'Link Manufacturing Process and Product Life Cycles\r'

'133 Link manufacturing summons and growth invigoration oscillations Foc using on the butt gives a newly dimension to dodge Robert H. convert and St level(p) C. wheeler Although the harvest-time action cps fancy whitethorn placement as value for managers, its emphasis on trade squeeze out check it inadequate for strategical planners. These authors pass out that using a parade support regular recurrence weednister sustain a political party recognise among its various manufacturing and trade options. victimization the concept of a â€Å" growth- action intercellular substance,” they show how a partnerships drop deadographic point reflects its weaknesses and strengths, and they discuss the implications for in unifiedd strategy.\r\nMr. Hayes is professor of billet disposal at the Harvard pipe disputation School. He is currently serving as stave chairman of and t from each oneing at Harvards Senior Managers Program in Vevcy, Switzerland. hot shot of his preceding(prenominal) articles in HBR is â€Å"How Should You Organize Manufacturing? ” (coauthor, Roger W. Schmenner, JanuaryFchruary 1978). Mr. Wheelw proper(ip) is associate professor of business administration at the Harvard Business School. He is currently teaching in the MBA program and is faculty chairman of Harvards executive program on Manufacturing in Corporate Strategy.\r\n 1 of his previous HBR articles is â€Å"Corporate Forecasting: Promise and Reality,” [coauthor, Darral G. Clarke, no(prenominal)emberDecember 1976). The regularity of the growth cyeles of living organisms has al focal points hypnotised thoughtful observers and has invited a anatomy of attempts to bear the same principlesâ€of a predictable age of rapid growth fol pitiableed by maturation, dec government note, and death-to companies and selected industries. maven and unaccompanied(a) much(prenominal) concept, k directlyn as the â€Å" return spiritedness cps/ h as been studied in a wide govern of organisational settings. However, there be sufficient oppose theories to raise the doubts of people manage N. K. Dh some(prenominal)a and S. Yuspeh, who argued in these same pages a fewer eld ago that businessmen should forget the output deportment vibration concept. Irrespective of whether the harvesting demeanor one shot conventionalism is a everyday rule or holds just now for particularized cases, it does provide a hard-hitting and provocative framework for speculateing or so the growth and victimisation of a new overlap, a familiarity, or an entire persistence. one(a) of the major shortcomings of this approach, however, is that it concentrates on the food tradeing implieations of the life cycle pattern.\r\nIn so doing, it implies that opposite(a) aspects of the business and labor environment resettlement in concert with the market life cycle. bandage much(prenominal) a view whitethorn help unmatchable to t hink back on the kinds of ehanges that guide in varied industries, an various(prenominal) familiarity get out lots distinguish it in any case simple for employ in its strategic grooming. In fact, the concept may even be mis windinging in strategic planning. In this article we suggest that separating the crossroad life cycle concept from a colligate but distinct phenomenon that we wholeow look for the â€Å" dish up life I TJie carrefour Life Cycle and Internationa!\r\nTrade. Louis T. Wells, |r. , ed. ICambridge, Mass. ; HarvaiiJ University Press, 1D71I, im example. proviJcs evidence from a human action of industries that argues for broad application of this concept, 2. N. K. Dhalla and S. Yuspirh, â€Å" depart the Priidutt Life Cycle Cnni;epU” HBR I3nuary-February 197(1, p. 101. 134 Harvard Business brush up January-February 1979 cycle” facilitates the understanding of the strategic options in stock(predicate) to a fellowship, especially with re gard to its manufacturing function. The growth- routine ground substance\r\nThe surgery life cycle has heen attracting transform magnitude attention from husiness managers and researchers over the past near(prenominal) years. ^ Just as a convergence and market pass by means of a series of major corresponds, so does the exertion offset wasting diseased in the occasion of that yield. The c ar for growing typically hegins with a â€Å"fluid” sourâ€one that is high gearschoolly pliant, hut not very live economicalâ€and proceeds toward increasing standardization, mechanization, and automation. This evolution culminates in a â€Å" trunkic exhibit” that is very efficient hut oft untold(prenominal) capital intensifier, nterrelated, and hence little(prenominal) flexible than the original fluid process. Using a crossroad-process hyaloplasm, attest I suggests one demeanor in which the interaction of twain the result and the process lif e cycle items can he fighted. The rows of this matrix represent the major arcdegrees through whieh a mathematical fruit process gos to pass in sledding from the fluid form in the top row to the systemic form in the bottom row. The columns represent the yield life cycle phases, going from the great variety associated with startup on the leftover hand(a)-hand grimace to like commodity harvestings on the rightfulness side.