizing to technique Robert They would. Hayes and Steven C. Wheelwright Even though the product life cycle concept may well have benefit for managers, its focus on marketing makes it inadequate pertaining to strategic organizers.
These authors point out that using a procedure life routine can help a business choose between its various manufacturing and marketing options. Using the idea of a “product-process matrix, ” they show how a provider’s position demonstrates its strengths and weaknesses, and they go over the significance for corporate strategy.
Mr. Hayes is usually professor of business operations at the Harvard Business Institution. He is at the moment serving because faculty leader of and teaching at Harvard’s Older Managers Program in Vevcy, Swiss. One of his previous articles or blog posts in HBR is “How Should You Plan Manufacturing? ” (coauthor, Roger W. Schmenner, JanuaryFchruary 1978). Mr. Wheelwright is affiliate professor of business government at the Harvard Business University. He is presently teaching inside the MBA program and is faculty chairman of Harvard’s business program about Manufacturing in Corporate Technique.
One of his previous HBR articles is definitely “Corporate Foretelling of: Promise and Reality, inch [coauthor, Darral G. Clarke, NovemberDecember 1976). The regularity of the growth cyeles of living organisms offers always interested thoughtful observers and provides invited a variety of attempts to make use of the same principles”of a expected sequence of rapid development followed by maturation, decline, and death-to businesses and selected industries. One such concept, known as the “product lifestyle cycle/’ continues to be studied in many of company settings. Nevertheless , there are enough opposing theories to raise the doubts of folks like In. K. Dhalla and H. Yuspeh, whom argued in these same webpages a few years ago that businessmen should intercontinental product life circuit concept. Irrespective of whether the product lifestyle cycle routine is a general rule or holds just for specific instances, it does give a useful and provocative construction for thinking about the growth and development of any new product, a company, or an entire industry. One of the main shortcomings with this approach, yet , is that that concentrates on the marketing implieations of the existence cycle pattern.
In so doing, this implies that other aspects of the business enterprise and market environment move in concert with all the market existence cycle. Whilst such some may help person to think backside on the kinds of ehanges that occur in several industries, a person company will often find it as well simplistic use with its strategic planning. In fact , the concept can even be deceiving in strategic planning. On this page we claim that separating the merchandise life circuit concept coming from a related but unique phenomenon that individuals will phone the “process life I actually TJie Support life Cycle and Internationa!
Transact. Louis To. Wells, |r., ed. ICambridge, Mass., HarvaiiJ University Press, 1D71I, im example. proviJcs evidence coming from a number of sectors that argues for wide-ranging application of idea, 2 . N. K. Dhalla and S i9000. Yuspirh, “Forget the Priidutt Life Pattern Cnni, epU” HBR I3nuary-February 197(1, g. 101. 134 Harvard Organization Review January-February 1979 cycle” facilitates the understanding of the proper options available into a company, especially with regard to the manufacturing function. The product-process matrix
The process life pattern has heen attracting elevating attention by husiness managers and research workers over the past a long period. ^ As a product and market move across a series of key stages, therefore does the production process found in the manufacture of that merchandise. The process advancement typically hegins with a “fluid” process”one that is certainly highly flexible, hut not too cost efficient”and proceeds toward increasing standardization, mechanization, and automation. This evolution culminates in a “systemic process” that may be very useful hut far more capital extensive, nterrelated, and therefore less adaptable than the first fluid procedure. Using a product-process matrix, Show I advises one way where the interaction of both the merchandise and the process life pattern stages can he symbolized. The lines of this matrix represent difficulties stages through whieh a production procedure tends to complete in going from the fluid form inside the top line to the systemic form in the bottom row. The columns represent the merchandise life circuit phases, going from the great variety connected with startup within the left-hand area to standardized commodity goods on the right-hand side.
Indirect position A firm [or a husiness unit within a diversified company) can be characterized as occupying a particular region in the matrix, determined by the stage in the product life circuit and its range of production procedure for that merchandise. Some basic examples may possibly clarify this kind of. Typical of the company found in the upper left-hand comer is actually a commercial printing device. In such a organization, each job is unique and a disorderly flow or job shop process is often selected to be most effective in meeting all those product requirements.
In such a work shop, jobs arrive in different forms and require different tasks, and therefore the equipment is usually relatively general purpose. Also, that equipment is seldom used at ioo% capability, the workers routinely have a wide range of development skills, every joh requires much longer to go through the plant compared to the lahor hours required by simply that work. Further over the diagonal in this matrix, the maker of large equipment generally chooses a production framework characterized being a “disconnected line flow” method.
