Strategic operations management decisions and professional performance in U.S. HMOs

Professional service organizations are becoming an increasingly important segment of the service sector in the U.S. but little attention has been paid to the management of these organizations, particularly in relation to technical performance. This paper reports the findings of a survey of managers of Health Maintenance Organizations (HMOs) which related operations management decisions about organization, workforce management, quality management and planning and control, to clinical process and outcome performance.This research demonstrates that managerial decisions do affect clinical performance in HMOs. These findings have implications for both researchers and practitioners. For researchers, the study provides a framework for future research on the important link between management decisions and technical performance in professional service organizations. For practitioners, this study suggests that technical performance will be enhanced when professional work is appropriately managed.     

A typology of de-coupling strategies in mixed services

A typology of a class of service systems is proposed. The typology links strategic operational objectives to the decision to de-couple work between the front and back offices of a service system. Four specific ideal types of a strategy/de-coupling mix are described; each of which has distinct operational, marketing and human resource ramifications. A type that has had significant representation in traditional literature is the “Cost Leader” type, where back-office activities are de-coupled from the front office for the purpose of lowering costs. Another traditional type representative of the craftsman legacy is the “Personal Service” type, which retains back-office tasks in the front office to pursue non-cost-oriented strategic goals. Theoretical and empirical evidence is also given for two non-traditional types: the “Kiosk” type, where all tasks remain in the front office to achieve lower costs, and the “Focused Professional” type, which de-couples front- and back-office activities to enable front-office workers to provide higher service, rather than to reduce costs. Empirically, retail bank lending systems are analyzed to support the typology.     

Towards an holistic understanding of disruptions in Operations Management

The paper reviews the literature on maintenance management, integrates key dimensions of maintenance within a taxonomy of maintenance configurations, and explores the impact of differing configurations on contextual factors and operational performance. “Prevention”, “hard maintenance integration” and “soft maintenance integration” were identified as key maintenance variables. Data were collected from 253 Swedish manufacturing companies, and three distinct clusters were identified. “Proactive Maintainers” emphasized preventive maintenance policies. “IT Maintainers” relied on computerized and company-wide integrated information systems for maintenance. “Maintenance Laggers” emphasized all maintenance dimensions to lesser extent than the others. The importance of maintenance prevention and integration differ between contexts. There were subtle performance differences across identified configurations, but preventive and integrated maintenance were more important for companies seeking competitive process control and flexibility. There existed no group with any great emphasis on all three maintenance dimensions, but attaining truly high performance may require a rare mix of the three dimensions. This mix of variables could constitute a hypothesized “World Class Maintenance” group.     

A meta-analysis model of manufacturing capabilities

Recent research in operations strategy has focused on showing the extent to which manufacturing's competence in developing and executing one or more competitive capabilities affects the organization's overall business performance. Several of those efforts have produced models, such as the ‘sand cone’, that suggest an ideal sequence in which manufacturing capabilities should be developed. However, efforts to empirically validate such sequential models, except for one recent study, have been inconclusive. This paper takes a different approach to examining the relationships among competitive capabilities. The existing cross-sectional studies of manufacturing capabilities are integrated to synthesize a proposed model of: (1) the relationships among manufacturing capabilities, and (2) the relationships between those capabilities and business performance. The proposed model is synthesized using data from previous studies, other models and theoretical arguments. Meta-analysis is used to identify aspects of the model that appear better supported by empirical research and those that require further study. The implications of this proposed model with regard to research, practice and future research in operations strategy are discussed.     