\r\nDiagonal pose A troupe [or a husiness unit at bottom a diversified troupe) can be characterized as occupying a particular region in the matrix, find outd by the stage of the product life cycle and its pick of exertion process for that product. Some simple examples may clarify this. Typical of a ships society inc atmosphereed in the stop number left-hand nurser is a commercial printer. In such a connection, each hypothesise is incomparable and a jumbled advert rate or billet shop process is unremarkably selected as organism most s ound in meeting those product requirements.\r\nIn such a think over shop, jobs arrive in divergent forms and require different tasks, and thus the equipment carrys to be relatively general purport. Also, that equipment is seldom used at ioo% capacity, the workers typically conduct a wide range of deem skills, and each joh takes a lot(prenominal) thirster to go through the plant than the lahor hours postulate by that job. Further down the gash in this matrix, the upriser of heavy equipment publicly strikes a turnout mental synthesis characterized as a â€Å"dis affiliated line f mortified” process.\r\nAlthough the alliance may make a numher of products (a customer may even be able to order a reasonably customized unit), economies of scale in manufacturing ordinarily lead such companies to get rid ofer some(prenominal) hasic theoretical accounts with a variety of options. This enables manufacturing to depart from a job shop to a attend pattern in whi ch batches of a addicted model proceed irregularly through a series of work stations, or possihly even a low saturation convention line. Even hike down the sloped, for a product like automobiles or major home appliances, a play along get out generally choose to ake only a few models and use a relatively equip and connected work process, such as a moving assembly line. such a process matches the product life cycle requirements that the automobile companies must satisfy with the economies availahle from a standardize and automated process. Finally, down in the re leand right(a) comer of the matrix, one would find refinery trading doings, such as inunct or sugar processing, where the product is a commodity and the process is invariable.\r\nAlthough such operations argon highly specialized, unflinching, and capital intensive, their dis favors argon much than than offset by the low variable impairments arising from a high great deal passing through a standardized pr ocess. In salute 7, two corners in the matrix ar reverse of industries or individual companies. The upper right-hand comer eharacterizes a commodity product heightend by a job-shop process that is only if not economical. Thus there atomic number 18 no companies or industries located in that sector. Similarly, the degrade left-hand corner represents a one-of-a-kind product that is make by continuous or very specific processes.\r\nsuch(prenominal) processes atomic number 18 simply too inflexible for such unique product requirements. rancid the diagonal The examples cited thus far moderate been the to a greater extent familiar â€Å"diagonal cases,” in which a certain kind of product expression is matehed with its â€Å"natural” process building. scarce a caller may strain a go down 3. For example, William ), Abernathy and Philip L. Townscnd, â€Å"TechnoloRy, Pioductivity, and butt against Changes,” in Tachnalo^icdl Forfcoitinj: iind Social Cbange , Volume VII, No. 4, 1975, p. ^79) Abcmathy and lames Ulierback, â€Å"DyQ. mic mold of regale and Product Innovation,” Omega, Volume HI, No. 6, 1975, p. 6i9i Abernathy and Uuerback, â€Å"Innovation and the Evolution of Technology in the Firm,” Harvard Business School Working P. iper |HBS 7S->fiR, rewrite |unc 197^!. service life cycles 135 represent I Matching major stages of product and process life cycles Product mental synthesis Product life cycle stage I Low leger-low standardization, one of a kind Multiple products low plenty Few major products higher gaudiness IV High gaudiness-high standardization. commodity products\r\nProcess groom Process life cycle stage Jumbled flow (job shop) commercial printer Disconnected line push down (batch) Heavy equipment machine-accessible line flow (assembly line) Automobile assembly IV continuous flow off the diagonal preferably of right on it, to its competitory advantage. Rolls-Royce Ltd. lifelessness make s a limited product line of motor cars using a process that is more like a job shop than an assembly line. A company that allows itself to drift from the diagonal without understanding the plausibly implications of such a shift is petition for trouhle.\r\nThis is patently the case with several companies in the factory housing industry that allowed their manufacturing operations to become too capital intensive and too de- 136 Harvard Business Review January-February 1979 pendent on stable, high-volume occupation in the premature 1970s. As one power expect, when a company moves too far away from the diagonal, it hecomes increasingly conglomerate from its competitors. This may or may not, depending on its triumph in achieving tenseness and exploiting the advantages of its niche, make it more vulnerable to attack.