Relationship between manufacturing and design departments: an empirical validation of a theoretical framework

ABSTRACT

Dean and Susman (1989) give four arrangements (design having a veto, manufacturing having a veto, use of integrators to co-ordinate activities of design and manufacturing, use of matrix structure) that define relationship of design and manufacturing functions. In this paper we relate these to the strategy of the firm (Miles and Snow et. al, 1978). This relationship is given in the form of hypotheses. We argue that in 'defenders' manufacturing will have the 'veto' over design; in 'prospectors' design will have the 'veto' over manufacturing; where as 'analyzers' will use 'integrators' to co-ordinate activities of design and manufacturing. This framework was supported by a sample data of twenty firms having design and manufacturing departments.

Keywords: relationship of design and manufacturing functions, veto with design, veto with manufacturing, integrators for design and manufacturing functions

1. INTRODUCTION

Different business strategies require different organizational configurations to be successful. There needs to be a good fit and appropriate match between the competitive strategy of an organization and its internal processes. A lot of work has been done relating competitive strategy to managerial characteristics (Gupta and Govindrajan, 1984); (Slater, 1989), strategic planning system characteristics (Veliyath, 1993), human resource management practices(Balkin and Gomez-Mejia, 1990);Rajagopalan, 1997), technology strategy (Dvir, Sagev, and Shenar, 1993), organizational structure (Powell, 1992), control systems (Govindarajan and Fisher, 1990), corporate SBU relations (Golden, 1992), middle management involvement (Floyd and Wooldridge, 1992), managerial consensus (Homburg, Krohmer and Workman, 1999) and marketing policy (Slater and Olson, 2000). In this paper we relate generic strategy types used by firms (Porter, 1985), (Miles and Snow et al., 1978) to different structures (Dean and Susman, 1989) that define the relationship between design and manufacturing departments.

Our focus is on relationship between design and manufacturing as the performance of these two departments is critical to the overall performance of the organization. Moreover these are two departments which are always in a state of conflict over product issues. Whitney (1988) recognized design as a strategic activity, which required inputs from many parties, including manufacturing. Concurrent or simultaneous engineering was employed to gather inputs and integrate them into design. Gupta and Somers (1996) analyses the importance of manufacturing flexibility and it being influenced by business strategy.

We give a framework in this paper that first identifies strategy of the firm and then recommends a suitable working that ensures desired co-operation between design and manufacturing departments.

2. BACKGROUND

We begin with an overview of past literature on strategy typologies and organizational structure (i.e. relationship between design and manufacturing). Porter (1985) listed three generic competitive strategies, namely (a) 'low cost position' (where company competed primarily on cost); (b) 'differentiation' (here company competed primarily on features other than cost); (c) focus (where a firm concentrates on a given segment. Miles and Snow et al. al. (1978) talked about three business strategies- defenders, analyzers and prospectors. Defenders seek to seal off a portion of the total market to create a stable domain. They achieve this by standard economic actions like competitive pricing or high quality products. Prospectors on the other hand try to locate and develop product and market opportunities, they compete on product novelty. Analyzers follow an intermediate strategy between defenders and prospectors. Walker and Ruekert (1987) came up with a hybrid topology which discriminated between low cost defenders and differentiated defenders. But he dropped the concept of analyzers. But as cited by Slater and Olson (2000) the alteration is not warranted. Hence for the rest of the paper we will be concerned with 4 strategy types: prospectors, low cost defenders, differentiated defenders and analyzers.

Dean and Susman (1989) listed alternative organization structures that could be employed by organizations to encourage co-operation between design and manufacturing. They identified four organization structure types prevalent in practice: (1) Manufacturing gets the veto (2) Use of integrators (3) Manufacturing and design reporting to a common boss (4) Use of matrix structure. However Dean and Susman (1989) do not tell how to choose among these different alternative structures to relate design and manufacturing departments.

3. INTEGRATIVE FRAMEWORK

Here we give a framework defining the desired relationship between design and manufacturing departments of a firm given its strategy.

If a firm chooses to be a low cost defender (Walker et. al., 1987) then it seeks to seal of a portion of the total market in order to create a stable domain by competitive pricing (Miles and Snow et al., 1978).For a low cost defender the manufacturing cost is kept low as possible. This tends to give more power to the manufacturing department forcing frequent redesigns.