Although the firm may make a numher of products (a customer may even manage to order a somewhat customized unit), financial systems of size in manufacturing usually lead this kind of companies to offer several hasic models having a variety of choices. This enables making to move via a job store to a movement pattern in which batches of any given style proceed irregularly through a group of work stations, or possihly even a lowvolume assembly line. Even further down the diagonal, for a item like autos or main home appliances, a business will generally choose to ake only a few models and use a relatively mechanical and linked production procedure, such as a moving assembly line.
You read ‘Link Manufacturing Procedure and Support life Cycles’ in category ‘Life’ Such a process matches the support life cycle requirements that the auto companies must satisfy with the economies availahle from a standardized and automated process. Finally, down in the considerably right-hand comer of the matrix, one would discover refinery procedures, such as essential oil or sugar processing, the place that the product is a commodity and the process can be continuous.
Even though such functions are highly specialised, inflexible, and capital intense, their disadvantages are more than offset by the low varying costs as a result of a high amount passing through a standardized method. In Exhibit 7, two corners inside the matrix happen to be void of companies or individual companies. The top right-hand ingerir eharacterizes a commodity product produced by a job-shop process that is simply not economical. Hence there are zero companies or perhaps industries situated in that sector. Similarly, the lower left-hand part represents a one-of-a-kind item that is manufactured by continuous or very specific processes.
These kinds of processes are merely too adamant for these kinds of unique product requirements. From the diagonal The examples reported thus far had been the more familiar “diagonal instances, ” in which a certain sort of product structure is matehed with its “natural” process structure. But a company may look for a position three or more. For example , Bill ), Abernathy and Philip L. Townscnd, “TechnoloRy, Pioductivity, and Method Changes, inches in Tachnalo^icdl Forfcoitinj: iind Social Cbange, Volume VII, No . 5, 1975, l. ^79) Abcmathy and lamelle Ulierback, “DyQ. mic Model of Process and Product Development, ” Omega, Volume HELLO THERE, No . six, 1975, l. 6i9i Abernathy and Uuerback, “Innovation as well as the Evolution of Technology in the Firm, inches Harvard Organization School Functioning P. iper |HBS 7S->, fiR, Modified |unc 197^!. Process existence cycles hundratrettiofem Exhibit I Matching significant stages of product and process your life cycles Product structure Support life cycle stage I Low volume-low standardization, one of a kind Multiple products low volume Handful of major items higher amount IV Large volume-high standardization. commodity goods
Process composition Process life cycle level Jumbled stream (job shop) Commercial inkjet printer Disconnected line Mow (batch) Heavy gear Connected collection flow (assembly line) Automobile assembly IV Continuous stream off the diagonal instead of on it, to its competitive advantage. Rolls-Royce Ltd. still makes a limited product line of motor automobiles using a method that is a lot more like a job store than an assembly line. A company that allows by itself to drift from the diagonal without understanding the likely effects of such a change is seeking trouhle.
This really is apparently the situation with services in the factory housing industry that allowed their particular manufacturing functions to become as well capital intense and as well de- 136 Harvard Business Review January-February 1979 pendent on stable, high-volume production in the early 1970s. Together might expect, when a business moves beyond the boundary away from the indirect, it hecomes increasingly dissimilar from its competition. This may could, depending on its success in achieving focus and exploiting the huge benefits of it is niche, help to make it more vulnerable to assault.
Coordinating advertising manufacturing could become more difficult while the two areas confront more and more different opportunities and stresses. Not rarely, companies realize that either inadvertently or by simply conscious decision they are at positions for the matrix extremely dissimilar by those of their very own competitors and must consider drastic helpful action. The majority of small firms that enter into a mature sector start off this way, of course , which provides one explanation of both strengths and the weaknesses of their situation.
An example of a industry’s matching their movements on these two sizes with within its sector is that of Zenith Radio Firm in the mid-1960s. Zenith had generally adopted a strategy of maintaining a top degree of overall flexibility in its making facilities intended for color tv receivers. We might characterize this procedure structure at that time as being stage 2 . Preparing additional convenience of color TV manufacturing in 1966 [during the height of the rapid growth inside the market), nevertheless.
Zenith chose to expand development capacity in a way that represented a definite move throughout the process aspect, toward the matrix diagonal, by combining color TELEVISION SET assembly in two large plants. One of these was in a low-cost labor area in the us. While Zenith continued to obtain facilities which were more flexible than those of other companies in the industry, this kind of decision mirrored corporate management’s assessment of the need to stay within variety of the industry on tbe process dimensions so that it is excellent marketing strategy would not always be constrained simply by inefficient making.
