Methods of cell formation in group technology: A framework for evaluation

Group technology is a manufacturing philosophy that attempts to provide some of the operational advantages of a line layout while maintaining some of the strategic advantages of the job shop layout. In designing a productive process that will adopt this manufacturing strategy, one of the primary problems encountered is the formation of component families and production cells. The production cell is a group of machines or processes of functionally dissimilar types that are placed together and dedicated to the manufacture of a specific range of component families.Several researchers in operations management have proposed methods of forming production cells and component families. These methods differ in terms of information requirements and also in terms of the final cell design. Furthermore, the objectives for each method are quite different and it thus seems that the focus has been on the method rather than its appropriateness in a particular situation. This article reviews some of the most publicized methods of group formation and analyzes the type of cells that could be formed using these methods. Subsequently, an evaluative framework is presented where the relative advantages of each type of production cell are discussed in terms of several strategic and operational factors. This framework is of particular use as it highlights the fact that in implementing a cellular manufacturing system, most organizations will face a trade-off of strategic and operational “costs.” Finally, the appropriateness of the cell types with respect to the degree of customer interaction is also discussed.     

Analysis and design of focused demand chains

The paper describes the evolution of focused demand chains over an extended period of time as a major UK lighting manufacturer has sought to remain an international player in a fast changing business environment. Analysis and design procedures make use of the concepts of Wickham Skinner and Marshall Fisher to answer the strategic questions “what facilities are required and how should they be laid out to enable the necessary focused demand chains?” and to answer the tactical question “which focused demand chain is appropriate for this product?” The case study then details how the company has been transformed from operating within a traditional supply chain to driving change via the engineering of four focused demand chains. The paper concludes with a comparison of operations enablers, customer choice, and business performance metrics covering the transition period culminating in the current focused demand chain scenario. By matching products to the appropriate value stream there is a consequential reduction in product development time of 75%; manufacturing costs reduction of up to 27%; and up to 95% reduction in delivery lead times.     

Levels of strategic purchasing: Impact on supply integration and performance

The growing importance of supply chain management has led to an increasing recognition of the strategic role of purchasing, which has recently evolved and expanded from “buying” to “procurement” and “supply management”. In this study, we chart our sample firms’ advance in strategic purchasing, characterized by the strategic focus, strategic involvement of the purchasing function and the status and visibility of the purchasing professionals, into three stages.This study provides strong empirical support for the importance of strategic purchasing by showing that, by moving towards the more advanced stages, firms at the nascent stage of strategic purchasing can achieve better supply integration, a second-order construct composed of four facets of relational, process, information, and cross-organizational team integration. Our analyses further reveal that strategic purchasing can have a profound impact on supply chain performance for both buyer and supplier firms.     

Household production, full consumption and the costs of children

Recent work criticises both the logic and relevance of the theoretical basis of the approach to estimating the costs of raising children adopted in much of the economics literature. This tends to be restricted purely to models in which the household members consume market goods with given household income. The “costs of children” are perceived essentially as market consumption costs. This ignores the fact that an important, possibly preponderant element of child costs takes the form of parental time, which must be diverted from alternative uses such as market work, other household production activities, and leisure, to care for children. The studies also ignore the question of the differential incidence of child costs on adult members of the household. In this paper, we first of all argue that a satisfactory theoretical approach to modelling child costs must simultaneously incorporate an “individualistic” formulation of the household and a formal treatment of household production. We then provide such a model. Using data from a time use survey we estimate specialised versions of the model for families with two children and use the results to derive the intra-family distribution of resources and implied child-rearing costs.     

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.     

