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International Journal of Production Research

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Choices in manufacturing strategy decision areas in batch production systemsix case studies
Sanjay C. Choudhari
a b a b

, Gajendra K. Adil & Usha Ananthakumar

National Institute of Construction Management and Research , Pune , India 411045

Shailesh J. Mehta School of Management, Indian Institute of Technology Bombay , Powai , Mumbai , India 400076 Published online: 18 Jul 2011.

To cite this article: Sanjay C. Choudhari , Gajendra K. Adil & Usha Ananthakumar (2012) Choices in manufacturing strategy decision areas in batch production systemsix case studies, International Journal of Production Research, 50:14, 3698-3717, DOI: 10.1080/00207543.2011.576276 To link to this article: http://dx.doi.org/10.1080/00207543.2011.576276

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International Journal of Production Research Vol. 50, No. 14, 15 July 2012, 36983717

Choices in manufacturing strategy decision areas in batch production system six case studies
Sanjay C. Choudhariab, Gajendra K. Adilb* and Usha Ananthakumarb
a

National Institute of Construction Management and Research, Pune, India 411045; bShailesh J. Mehta School of Management, Indian Institute of Technology Bombay, Powai, Mumbai, India 400076 (Received 25 December 2009; final version received 27 February 2011)

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The configuration of a production system can be described by the choices a firm makes in its manufacturing decision areas. Manufacturing strategy literature lacks empirical research in manufacturing decision areas. The current paper is an exploratory study using six case companies on alternative configurations that can exist in a batch production system. Choices made in decisions such as layout, shop floor control, etc., were found to be similar for all six companies that use batch process. However, there were a number of decisions that were found to be non-process specific and are influenced by product complexity, important competitive priorities, strategic orientation of manufacturing, top management decisions and the size of the company. The paper concludes with managerial implications and future research directions. Keywords: batch production system; manufacturing strategy; manufacturing decision areas; decision choices; case studies

1. Introduction Manufacturing strategy decision areas comprise production planning and control, organisation structure and control, sourcing, process technology, facilities and human resources (Leong et al. 1990, Miltenburg 2005). Choices made in various elements of each decision area determine the configuration or internal composition of the production system, which in turn affect the capability of a production system to compete on basic dimensions such as cost, quality, delivery reliability, delivery speed, flexibility and innovation (Safizadeh et al. 2000). The importance a company attaches to these dimensions in the market place is determined by its competitive priorities. The generic configurations of a production system (also called process choices) used in manufacturing literature are job, batch, line and continuous flow (Hayes and Wheelwright 1979a, b). This classification relates the product volume and varieties to the process choice. A few studies about configurations of production systems consider a limited number of elements in the decision areas (Woodward 1965, Hull and Collins 1987). A few authors consider decision areas in their research studies but findings in these studies are not on the basis of process choice (Skinner 1969, Wheelwright 1984, Fine and Hax 1985, Garrido et al. 2007). Miller (1981), however, states that the same relationship between variables may not generally apply in different contexts (e.g. process choice, market). Safizadeh et al. (2000) argue that controlling the process choice offers a new perspective on alternative manufacturing paradigms and that tradeoffs are implicit in the process choice itself. In the past, few studies suggest the suitability of a particular IT application consistent with the process choice of the company (Kathuria and Igbaria 1997, Kathuria et al. 1999). Thus it is desirable to control the process choice in such studies. In recent times, Choudhari et al. (2010) proposed a research framework to study the appropriateness of decision choices for a production system by controlling the process choice. Some past studies provide a description of decisions made under each process choice based on conceptual or empirical research (Safizadeh and Ritzman 1997, Olhager et al. 2001, Olhager and Rudberg 2002, Miltenburg 2005, Hill and Hill 2009). However, the list of decision types considered in these studies is not comprehensive. A number of studies point out that all decision choices are not process specific but influenced by several other factors. Some authors (Bhattacharya and Coleman 1994, Spring and Dalrymple 2000, Garrido et al. 2007) observe that decisions such as planning strategy and master planning schedule are related to product complexity. Wheelwright and Hayes (1985) propose a four-stage model which state that companies in different stages of their

*Corresponding author. Email: adil@iitb.ac.in

ISSN 00207543 print/ISSN 1366588X online 2012 Taylor & Francis http://dx.doi.org/10.1080/00207543.2011.576276 http://www.tandfonline.com

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manufacturings strategic orientation exhibit different preferences in their decision choices. Further, there is a broad agreement among a few authors (Safizadeh and Ritzman 1997, Narasimhan and Das 1999, Vickery et al. 1999, Olhager et al. 2001) that decision choices are also related to the competitive priorities of the company. Few decisions are sometimes influenced by top management of the company for reasons such as convenience in location decision and investment capability of the company (Schmenner 1979, Slack and Lewis 2009). For example, the size of the company is determined by investment capability of the company or market size. Selection of these decisions may also influence other decisions. For instance, the size of the company is also found to influence many other decisions in production systems (Swamidass and Kotha 1998, Cagliano and Spina 2000, Spring and Dalrymple 2000). There is a need to study how these factors affect decision choices in order to form a sound manufacturing strategy for the company. It will be valuable to know which decisions are specific to process choice and which are contingent on other factors as discussed above. Not many empirical studies have been carried out in this area. Empirical studies may lead to the possibility of several alternative configurations in a batch production system that may exist in practice. This exploratory research aims to investigate the decision choices made in a batch production system using six case studies. In particular, the following are the research objectives. The first objective is to probe which decisions are process specific to a batch production system. The second objective is to understand the influence of non-process specific factors on decision choices. The non-process specific factors considered in this research are product complexity, competitive priorities (order winner), strategic orientation of manufacturing (stages in the H&W model), top management decisions and size of the company. The remainder of this paper is organised as follows. In Section 2, we briefly review the relevant literature and develop research framework for this study. The research methodology is given in Section 3. In Section 4, within-case and cross-case analyses are presented for case companies. Research implications and future work are discussed in Section 5. Finally, Section 6 provides concluding remarks.