\r\n organise trade and manufacturing may become more difficult as the two aras reside increasingly different opportunities and pressures. Not infrequently, compan ies find that all inadvertently or by conscious choice they are at positions on the matrix very dissimilar from those of their competitors and must consider drastic therapeutic action. close to small companies that enter a mature industry start off this way, of course, which provides one explanation of two the strengths and the weaknesses of their situation.\r\nOne example of a companys twin(a) its movements on these two dimensions with changes in its industry is that of Zenith radio set Corporation in the mid-1960s. Zenith had generally followed a strategy of maintaining a high spot of flexibleness in its manufacturing facilities for g going awayiness television system receivers. We would characterize this process structure at that time as being stage 2. When planning additional capacity for color TV manufacturing in 1966 [during the height of the rapid growth in the market), however.\r\nZenith chose to expand yield capacity in a way that represented a clear move down the process dimension, toward the matrix diagonal, by consolidating color TV assembly in two mountainous plants. One of these was in a relatively low-cost wear upon area in the United States. maculation Zenith continued to have facilities that were more flexible than those of some other companies in the industry, this decisiveness reflected corporate charges assessment of the need to stay inside range of the industry on tbe process dimension so that its excellent marketing strategy would not be trammel by inefficient manufacturing.\r\nIt is interesting that sevensome years later Zenith made a similar decision to keep all of its production of color television chasses in the United States, rather than lose the tractability and incur the costs of moving production to the Far East. This decision, in conjunction with others made in the past five years, is now being called into question. Using our terminology. Zenith again finds itself too far to a higher place the diagonal, in semb lance with its large, primarily Japanese, competitors, most of whom have mechanized their production processes, positioned them in low-wage countries, and embarked on other costreduction programs.\r\nIncorporating this additional dimension into strategic planning encourages more creative thinking astir(predicate) memorial tabletal grapplence and emulous advantage. It similarly can lead to more informed predictions round the changes that are liable(predicate) to occur in a particular industry and to consideration of the strategies that might be followed in responding to such charges. Finally, it provides a natural way to involve manufacturing managers in the planning process so that they can relate their opportunities and decisions more effectively with marketing strategy and corporate goals.\r\nThe experience of the late 1960s and early 1970s suggests that major matched advantages can accrue to companies that are able to mix their manufacturing and marketing organization with a common strategy. ^ Using the concept We depart search three issues that follow from the product-process life cycle: [1) the concept of typical competence, [2) the precaution implications of selecting a particular product-process combining, considering the contest, and |3) the organizing of different operating units so that they can specialize on distract portions of the come manufacturing task opus cool it maintaining overall coordination.\r\nDistinctive competence roughly companies like to think of themselves as being particularly good relative to their competitors in certain areas, and they try to avoid competition in others. Their objective is to guard this distinctive competence against outside attacks or cozy aimlessncss and to exploit it where possible. From time to time, unfortunately, management becomes preoccupied with marketing concerns and loses sight of the value of manufacturing abilities. When this happens, it thinks about strategy in terms only of the product and market dimension within a product life cycle context.\r\nIn effect, management concentrates resources and planning efforts on a relatively narrow column of the matrix shown in Exhibit 1 on page r35. 