Knotting the action net, or organizing between organizations

This paper presents a study of a successful organizing process, namely the knotting together of different types of action by “translating” them into one another. The connections thus established were then stabilized to form a unit that can be designated as an “action net”. This instance of organizing occurred in the course of a project in the Swedish health care sector, with a view to establishing coordination between care units in three separate organizations. Different laws regulated their tasks, their operations were financed by different principals, and the everyday work of their members was undertaken at different point in time and in different places. Despite this, the participants in the studied project were able to establish a lasting net of connections that contributed, in the eyes of the environment, to an instance of “good care”. In this paper we examine in detail the creation of an action net, and offer a tentative theory of organizing in action nets.     

Strategic segmentation in front-line services: matching customers,employees and human resource systems

This paper examines variation in the use of high involvement work practices in service and sales operations. I argue that the relationship between the customer and front-line service provider is a central feature that distinguishes production-level service activities from manufacturing. In particular, through strategic segmentation, firms are able to segment customers by their demand characteristics and to match the complexity and potential revenue stream of the customer to the skills of employees and the human resource system that shapes the customer–employee interface. Unlike manufacturing, where high involvement systems have emerged in a wide variety of product markets, therefore, service organizations are likely to use high involvement systems only to serve higher value-added customers because of the high costs of these systems and the labour-intensive nature of services. Data from a nationally random sample of 354 call centres in US telecommunications documents this pattern: from classic mass production approaches for back office workers and increasingly for front office residential service agents, to greater involvement for small business service providers and high involvement practices for middle-market service agents.     

About “strategy” and “strategies” in supply management

This article addresses the context and content of a generic supply strategy and discusses its strategy-making process. Building mostly on fundamental strategic management theories, the authors explain the role of supply strategy in its managerial context. In so doing, some light is shed on the meaning and use of the terms “strategy” and “strategies”. Also, a practical conceptual framework for supply strategy formulation is provided. The generic checklist, built by segmenting supply management decisions, is intended to guide supply professionals in addressing strategic issues to create value to customers, avoiding confusion and optimising resource allocation.     

A behavioral study of supply manager decision-making: Factors influencing make versus buy evaluation

This paper investigates behavioral factors influencing a supply manager's decision to insource or outsource the manufacture of a product component. To do so we posit a theoretical framework that integrates the heretofore distinct operational make–buy literature and the behavioral decision-making literature. Within the framework three factors influencing the make–buy decision are brought into account: the decision-maker's perception of supply risk or “strategic vulnerability”, the degree of core competency represented by the product component under consideration and the formality of the information about supply alternatives. The results of a controlled experimental survey show that: strategic vulnerability and core competency do influence the make–buy decision, strategic vulnerability has greater influence than core competency and information formality moderates the make–buy decision when the strategic vulnerability and core competency conditions are mixed. The practical implications of these results include the notion that management can ensure a more rational make–buy decision if they understand the biases that influence the decision and point these biases out to the decision maker.     

The impact of employee satisfaction on quality and profitability in high-contact service industries

The extant operations management literature has extensively investigated the associations among quality, customer satisfaction, and firm profitability. However, the influence of employee attributes on these performance dimensions has rarely been examined. In this study we investigate the impact of employee satisfaction on operational performance in high-contact service industries. Based on an empirical study of 206 service shops in Hong Kong, we examined the hypothesized relationships among employee satisfaction, service quality, customer satisfaction, and firm profitability. Using structural equations modeling, we found that employee satisfaction is significantly related to service quality and to customer satisfaction, while the latter in turn influences firm profitability. We also found that firm profitability has a moderate non-recursive effect on employee satisfaction, leading to a “satisfaction–quality–profit cycle”. Our empirical investigation suggests that employee satisfaction is an important consideration for operations managers to boost service quality and customer satisfaction. We provide empirical evidence that employee satisfaction plays a significant role in enhancing the operational performance of organizations in the high-contact service sector.     