Approaches to the factory of the future. An empirical taxonomy

An empirical analysis of the patterns in which companies invest in advanced manufacturing technologies (AMTs) such as computer-aided design, computer-aided manufacturing, and flexible manufacturing systems is presented. Data for this analysis are gathered from 202 manufacturing plants chosen from industries generally considered to have relatively high investments in technology.Three general types of AMTs are identified from the literature: design, manufacturing, and administrative. Multiple item scales are developed to measure each type of AMT. These scales are shown to be reliable instruments, and are used to develop an empirical taxonomy which validates existing conceptual typologies of AMTs. A cluster analysis reveals four distinct groups of companies with respect to their approaches toward investing in AMTs. TRADITIONALISTS do not invest heavily in any of the three types of AMTs. GENERALISTS have moderate investments in each technology type. HIGH INVESTORS have the highest investment in each of the three technology types. The most interesting group may well be the DESIGNERS, which have low investments for manufacturing and administrative AMTs, but have the second highest investment in design-related AMTs.An analysis of the four technology groups reveals that while plants do differ in terms of plant size and integration, they do not differ significantly in terms of industry membership or performance. This suggests that successful firms can be found in each of the groups and that good strategies may be found that are consistent with each of these approaches. Therefore, the taxonomy is fairly robust, and further research must analyze companies within these groupings in order to identify the contingencies or other factors that may act in conjunction with technology to separate high and low performing firms. The data from our study clearly suggest that investments in technology alone are not a causal factor for performance improvement.     

Configurations of low-contact services

This study uses a cluster analysis procedure to develop a classification model of low-contact services based on seven operations objectives. The effectiveness of the classification scheme is tested by demonstrating the link between the objectives, competitive priorities, and performance. This study also identifies eight underlying factors of competitive priorities in low-contact services. Furthermore, discriminant analysis on competitive priority dimensions shows that low-contact services consist of multiple groups and therefore should not be lumped into one group in any analysis scheme.     

An analysis of decentralized collection and processing of end-of-life products

In this study, we analyze decentralized collection and processing operations for end-of-life products in durable goods industries. We consider a durable end-of-life product from which a particular part can be dismantled and remanufactured, and the remainder of the product can be further processed for part and/or material recovery. Both the quantity of end-of-life products available and the demand for remanufactured parts are price-sensitive. We develop models to determine the optimal acquisition price of the end-of-life products and the selling price of the remanufactured parts in centralized as well as remanufacturer- and collector-driven decentralized channels. We discuss how the decentralized channels can be coordinated to attain the end-of-life product collection rate that can be achieved in the centralized channel. In the presence of environmental regulations that require an original equipment manufacturer (OEM) of durable goods to collect and process its end-of-life products, we identify when and why the OEM would prefer a remanufacturer- or a collector-driven channel, i.e., outsource the processing or the collection activity, respectively. From a practical perspective, we show that the OEM should prefer a collector-driven channel to increase the collection rate, when end-of-life products are homogenous. However, we also show that the OEM would prefer a remanufacturer-driven channel under certain conditions. We also examine how the OEM can increase the quantity of used products collected, when the collection rate in the preferred channel setting falls short of the collection rate mandated by the environmental regulation. When end-of-life products are heterogeneous, we observe that the collection rate for all quality groups can be positive in a remanufacturer-driven channel, whereas the collection rate for some quality groups may be zero. This indicates that the OEM must pay more attention to its outsourcing decision in this case, if the environmental regulation in effect specifies target collection rates for individual quality groups.     

Operational hedging against adverse circumstances

This paper investigates operational hedging against severe disruptions to normal operations. It offers a new method to evaluate the extent that operations policy serves as a hedge against adverse circumstances. We apply the proposed method to explore how supply chain characteristics affect the responses of airlines to the acute demand fall off after the September 11 terrorist attacks. Results indicate that operational hedging vehicles (fleet standardization, high-fleet utilization, an aircraft ownership policy rather than leasing, and international operations) are more powerful in protecting firms than using financial instruments. The study contributes in guiding managers as to how operations policy can serve as an imperative factor in mitigating exposures to low-end performance levels.     

A contingent view of e-collaboration and performance in manufacturing

Manufacturers are increasingly utilizing Internet-based tools to more readily conduct collaborative activities with key business customers. While the emerging conventional wisdom suggests that the greater the extent to which manufacturers engage in Internet-enabled commerce with downstream business customers the better the performance, we espouse an alternative view. Consistent with the relational view of competitive advantage and contingency theory, we develop a model and a series of hypotheses that specify how various product and market characteristics may influence the nature of the expected positive relationship between e-collaboration and performance.To test the model, we collected data from 50 manufacturers using a Web-based survey. Our partial least squares (PLS) analysis results do indeed support the notion that e-collaboration is related to better operational and business performance. However, we go on to show that the strength of the relationship between e-collaboration and operational performance diminishes as the level of environmental munificence increases. Notably, we found no such moderating effect with respect to the level of product complexity or market variability. Our findings contribute to the operations strategy literature on supply chain relationships in the e-business arena and offer managers a framework for understanding the conditions under which investments in e-collaboration may be more appropriate and therefore more beneficial.     

