Improving Manufacturing Performance Through Process Change and Knowledge Creation

Abstract

A model is introduced to guide a profit maximizing firm in its quest to enhance performance through process change. The key benefit sought from process change is a long term increase in effective capacity. However, realizing success from process change is not trivial. First, while process change may increase effective capacity in the long run, the disruptions during implementation typically reduce short term capacity. Second, competitive forces such as decreasing revenue streams and shrinking product life cycles complicate the implementation of process change. Third, while knowledge may enhance the ultimate benefits derived from process change, the correct timing and means of knowledge creation are difficult to discern. Lastly, a variety of trade-offs must be evaluated when selecting the particular process change to pursue. For example, choices range from hardware and software replacements to modification of manufacturing procedures. The model introduced here explicitly considers both the short term loss due to disruption and the long term gain in effective capacity associated with the process change. In addition, investments in the accumulation of knowledge are investigated for their potential to enhance process change effectiveness. Knowledge is generated from investment in preparation and training (learning-before-doing) and as a by-product of process change (learning-by-doing). Analysis of the model provides managerial recommendations for several key decisions relating to process change implementation including: (i) the selection of an appropriate process change alternative, (ii) the rate and timing for investment in process change, and (iii) the rate and timing for investment in preparation and training. New results are reported reflecting the important relationship between process change and knowledge. For example, we show that under certain conditions, a firm should optimally delay investment in process change until sufficient accumulation of knowledge is achieved. More generally, we identify conditions whereby investment in process change occurs at an increasing rate over time. This result is particularly important since it demonstrates a limitation of the existing literature where process change always occurs at a decreasing rate.process change, knowledge management, optimal control theory

Mitigating Supply Risk: Dual Sourcing or Process Improvement?

“…The first stream primarily focuses on finding the optimal control policies to improve the production process while minimizing operating cost, e.g., Porteus (1986), Fine andPorteus (1989), Marcellus andDada (1991), Dada and Marcellus (1994), Chand et al (1996), where process improvement is typically measured in effective capacity (Spence and Porteus 1987), amount of defects (Marcellus and Dada 1991), or general cost of failures (Chand et al 1996). The second stream of the literature focuses on the interaction of process improvement with the firm's knowledge creation and learning curve, e.g., Fine (1986), Zangwill and Kantor (1998), Carrillo and Gaimon (2000), Terwiesch and Bohn (2001), Carrillo and Gaimon (2004). This stream establishes theoretical foundations for the evaluation of process improvement benefits.…”

On the Value of Input Efficiency, Capacity Efficiency, and the Flexibility to Rebalance Them

“…This paper focuses on the value of improving input efficiency, capacity efficiency, and flexibility therein, but abstracts from the costs of doing so. For modelbased and empirical research on how to improve input efficiency or capacity efficiency (and the associated costs), we refer the reader to Carrillo and Gaimon (2000), Lapre et al (2000), Gaimon (2008), Tanrisever et al (2012), and the papers surveyed therein. The potential for flexibility in input efficiency versus capacity efficiency may be inherent in a production technology.…”

“…The potential for flexibility in input efficiency versus capacity efficiency may be inherent in a production technology. However, that flexibility typically must be developed through investments in research and development or experimentation in the operating mode of a production facility, which, as Carrillo and Gaimon (2000) and Terwiesch and Xu (2004) show, is costly.…”

Proposição de um modelo para caracterização das conversões do conhecimento no processo de desenvolvimento de produtos

“…Processo de negócio (adaptado de ROZENFELD et al, 2000) GARVIN (1995), assim como DAVENPORT (1994), afirmam que o processo provê uma poderosa forma de se compreender o funcionamento de uma organização (da sua produção, do seu DP, etc), assegurando a necessária integração entre as práticas de trabalho relacionadas. Ao integrar e coordenar, um processo também relaciona-se com a criação e acumulação do conhecimento na empresa (CARRILLO & GAIMON, 2000), e com sua circulação e compartilhamento (BROWN & DUGUID, 2000;EL SAWY, 2001). …”

“…Uma reflexão relevante neste sentido, advinda dos capítulos 2 e 3, é que o DP, ao ser tratado como um processo, alarga as atribuições das áreas funcionais e envolve pessoas de diferentes áreas (valorizando o conhecimento heterogêneo), amplia a participação de clientes e fornecedores no projeto (valorizando o conhecimento externo), e melhor integra e coordena as atividades do projeto, o que, segundo CARRILLO & GAIMON (2000), relaciona esse processo com a criação e acumulação do conhecimento na empresa, e com sua circulação e compartilhamento (BROWN & DUGUID, 2000;EL SAWY, 2001). …”