Service Guarantee Strength: The key to service quality

While most authors describe a service guarantee as a “zero-one variable” indicating the presence or absence of an explicit written service guarantee, this paper develops a construct called “Service Guarantee Strength” (SGS) that is a continuous variable. This construct measures the degree to which a firm sets clear service quality standards for itself on dimensions that customers care about, and has an formal policy for quickly giving meaningful compensation to customers when these standards are not met.The paper builds upon established micro-level behavioral theory to develop the “Service Guarantee Strength Framework”. This framework posits that high Service Guarantee Strength leads to improved service quality, customer satisfaction, and loyalty through three intervening variables—marketing communications impact, employee motivation and vision, and learning through service failure.An empirical investigation was conducted to test the SGS Framework using both employee and customer data from three pairs of firms, with each pair in a different industry. None of these firms had an explicit service guarantee. Unlike many behavioral research studies, this study measured both employee and customer perceptual data and compared the two. The research finds that Service Guarantee Strength is positively related to customer perceptions of service quality, customer satisfaction, and loyalty.     

In at the deep end: Conducting processual research on organisational change

This article provides a series of reflections on the practice of carrying out processual research on organisational change. At a broad level, some of the main tasks associated with conducting company case studies are described and the benefits of this approach for dealing with complex change data are outlined. At a more specific level, the article addresses three main areas tied to the actual “doing” of processual research. First, the notion of tacit knowledge and “getting your hands dirty” by engaging in ongoing in-depth fieldwork. Second, the design and implementation of a longitudinal case study research programme. Third, the advantages and concerns of combining a range of different data collecting techniques in carrying out processual studies. Overall, the main intention is to provide some useful reflections and practical insights, as well as providing something of the flavour of carrying out this type of research.     

Increasing human and social capital by applying job embeddedness theory

Most modern lives are complicated. When employees feel that their organization values the complexity of their entire lives and tries to do something about making it a little easier for them to balance all the conflicting demands, the employees tend to be more productive and stay with those organizations longer. Job embeddedness captures some of this complexity by measuring both the on-the-job and off-the-job components that most contribute to a person's staying. Research evidence as well as ample anecdotal evidence (discussed here and other places) supports the value of using the job embeddedness framework for developing a world-class retention strategy based on corporate strengths and employee preferences.To execute effectively their corporate strategy, different organizations require different knowledge, skills and abilities from their people. And because of occupational, geographic, demographic or other differences, these people will have needs that are different from other organizations. For that reason, the retention program of the week from international consultants won’t always work. Instead, organizations need to carefully assess the needs/desires of their unique employee base. Then, these organizations need to determine which of these needs/desires they can address in a cost effective fashion (confer more benefits than the cost of the program). Many times this requires an investment that will pay off over a longer term – not just a quarter or even year. Put differently, executives will need to carefully understand the fully loaded costs of turnover (loss of tacit knowledge, reduced customer service, slowed production, lost contracts, lack of internal candidates to lead the organization in the future, etc., in addition to the obvious costs like recruiting, selecting and training new people). Then, these executives need to recognize the expected benefits of various retention practices. Only then can leaders make informed decisions about strategic investments in human and social capital.

Selected bibliography

A number of articles have influenced our thinking about the importance of connecting employee retention strategies to business strategies:

• R. W. Beatty, M. A. Huselid, and C. E. Schneier. “New HR Metrics: Scoring on the Business Scorecard,” Organizational Dynamics, 2003, 32 (2), 107–121.

• Bradach. “Organizational Alignment: The 7-S Model,” Harvard Business Review, 1998.

• J. Pfeffer. “Producing Sustainable Competitive Advantage Through the Effective Management of People,” Academy of Management Executive, 1995 (9), 1–13.

• C. J. Collins, and K. D. Clark. “Strategic Human Resources Practices and Top Management Team Social Networks: An Examination of the Role of HR Practices in Creating Organizational Competitive Advantage,” Academy of Management Journal, 2003, 46, 740–752.

The theoretical development and empirical support for the Unfolding Model of turnover are captured in the following articles:

• T. Lee, and T. Mitchell. “An Alternative Approach: The Unfolding Model of Voluntary Employee Turnover,” Academy of Management Review, 1994, 19, 57–89.

