Improving Manufacturing Performance Through Process Change and Knowledge Creation
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.
Volume (Year): 46 (2000)
Issue (Month): 2 (February)
|Contact details of provider:|| Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA|
Web page: http://www.informs.org/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- James R. Dorroh & Thomas R. Gulledge & Norman K. Womer, 1994. "Investment in Knowledge: A Generalization of Learning By Experience," Management Science, INFORMS, vol. 40(8), pages 947-958, August.
- Eric D. Darr & Linda Argote & Dennis Epple, 1995. "The Acquisition, Transfer, and Depreciation of Knowledge in Service Organizations: Productivity in Franchises," Management Science, INFORMS, vol. 41(11), pages 1750-1762, November.
- Cheryl Gaimon, 1997. "Planning Information Technology--Knowledge Worker Systems," Management Science, INFORMS, vol. 43(9), pages 1308-1328, September.
- Paul S. Adler & Kim B. Clark, 1991. "Behind the Learning Curve: A Sketch of the Learning Process," Management Science, INFORMS, vol. 37(3), pages 267-281, March.
- George Li & S. Rajagopalan, 1998. "Process Improvement, Quality, and Learning Effects," Management Science, INFORMS, vol. 44(11-Part-1), pages 1517-1532, November.
- Epple, D. & Argote, L. & Darr, E.D., 1995. "The Acquisition, Transfer and Depreciation of Knowledge in Service Organisations: Productivity in Franchises," GSIA Working Papers 1995-16, Carnegie Mellon University, Tepper School of Business.
- Charles D. Bailey, 1989. "Forgetting and the Learning Curve: A Laboratory Study," Management Science, INFORMS, vol. 35(3), pages 340-352, March.
- Charles H. Fine, 1986. "Quality Improvement and Learning in Productive Systems," Management Science, INFORMS, vol. 32(10), pages 1301-1315, October.
- Linda Argote & Sara L. Beckman & Dennis Epple, 1990. "The Persistence and Transfer of Learning in Industrial Settings," Management Science, INFORMS, vol. 36(2), pages 140-154, February.
When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:46:y:2000:i:2:p:265-288. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc)
If references are entirely missing, you can add them using this form.