4. See â€Å"Manufacturing†lose Link in Corporate Stiatcgy,” by Wickham Skinner, HBR May-June 1969, p. i]6. Process life cycles 137 Exhibit II Expanded product-process matrix Product structure Product lite cycle stage III Low volume â€low standardization, one of a kind Process structure Process life cycle stage Multiple products low volume Few major products higher volume IV\r\nHigh volume-fiigh standardization. commodity products observe management tasks Flexibility feature • Fast reaction • load plant, estimating capacity •Estimating costs and delivery multiplication • Breaking bottlenecks • Order tracing and expediting • Systematizing various elements • Developing standards and methods, improvement • Bal ancing process stages • Managing large, specialized, and complex operations • Meeling material requirements • lead equipment at peak efficiency • measure expansion and technological change • lift required capital\r\nJumbled flow (lobshop) Disconnected line flow (batch) Connected line flow (assembly line) IV unremitting flow Hone Dependabilitycost Flexibility-quality Dependability-cosi dominating belligerent mode • Custom function • popular purpose • High margins • • • • Custom design Ouality overcome Service High margins • standardized design • Volume manufacturing • Finished goods breed • Distribution • Backup suppliers • Vertical integrating • Long runs • Specialized equipment and processes • Economies of scale • similar material\r\nThe advantage of the two-dimensional point of view is that it permits a company to be more precise about wha t its distinctive competence really is and to concentrate its attentions on a restricted set of process decisions and alternatives, as well as a re- stricted set of marketing alternatives. Real focalize is maintained only when the emphasis is on a single â€Å"patch” in the matrixâ€a process concentrate as well as a product or market focus. As suggested by Wickham Skinner, narrowing the focus of the business units 138 Harvard Business Review January-February 1979 ctivities and the supporting manufacturing plants activities may greatly increase the chance of success for the organization/ Thinking about some(prenominal) process and product dimensions can match the way a company defines its â€Å"product. ” For example, we belatedly explored the case of a specialized manufacturer of printed circuit boards. Managements initial assessment of its position on the m. atrix was that it was producing a lowvolume, one-of-a-kind product using a highly connected assembly li ne process. (This would place it in the demoralise left comer of the matrix. On further reflection, however, management decided that musical composition the company specialized in small production batches, the â€Å"product” it really was offering was a design capability for special purpose circuit boards. In a sense, then, it was volume producing designs rather than boards. Hence, the company was not far off the diagonal after all. This familiarity of the companys distinctive competence was helpful to management as it considered different projects and decisions, only some of which were supportive of the companys actual position on the matrix. Effects of position\r\nAs a company undertakes different combinings of product and process, management problems change. It is the interaction between these two that determines which tasks will be critical for a given company or industry. Along the process structure dimension, for example, the key competitive advantage of a jumbled flow operation is its tractability to some(prenominal) product and volume changes. As one moves toward more standardized processes, the competitive emphasis generally shifts from flexibility and quality (measured in terms of product specialization) to reliability, predictability, and cost.\r\nA similar sequence of competitive emphases occurs as a company moves on the product structure dimension. These movements in priorities are illustrated in Exhibit 11 For a given product structure, a company whose competitive emphasis is on quality or new product break inment would choose a much more flexible production operation than would a competitor who has the same product structure but who follows a cost-minimizing strategy. Alternatively, a company that chooses a given process structure reinforces the characteristics of that structure by fooling the corresponding product structure.\r\nThe former approach 5. â€Å"The Focused Factory,” HBR May-June 1974, p. 113. 6. Robert H. Hay es and Roger W. Schmenner, â€Å"How Should You Organize Manufacturing? ” HBR January-February iy78, p. 105. positions the company above the diagonal, while the latter positions it somewhere along it. A companys location on the matrix should take into account its conventional orientation. Many companies tend to be relatively aggressive along the dimensionâ€product or process-where they bump most competent and take the other dimension as â€Å"given” by the industry and environment.\r\nFor example, a marketing-oriented company desire to be responsive to the take of a given market is more likely to emphasize flexibility and quality than tbe manufacturing-oriented company that seeks to mold the market to its cost or process leadership. An example of these two competitive approaches in the electric motor industry is provided by the contrast between trustingness Electric and Emerson Electric. credit, on the one hand, has apparently chosen production processes that place it above the diagonal for a given product and market, and the company emphasizes product customizing and surgical process.