It is interesting that eight years later Zenith manufactured a similar decision to keep all its development of color television chasses in the United States, instead of lose the flexibleness and bear the costs of moving creation to the China. This decision, in conjunction with other folks made in earlier times five years, is now being called into question. Applying our lingo. Zenith once again finds alone too far over a diagonal, compared to its huge, primarily Japan, competitors, most of whom possess mechanized their very own production procedures, positioned these people in low wage countries, and embarked on different costreduction applications.
Incorporating this additional sizing into proper planning encourages more creative thinking about company competence and competitive edge. It also can result in more informed predictions regarding the changes which have been likely to result from a particular market and to consideration of the approaches that might be used in answering such fees. Finally, it provides a natural approach to involve manufacturing managers in the planning process to enable them to relate their particular opportunities and decisions more effectively with online strategy and corporate desired goals.
The experience of the late 1960s and early 1970s shows that major competitive advantages can easily accrue to companies that are able to integrate all their manufacturing and marketing business with a prevalent strategy. ^ Using the idea We will certainly explore three issues that comply with from the product-process life circuit: [1) the concept of exclusive competence, [2) the management ramifications of deciding on a particular product-process combination, taking into consideration the competition, and |3) the organizing of numerous operating devices so that they can specialize on distinct portions in the total making task whilst still retaining overall dexterity.
Distinctive skills Most companies love to think of themselves as being particularly good relative to their rivals in certain areas, and they stay away from competition in others. Their particular objective is always to guard this distinctive competence against outdoors attacks or perhaps internal aimlessncss and to take advantage of it wherever possible. Every once in awhile, unfortunately, managing becomes preoccupied with promoting concerns and loses view of the value of manufacturing talents. When this happens, that thinks about technique in terms simply of the merchandise and industry dimension in a product life circuit context.
Essentially, management concentrates resources and planning attempts on a relatively narrow line of the matrix shown in Exhibit 1 on page r35. 4. See “Manufacturing”Missing Website link in Corporate and business Stiatcgy, inches by Wickham Skinner, HBR May-June 69, p. i]6. Procedure life cycles 137 Exhibit II Extended product-process matrix Product composition Product några cycle stage III Low volume “low standardization, one of a kind Process structure Process life cycle stage Multiple products low volume level Few major products larger volume IV
High volume-fiigh standardization. commodity products Crucial management tasks Flexibilityquality ¢ Fast response ¢ Packing plant, estimating capacity ¢Estimating costs and delivery instances ¢ Breaking bottlenecks ¢ Order tracing and expediting ¢ Systemizing diverse components ¢ Developing standards and methods, improvement ¢ Balancing process stages ¢ Controlling large, particular, and intricate operations ¢ Meeling material requirements ¢ Running products at optimum efficiency ¢ Timing enlargement and scientific change ¢ Raising essential capital
Jumbled flow (lobshop) Disconnected series flow (batch) Connected collection flow (assembly line) IV Continuous flow Hone Dependabilitycost Flexibility-quality Dependability-cosi dominant competitive mode ¢ Custom design and style ¢ General purpose ¢ Excessive margins ¢ ¢ ¢ ¢ Personalized design Ouality control Services High margins ¢ Standardized design ¢ Volume making ¢ Completed goods products on hand ¢ Division ¢ Back-up suppliers ¢ Vertical integration ¢ Long runs ¢ Specialized tools and procedures ¢ Economies of scale ¢ Standard material
The benefit of the two-dimensional point of view is that it lets a company being more exact about what the distinctive skills really is also to concentrate their attentions on a restricted pair of process decisions and alternatives, as well as a re- stricted pair of marketing alternatives. Real emphasis is maintained only when the emphasis is on a single “patch” in the matrix”a process emphasis as well as a product or industry focus. Since suggested by Wickham Skinner, narrowing the focus of the organization unit’s 138 Harvard Organization Review January-February 1979 ctivities and the supporting manufacturing plant’s activities might greatly raise the chance of success for the organization/’ Contemplating both method and product dimensions may affect the way an organization defines it is “product. ” For example , all of us recently explored the case of your specialized maker of branded circuit planks. Management’s initial assessment of its position within the m. atrix was that it absolutely was producing a lowvolume, one-of-a-kind merchandise using a very connected flow line process. (This would put it in the reduce left comer of the matrix. On further reflection, however , management made the decision that while the company specialized in tiny production batches, the “product” it really was offering was obviously a design capacity for particular purpose circuit boards. In this way, then, it absolutely was mass generating designs rather than boards. Therefore, the company was not far off the diagonal after all. This understanding of the company’s exclusive competence was helpful to management as it regarded different tasks and decisions, only many of which were encouraging of the provider’s actual location on the matrix. Effects of position
As a firm undertakes distinct combinations of product and process, managing problems change. It is the discussion between the two of these that establishes which jobs will be crucial for a given company or sector. Along the procedure structure dimensions, for example , the key competitive benefit of a jumbled flow operation is it is flexibility to both merchandise and volume changes. Jointly moves toward more standard processes, the competitive emphasis generally shifts from flexibility and quality (measured with regards to product specialization) to stability, predictability, and cost.