Benefits and barriers of telework: perception differences of human resources managers according to company's operations strategy

Telework as an integration of Information and Telecommunication Technologies with Human Resources management, means a new job organisation paradigm for companies working in the New Economy. However there are very few empirical studies that have analysed the perception differences of telework benefits and barriers in industrial and service companies. This paper contributes with empirical data to the relationship between the use of telework techniques and the implementation of this new work organisation with the company's operations strategy. The paper uses data from Spanish companies to test the relationship between innovation, employee training, and other production strategy performance parameters with the feasibility of telework adoption.     

The efficient use of enterprise information for strategic advantage: A data envelopment analysis

A majority of manufacturers make use of some form of enterprise systems (ES), yet on average, the financial impact of ES adoption is essentially neutral. We propose that in an ES environment of easy information access, competitive success depends, in part, on the policies regulating enterprise information use. To explore this proposition, we examine the efficient use of different types of enterprise information in the realization of strategic performance. Efficient firms will devote fewer resources to information use to achieve the same strategic performance as less efficient firms.     

Firm performance in dynamic environments: The role of operational slack and operational scope

This study examines the effects of operational scope (breadth of product offering, extent of geographical diversification, and extent to which production processes can effectively meet varying demand) and operational slack (resources in excess of what is required to fulfill expected demand) on firm performance, contingent on two components of a firm's dynamic environment, unpredictability and instability. We collate quarterly data on 3857 publicly traded firms in 19 industries from the years 1991 to 2013 (representing 99,559 firm-quarter observations). Using panel data analysis, we find that narrow product offerings, low geographical diversification, low levels of excess capacity, and low inventory slack are each positively associated with firm performance. More importantly though, we find that operational scope is associated with improved performance in unpredictable environments, whereas operational slack is associated with improved performance in unstable environments. These findings contribute to the research on operations strategy by identifying the industry-specific environmental conditions under which operational slack and operational scope are associated with firm performance.     

Facilitating offshoring with enterprise technologies: Reducing operational friction in the governance and production of services

The development of cheap and robust communications technologies has lowered the cost of conducting business transactions across international boarders and opened up low wage rate global labor markets to firms facing demand for cheap and efficient service delivery. A review of transaction cost theory and operations management models of service process disaggregation reveals parallels between the how firm boundaries are determined and how certain service process elements can be disaggregated from face-to-face customer contact. This theoretical background is used to identify challenges to the effective offshoring of service processes. The competitive capability literature offers suggestions as to how firms might acquire the internal capabilities required to manage offshore service processes. Propositions are developed on how the standardized transactional infrastructure of enterprise technologies (and the organizational competencies developed by successful enterprise system adopters) may help mitigate the challenges of offshore governance.     

Agglomeration and the export decisions of French firms

This paper asks whether export spillovers influence the export behavior of French manufacturers. I use a database containing export flows by firm and importing country between 1986 and 1992. The decision to start exporting to a particular country is estimated using a logit model, controlling for the specific characteristics of firms, locations, countries and years. The export spillovers identified are industry- and/or destination-specific, and are computed at a very disaggregated geographical level. The results indicate that the pool of local exporters positively affects the decision to start exporting to a country. These effects are clearly destination-specific, and are larger for firms that export to remote markets.     

Lean principles, learning, and knowledge work: Evidence from a software services provider

In this paper, we examine the applicability of lean production to knowledge work by investigating the implementation of a lean production system at an Indian software services firm. We first discuss specific aspects of knowledge work—task uncertainty, process invisibility, and architectural ambiguity—that call into question the relevance of lean production in this setting. Then, combining a detailed case study and empirical analysis, we find that lean software projects perform better than non-lean software projects at the company for most performance outcomes. We document the influence of the lean initiative on internal processes and examine how the techniques affect learning by improving both problem identification and problem resolution. Finally, we extend the lean production framework by highlighting the need to (1) identify problems early in the process and (2) keep problems and solutions together in time, space, and person.     