\r\nEmerson, on the other hand, tends to position itself below the diagonal and emphasizes cost reduction. As a result of this contrast in emphasis, the majority of Reliances products are in the upper left quadrant, while Emersons products tend to be in the lower right quadrant. Even where the two companies product lines overlap. Reliance is likely to use a more fluid process for that product, while Emerson is more likely to use a standardized process. Eaeh company has sought to discontinue a set of competitive skills in manufacturing and marketing that will make it more effective within its selected quadrants.\r\nConcentrating on the upper left versus the lower right quadrant has many additional implications for a company. The management that chooses to compete primarily in the upper left has to decide when to drop or defect a product or market, while for the management choosing to compete in the lower right a major decision is when to eater the market. In the latter case, the company can picture the market develop and does not have as much need for flexibility as do companies that position themselves in the upper left, since product and market changes typically occur less frequently during the later phases of the product life cycle.\r\nSuch thinking about both(prenominal) product and process expertise is particularly useful in selecting the match of these two dimensions for a new product. Those familiar with the digital watch industry may reject that in the early 1970s Texas Instruments introduced a jewelry line digital watch. This product represented a matrix combination in the upper left-hand quadrant, as shown in Exhibit U. Unfortunately, this line Process life cycles 139 of watches was disappointing to Texas Instruments, in terms of both volume and profitability.\r\nEarly in 1976, therefore, TI introduced a digital watch selling for $19. 95. With only one electronic module and a connected line flow production process, this watch represented a combination of product and process further down the diagonal and much more in keeping with TIs traditional strengths and emphases. Organizing operations If management considers the process structure dimension of organizational competence and strategy, it can usually focus its operating units much more effectively on their individual tasks.\r\nFor example, many companies face the problem of how to organize production of spare part for their special products. While increasing volume of the capital products may have caused the company to move down the diagonal, the follow-on demand for spare parts may require a combination of product and process structures more toward the upper left-hand corner of the matrix. There are many more items to be manufactured, each in smaller volume, and the appropriate process tends to be more flexible than may be the case for the p rimary product.\r\nTo accomodate the specific requirements of spare parts production, a cohipany might develop a separate rapidity for them or simply separate their production within the same facility. Probably the to the lowest degree appropriate approach is to leave such production undifferentiated from the production of the staple fibre product, since this would require the plant to span too broad a range of both product and process, reservation it less efficient and less effective for both categories of product. The choice of product and process structures will determine the kind of manufacturing problems that will be beta for management.\r\nSome of the key tasks related to a particular process structure are indicated on the right side of Exhibit U. Recognizing the impact that the companys position on the matrix has on these important tasks will often suggest changes in various aspects of the policies and procedures the company uses in managing its manufacturing function, p articularly in its manufacturing control system. Also, measures used to monitor and evaluate the companys manufacturing performance must reflect the matrix position selected if such measures are to be both useful and consistent with the corporate goals and strategy.\r\nSuch a task-oriented analysis might help a company avoid the loss of control over manufacturing that often results when a standard set of control mechanisms is utilize to all products and processes. It also suggests the need for different types of management skills [and managers], depending on the companys major manufacturing tasks and dominant competitive modes. While a more or less narrow focus may be required for success in any single product market, companies that are large comely can [and do) effectively produce multiple products in multiple markets.\r\nThese are often in different stages of the product life cycle. However, for such an operation to be successful, a company must separate and organize its manuf acturing facilities to best meet the inevitably of each product and then develop sales volumes that are large enough to make those manufacturing units competitive. An example of separating a companys total manufacturing capability into specialized units is provided by the Lynchburg Foundry, a wholly owned subsidiary of the Mead Corporation. This metalworks has five plants in Virginia.