• B. Holtom, T. Mitchell, T. Lee, and E.Inderrieden. “Shocks as Causes of Turnover: What They Are and How Organizations Can Manage Them,” Human Resource Management, 2005, 44(3), 337–352.

The development of job embeddedness theory is captured in the following articles:

• T. Mitchell, B. Holtom, T. Lee, C. Sablynski, and M. Erez. “Why People Stay: Using Job Embeddedness to Predict Voluntary Turnover,” Academy of Management Journal, 2001, 44, 1102–1121.

• T. Mitchell, B. Holtom, and T. Lee. “How To Keep Your Best employees: The Development Of An Effective Retention Policy,” Academy of Management Executive, 2001, 15(4), 96–108.

• B. Holtom, and E. Inderrieden. “Integrating the Unfolding Model and Job Embeddedness To Better Understand Voluntary Turnover,” Journal of Managerial Issues, in press.

• D.G. Allen. “Do Organizational Socialization Tactics Influence Newcomer Embeddedness and Turnover?” Journal of Management, 2006, 32, 237–257.

Executive SummaryEmployee turnover is costly to organizations. Some of the costs are obvious (e.g., recruiting, selecting, and training expenses) and others are not so obvious (e.g., diminished customer service ability, lack of continuity on key projects, and loss of future leadership talent). Understanding the value inherent in attracting and keeping excellent employees is the first step toward investing systematically to build the human and social capital in an organization. The second step is to identify retention practices that align with the organization's strategy and culture. Through extensive research, we have developed a framework for creating this alignment. We call this theory job embeddedness. Across multiple industries, we have found that job embeddedness is a stronger predictor of important organizational outcomes, such as employee attendance, retention and performance than the best, well-known and accepted psychological explanations (e.g., job satisfaction and organizational commitment). The third step is to implement the ideas. Throughout this article we discuss examples from the Fortune 100 Best Companies to Work For and many others to demonstrate how job embeddedness theory can be used to build human and social capital by increasing employee retention.     

A typology of project-level technology transfer processes

This paper develops a conceptual typology of inward technology transfer (ITT), which explicitly considers technology transfer at the project, rather than the firm, level of analysis. Building on extant technology management literature and the organizational theories of information processing and interdependence, we carefully characterize the three dimensions of the typology: the technology uncertainty of the technology that is transferred, the organizational interaction between the technology source and recipient, and transfer effectiveness. Appropriate matches of technology uncertainty and organizational interaction result in four archetypal cases called “transfer process types”, which represent the most effective approaches to technology transfer. Real-life examples of effective and ineffective matches are presented, and implications of the typology for future research and practice are discussed.     

Expert systems in production management: An assessment

Over the last several years expert systems (ES) have gained almost sensational interest. Within business administration, production management might be one of the most fruitful application areas for ES. There already exist a number of interesting pilot systems, and reports of research projects are beginning to appear in the literature.The main goal of this study is to identify systematically those areas in production management where an ES approach might be most promising. This is important to both researchers and practitioners because it helps pinpoint where research and development resources would be best allocated.In this article the authors provide a taxonomy for production management activities. They then combine this taxonomy with a well-known list of eight “expert tasks” to provide what they call an “applications map” to guide the discussion.After discussing existing research efforts and potential production management applications of expert systems, the authors employ a Likert scoring procedure to quantify their subjective ratings as to problem importance, potential for improved solution, and ease of development, for expert systems development efforts in a given production management decision situation.One conclusion here is that the applicability of expert systems to production management appears to be broadly based. This is particularly true for what the authors have labeled as “technological” activities. An interesting finding is the apparent lack of applicability of expert systems to inventory management. The authors found no existing system or research proposals applying expert systems to inventory management. Finally, systems that combine technological with logistical knowledge seem to be a fertile (but difficult) application area for ES.     