An identical sequence of competitive emploi occurs as being a company moves along the merchandise structure aspect. These movements in focal points are illustrated in Demonstrate 11 For any given product structure, a firm whose competitive emphasis is on quality or new product development would choose a much more flexible development operation than would a competitor who has the same item structure yet who comes after a cost-minimizing strategy. On the other hand, a company that chooses specific process framework reinforces the functions of that structure by using the corresponding merchandise structure.
The former approach five. “The Centered Factory, inches HBR May-June 1974, g. 113. six. Robert H. Hayes and Roger T. Schmenner, “How Should You Coordinate Manufacturing? inch HBR January-February iy78, s. 105. positions the company above the diagonal, even though the latter positions it someplace along it. A business location around the matrix is going to take into account their traditional orientation. Many companies often be fairly aggressive along the dimension”product or perhaps process-where that they feel many competent and take the additional dimension as “given” by the industry and environment.
For example , a marketing-oriented company wanting to be alert to the requirements of a presented market is more likely to emphasize versatility and top quality than tbe manufacturing-oriented business that looks for to mould the market to its cost or perhaps process leadership. An example of these two competitive methods in the electrical motor industry is provided by the contrast between Dependence Electric and Emerson Electrical. Reliance, on the other hand, has evidently chosen development processes that place it above the diagonal for the given merchandise and industry, and the business emphasizes merchandise customizing and performance.
Emerson, however, tends to location itself under the diagonal and emphasizes expense reduction. Resulting from this difference in emphasis, the majority of Reliance’s products are in the uppr left quadrant, while Emerson’s products often be in the lower right installment. Even where the two companies’ product lines overlap. Reliance may use a even more fluid procedure for that merchandise, while Emerson is more likely to use a standardized process. Eaeh organization has searched for to develop a collection of competitive expertise in manufacturing and marketing that can help it more effective within the selected quadrants.
Concentrating on the upper left versus the lower proper quadrant has many additional effects for a business. The supervision that selects to be competitive primarily in the upper left has to decide when to drop or forego a product or perhaps market, and for the management choosing to compete inside the lower correct a major decision is if you should eater the market. In the last mentioned case, the business can watch the market develop and does not have as much need for overall flexibility as do firms that placement themselves inside the upper left, since item and market changes commonly occur significantly less frequently through the later stages of the support life cycle.
This sort of thinking about the two product and process knowledge is particularly useful in selecting the match of these two proportions for a new product. Those familiar with the digital watch sector may recall that in the early 1972s Texas Musical instruments introduced a jewellery line digital watch. The product represented a matrix blend in the top left-hand sector, as demonstrated in Demonstrate U. However, this collection Process your life cycles 139 of wristwatches was discouraging to The state of texas Instruments, in terms of both volume level and success.
Early in 1976, therefore , TI presented a digital view selling intended for $19. ninety five. With only one electronic module and a connected series flow production process, this kind of watch represented a combination of merchandise and method further throughout the diagonal and much more in keeping with TI’s traditional talents and comédie. Organizing procedures If management considers the task structure aspect of organizational competence and strategy, it might usually target its functioning units far more effectively prove individual duties.
For example , many companies face the situation of how to arrange production of spare parts for primary items. While raising volume of the main products may well have induced the company to go down the indirect, the follow-on demand for spare parts may require a mixture of product and process buildings more toward the upper left-hand corner with the matrix. There are numerous more what to be created, each in smaller volume, and the suitable process is usually more flexible than may be the advantages of the primary item.
To accomodate the specific requirements of spare parts production, a cohipany may possibly develop a independent facility for them or simply distinct their production within the same facility. Most likely the least suitable approach is always to leave this sort of production undifferentiated from the production of the simple product, since this would need the plant to span as well broad a number of both equally product and process, rendering it less successful and less powerful for equally categories of item. The choice of merchandise and process structures will certainly determine the kind of manufacturing conditions that will be important for management.