Monitoring process quality in off-shore outsourcing: A model and findings from multi-country survey

We investigate how recent advances in information technology and telecommunications have led to real-time monitoring of processes at the site of the provider by a buyer located across the globe. We construct a game-theoretic model of the dynamics of the buyer–supplier interaction in the presence of moral hazard and incomplete contracting. We derive the Minimum Quality Threshold (MQT) below which the provider's output will certainly be inspected. Our findings show that the buyer can pick a level of monitoring and thereby force the provider to exceed the quality level of the MQT in output quality and avoid costly and wasteful inspection. Finally, our model explains why the production of processes that are complex and more prone to errors are actually monitored less by the buyers. We furnish the results of a comprehensive, multi-year, multi-country survey of the efficacy of monitoring in off-shore outsourcing projects and demonstrate strong empirical support for the findings of the model.     

ISO 9000 practices and financial performance: A technology coherence perspective

Attention to processes has increased, as thousands of organizations have adopted process-focused programs such as TQM and ISO 9000. Proponents of such programs stress the promise of improved efficiency and profitability. But research has not consistently borne out these prospects. Moreover, the expectation of universal benefits is not consistent with research highlighting the important role of firm-specific capabilities in sustaining competitive advantage. In this paper, we use longitudinal panel data on ISO 9000 practices for firms in the auto supplier industry to study two new issues related to the adoption of process management practices. First, we find that, as the majority of firms within an industry adopt ISO 9000, late adopters no longer gain financial benefits from these practices. Second, we explore how firms’ technological coherence moderates the performance advantages of ISO 9000 practices. We find that firms that have a very narrow or very broad technological focus have fewer opportunities for complementary interactions that arise from process management practices and thus benefit less than those with limited breadth in technologically related activities.     

Trade-offs in means tested pension design

The means-testing of age pension programs allows governments to control the receipt of pension benefits (extensive margin) and the benefit level (intensive margin). We investigate how the presence of the extensive margin influences the trade-off between protecting the poorer elderly and the economic costs of distorting incentives to work and save of young individuals. The means-test effect via the extensive margin improves the insurance aspect but introduces opposing impacts on incentives that potentially have ambiguous welfare outcomes. We characterize combinations of the maximum pension benefit and taper rate that balance the negative incentive effects and positive insurance effects.     

The differential impact of product complexity,inventory level,and configuration capacity on unit and order fill rate performance

This paper examines the simultaneous impact of configuration capacity, inventory level, and complexity on service performance as measured by unit and order fill rates in a configure-to-order environment. Demand skew is treated as a control variable. A simulation model based on data from a leading electronics manufacturer is used to test the hypotheses and identify the impact. Results suggest that there are differential direct and interactive effects of examined variables on unit and order fill rates.     

Supply chain decisions and coordination in the presence of an imperfect spot market

This study considers a supply chain consisting of a commodity supplier and a final product manufacturer with uncertain demand. In addition to purchasing from the supplier through a forward contract, the manufacturer can adjust their inventory by trading the commodity in an online spot market after observing the actual demand. However, the spot market is imperfect in that transactions cannot be certainly realized and come with additional transaction costs. Furthermore, the spot price is volatile such that overly relying on the spot market is unwise. To investigate how the spot market affects the decisions and coordination in a supply chain, we develop a game-theoretical model incorporating spot trading. We derive the optimal ordering decision in a centralized supply chain, as well as the supplier's and manufacturer's equilibrium pricing and ordering decisions in a decentralized supply chain. The impact of the imperfect spot market on the optimal decisions and profits is analyzed. This study also demonstrates how the supply chain can be coordinated in the presence of an imperfect spot market. Finally, a numerical analysis is performed to examine the analytical results. Our results indicate that the spot market can generally improve the performance of the centralized supply chain and benefit the manufacturer in the decentralized one. However, it can be detrimental to the supplier. The supply chain can be coordinated by a revenue-sharing contract, and both parties' profits can be improved. Our findings suggest that the manufacturer could take advantage of the spot market, and the supplier should attempt to integrate or coordinate the supply chain to share the benefits of spot trading.