On Certain Indices for Ordinal Data with Unequally Weighted Classes

In this paper, some new indices for ordinal data are introduced. These indices have been developed so as to measure the degree of concentration on the “small” or the “large” values of a variable whose level of measurement is ordinal. Their advantage in relation to other approaches is that they ascribe unequal weights to each class of values. Although, they constitute a useful tool in various fields of applications, the focus here is on their use in sample surveys and specifically in situations where one is interested in taking into account the “distance” of the responses from the “neutral” category in a given question. The properties of these indices are examined and methods for constructing confidence intervals for their actual values are discussed. The performance of these methods is evaluated through an extensive simulation study.     

INSTITUTIONALISED JUSTIFICATION OF CORPORATE ACTION: INTERNATIONALISATION AND THE EU IN CORPORATE REPORTS

This paper provides an institutional analysis of the way a set of Finnish firms have used the concept of internationalisation and the EU in justifying major strategic decisions. They have used internationalisation, and in particular the then new possibility of Finland joining the EU, as an argument in support of radical change. An analysis of their annual reports reveals a number of institutional arguments which are strong because they are generally accepted, a priori, as being important not only to firms but indeed to Finland as a whole. In using institutional arguments firms are aligning their own interests with those of the country, and in so doing are able to justify radical changes in most parts of their own organisations. We are not claiming that Finnish firms should not react to the challenges which EU represents. Rather, we suggest that by using institutional arguments they are borrowing legitimacy from a wider public. The arguments used are typically very broad, invoking very general visions of the role of Finland in the EU. We call these arguments “easy rides” because, even if they are only partially explicated, it is generally assumed that they will become accepted without questioning by public and employees alike. Certain specific patterns of “easy rides” can be distinguished: i) The mobilisation of a “national mission”, ii) “Sacrifice now, reap the benefit later”, and iii) “Bigger is better”. The paper concludes with a methodological discussion about the difficulty of distinguishing between the technical/functional and the institutional arguments.     

Use transnational teams to globalize your company

The authors report on their two-year study of successful transnational teams, in which they examined how such teams are designed and managed to help their firms pursue global business strategies. Based on this study, they present a comprehensive model of team effectiveness that includes the key characteristics differentiating a transnational team from other types of work teams. The model shows how transnational teams operate—how they are staffed and led, communicate across great distances, and cope with cross-cultural issues. In closing, they describe how a company's human resources department can help an “international” or “multinational” team become a “transnational” team—one that has successfully transcended the cultural, geographic, and managerial barriers to team effectiveness.     

Design and implementation in major investments — A project network approach

Many investments in modern society take place in project networks. This article proposes a project network approach for describing the design and implementation processes in major investments. The design process of major projects is “fuzzy”, takes a long time, and is hard to capture. The implementation process, on the other hand, takes place in “semi-hierarchical” networks, and is easier to plan and control. The actor that controls the transformation of the political design process into the implementation process has a unique strategic position in the dynamically changing network. This means linking processes that are characterized by separate logic and network structures. Data from processes of design and implementation of three shopping malls illustrate the theoretical framework.     

Labour adjustment costs: Estimation of a dynamic discrete choice model using panel data for Greek manufacturing firms

In this paper we estimate a dynamic structural model of employment at firm level. Our dataset consists of a balanced panel of 2790 Greek manufacturing firms. The empirical evidence of this dataset stresses three important stylized facts: (a) there are periods in which firms decide not to change their labour input, (b) there are periods of large employment changes (lumpy nature of labour adjustment) and (c) the commonality is employment spikes to be followed by smooth and low employment growth periods. Following Cooper and Haltiwanger [Cooper, R.W. and Haltiwanger, J. “On the Nature of Capital Adjustment Costs”, Review of Economic Studies, 2006; 73(3); 611–633], we consider a dynamic discrete choice model of a general specification of adjustment costs including convex, non-convex and “disruption of production” components. We use a method of simulated moments procedure to estimate the structural parameters. Our results indicate considerable fixed costs in the Greek employment adjustment.