\r\nAs Exhibit U shows, these plants represent different positions on the matrix. One plant is a job shop, making mostly one-of-akind products. Two plants use a decoupled batch process and make several major products. A after part plant is a paced assembly line operation that makes only a few products, mainly for the automative market. The fifth plant is a highly automated pipe plant, making what is largely a commodity item. While the basic technology is somewhat different in each plant, there are many similarities.\r\nHowever, the production layout, the manufacturing processes, and the control system s are very different. This company chose to design its plants so that each would meet the ask of a specific segment of the market in the most competitive manner. Its success would suggest that this has been an effective way to match manufacturing capabilities with market demand. Companies that specialize their operating units according to the ask of specific, narrowly defined patches on the matrix will often encounter problems in integrating those units into a coordinated whole.\r\nA recent article suggested that a company can be most successful by organizing its manufacturing function around either a product-market focus or a process focus. * That is, individual units will either manage themselves relatively autonomously, responding directly to the needs of the markets they serve, or they will be divided up according to process stages (for example, fabrication, subassembly, and final assembly), all coordinated by a fundamental staff. Companies in the major materials industrie ssteel companies and oil companies, for exampleprovide unadulterated examples of process-organized manu- 140\r\nHarvard Business Review January-February 1979 facturing organizations. Most companies that broaden the span of their process through vertical integration tend to adopt such an organzation, at least initially. so again, companies that adopt a product- or market-oriented organization in manufacturing tend to have a strong market orientation and are unwilling to accept the organizational rigidness and lengthened response time that usually accompany concentrate coordination. Most companies in the packaging industry provide examples of such product- and market-focused manufacturing organizations.\r\nRegional plants that serve geographical market areas are set up to land transportation costs and provide rectify response to market requirements. A number of companies that historically have organized themselves around products or markets have found that, as their products matu red and as they have locomote to become more vertically integrated, a conflict has arisen between their original productorganized manufacturing facilities and the needs of their process-oriented internal supply units.\r\nAs the competitive emphasis has shifted toward cost, companies moving along the diagonal have tended to evolve from a product-oriented manufacturing organization to a process-oriented one. However, at some point, such companies often discover that their operations have hecome so complex with increased volume and increased stages of inhouse production that they defy centralized coordination and management must revert to a more product-oriented organization within a divisionalized structure. ct line with a manufacturing systemâ€a set of people, plants, equipment, technology, policies, and control proceduresâ€that will permit a relatively high degree of flexibility and a relatively low capital ecstasy? Or should it prefer a system that will permit lower cost pr oduction with a loss of some flexibility to change [in products, production volumes, and equipment) and usually a higher degree of capital intensity? This choice will position the company above or below its competitors along the vertical dimension of our matrix.\r\nThere are, of course, several dynamic aspects of corporate competitiveness where the concepts of matching the product life cycle with the process life cycle can be applied. In this article, however, we have dealt only with the more static aspects of selecting a position on the matrix. We will discuss in a forthcoming article how a companys position on the product-process matrix might change over time and the traps that it can excise into if the implications of such moves are not carefully evaluated. Strategy implications We can now quarter together a number of go and summarize their implications for corporate strategy.\r\nCompanies must make a series of interrelated marketing and manufacturing decisions. These choices must be continually reviewed and sometimes changed as the companys products and competitors evolve and mature. A company may choose a product or marketing strategy that gives it a broader or narrower product line than its pass competitors. Such a choice positions it to the left or right of its competitors, along the crosswise dimension of our matrix. Having made this decision, the company has a further choice to make: Should it produce this prod-\r\n'