Some of the key jobs related to a particular process framework are mentioned on the correct side of Exhibit U. Recognizing the effect that the provider’s position within the matrix has on these important tasks will frequently suggest within various facets of the policies and procedures the company uses in controlling its manufacturing function, specifically in its production control system. Also, procedures used to keep an eye on and measure the company’s developing performance need to reflect the matrix position selected in the event such actions are to be both useful and consistent with the business goals and strategy.
This sort of a task-oriented analysis can certainly help a company prevent the loss of control more than manufacturing that results every time a standard pair of control systems is used on all products and processes. In addition, it suggests the advantages of different types of managing skills [and managers], depending on the provider’s major developing tasks and dominant competitive modes. While a fairly thin focus can be required for achievement in any individual item market, businesses that are large enough can [and do) effectively produce multiple items in multiple markets.
These are generally often in different stages in the product life routine. However , intended for such an procedure to be successful, a company must separate and set up its making facilities to best focus on each item and then develop sales quantities that are large enough to make individuals manufacturing devices competitive. An example of separating a company’s total manufacturing ability into specific units is definitely provided by the Lynchburg Foundry, a wholly owned subsidiary from the Mead Company. This foundry has five plants in Virginia.
Since Exhibit U shows, these types of plants signify different positions on the matrix. One plant is a job shop, producing mostly one-of-akind products. Two plants make use of a decoupled batch process and make many major goods. A last plant is known as a paced manufacturing plant operation which enables only a few goods, mainly for the automative market. The sixth plant is a highly computerized pipe flower, making what is largely a commodity item. While the standard technology is usually somewhat several in every single plant, there are plenty of similarities.
Nevertheless , the production design, the making processes, as well as the control systems are very diverse. This company decided to design their plants to ensure that each could meet the needs of a specific segment from the market inside the most competitive fashion. Its success indicate that this has been an effective way to match manufacturing functions with market demand. Companies that concentrate their operating units according to the needs of specific, directly defined areas on the matrix will often come across problems in integrating these units right into a coordinated entire.
A recent document suggested a company could be most successful by arranging its manufacturing function around either a product-market focus or possibly a process focus. * That may be, individual units will both manage themselves relatively autonomously, responding directly to the requires of the marketplaces they provide, or they will be divided according to process stages (for example, manufacture, subassembly, and final assembly), all synchronised by a central staff. Firms in the major materials industriessteel companies and oil firms, for exampleprovide classic instances of process-organized manu- 140
Harvard Business Review January-February lates 1970s facturing companies. Most companies that broaden the span with their process through vertical incorporation tend to adopt such an organzation, at least initially. On the other hand, companies that adopt a product- or market-oriented firm in manufacturing generally have a strong market orientation and are unwilling to simply accept the organizational rigidity and lengthened response time that usually accompany central coordination. Most companies in the the labels industry give examples of this kind of product- and market-focused developing organizations.
Regional plants that serve physical market areas are create to reduce travel costs and provide better respond to market requirements. A number of corporations that in the past have arranged themselves around products or perhaps markets include found that, as their items matured and since they have moved to become more vertically integrated, a conflict provides arisen among their initial productorganized manufacturing facilities as well as the needs with their process-oriented internal supply models.
As the competitive emphasis has altered toward price, companies going along the oblicuo have were known to evolve from a product-oriented developing organization to a process-oriented a single. However , sooner or later, such corporations often notice that their operations have hecome so complicated with increased volume level and increased stages of inhouse development that they defy centralized dexterity and management must go back to a more product-oriented organization within a divisionalized structure. ct line with a manufacturing system”a set of persons, plants, products, technology, policies, and control procedures”that can permit a comparatively high degree of flexibility and a relatively low capital power? Or should it prefer a program that will enable lower cost creation with a lack of some overall flexibility to change [in items, production volumes, and equipment) and usually a better degree of capital intensity? This kind of choice will position the corporation above or below its competitors along the vertical dimensions of our matrix.
There are, of course , several energetic aspects of business competitiveness the place that the concepts of matching the item life cycle with the process life cycle can be used. In this article, nevertheless , we have dealt only while using more stationary aspects of deciding on a position around the matrix. We will discuss in a future article what sort of company’s location on the product-process matrix might change over time and the barriers that it can fall into if the implications of such moves are not cautiously evaluated. Strategy implications We are able to now pull together a number of threads and summarize their particular implications intended for corporate approach.
Companies need to make a series of related marketing and manufacturing decisions. These choices should be continually evaluated and sometimes transformed as you can actually products and competition evolve and mature. A firm may pick a product or marketing strategy which gives it a broader or narrower product line than it is principal rivals. Such a choice positions this to the left or right of its rivals, along the side to side dimension of the matrix. Having made this decision, the company provides a further choice to make: Ought it to produce this kind of prod-