2. Literature review This section first reviews the literature on manufacturing decision areas. It is then followed by the literature on process specific decisions in a batch production system and non-process specific decisions.

2.1 Decision areas in manufacturing Many authors have articulated the schemes for listing the manufacturing decision areas. However, there is an essential agreement on those areas that matter to manufacturing strategy (e.g. Skinner 1969, Hayes and Wheelwright 1984, Fine and Hax 1985, Leong et al. 1990, Miltenburg 2005, Garrido et al. 2007). This paper adopts the comprehensive classification scheme of Miltenburg (2005) which consists of six decision areas, i.e.: . . . . . . production planning and control, organisation structure and control, sourcing, process technology, facilities and human resources.

Choudhari et al. (2010) presented a list of 54 decision types in six decision areas from a wide range of literature. Each decision type consists of a few alternatives choices that are available for manufacturing companies. This study explores the configurations of a batch production system using these decisions. The detailed descriptions of these decisions are further referred to in Section 4.

2.2 Process specific decision choices in a batch production system Some past studies (e.g. Safizadeh and Ritzman 1997, Olhager et al. 2001, Miltenburg 2005) indicate that batch shop uses customer order as planning inputs to facilitate MTO (make-to-order)/ATO (assemble to order) policy in master production schedule (MPS). In order to respond to the fluctuating level of customer orders, chase planning strategy is thought to be most suited in batch shop (Safizadeh and Ritzman 1997, Olhager et al. 2002).

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Further, the time-phased material requirement planning (MRP) is appropriate to schedule and track customer demand (Bhattacharya and Coleman 1994, Olhager and Rudberg 2002). Batch shop is understood to use push or TOC based system for shop floor control (Bhattacharya and Coleman 1994, Olhager and Rudberg 2002). It is indicated that batch shop carry a high level of raw materials and work-in-process (WIP) inventory to decouple different stages of operations (Hill and Hill 2009). While Miltenburg (2005) argues that the amount of raw materials inventory should be low as products change from customer to customer. Safizadeh and Ritzman (1997) empirically found raw materials inventory to be high (42 days). Finished goods inventory is anticipated to be low in batch shop as it uses MTO policy (Safizadeh and Ritzman 1997, Hill and Hill 2009). It is believed that set-up time is generally large compared to run time in batch shop. Few authors suggest that batch shop achieves economy of scale by combining several customer orders as backlog (Ashton and Cook 1989, Safizadeh and Ritzman 1997). Safizadeh and Ritzman (1997) state that planning horizon for batch shop is longer compared to line shop due to the high degree of uncertainty in customer demand. Olhager et al. (2001) argues that batch shop is likely to choose lead capacity strategy facilitating the company to chase demand. It is suggested that process layout and general purpose machineries are appropriate to handle large product varieties in batch shop (Hayes and Wheelwright 1979a, b, Miltenburg 2005). There are chances of disconnection between various processes to maintain the independence of operations (Slack and Lewis 2009) by keeping inventories. Hill and Hill (2009) and Miltenburg (2005) state that organisation structure in batch process is likely to be flat. Further, operations in batch shop are decentralised for quick response to changes in customer needs (Miltenburg 2005).

2.3 Non-process specific decision choices Some studies indicate that some factors may influence decision choices irrespective of process choice of the production system. This paper identifies the following such factors from literature. Product complexity The product complexity dimension includes factors such as product variety, product volume, end product complexity and end product experience (Kotha and Orne 1989). A method for computing product complexity indices using the above factors is given by Choe et al. (1997). Choe et al. (1997) suggest that companies which align product complexity to business strategy would develop competitive advantage in the market. Some studies observe that decisions such as planning strategy and master planning schedule are related to product complexity (Bhattacharya and Coleman 1994, Spring and Dalrymple 2000, Garrido et al. 2007). Bhattacharya and Coleman (1994) argue that high product complexity of the company requires chase planning strategy in the decision area production planning and control. It should be noted that product complexity could be a major factor in determining the process choice. Strategic orientation of manufacturing A four-stage (H&W) model proposed by Wheelwright and Hayes (1985) evaluates the manufacturings strategic orientation of the company. As per H&W model, the manufacturing can be in one of the four stages in a continuum, where stage 1 means internally neutral and stage 4 means externally supportive role of manufacturing function. Wheelwright and Hayes (1985) have suggested that companies in different stages exhibit different preferences in their decision choices. For instance, the companies in stages 1 to 3 use command and control method of workforce management while those in stage 4 use learning. Furthermore, different decision areas of a company may not necessarily be at the same stage of development (Wheelwright and Hayes 1985). Barnes and Rowbotham (2004) operationalised the H&W four-stage model describing the strategic role of operations. Hum and Leow (1996) assessed stages of electronic companies in Singapore on each decision area separately. Competitive priorities Competitive priorities are defined as order winners and qualifiers by Hill and Hill (2009). Order-winners are criteria that win the order while qualifiers are those which make it to customers shortlist. Some studies suggest that decision choices may have been influenced by order winning criteria (Safizadeh and Ritzman 1997, Narasimhan and Das 1999, Vickery et al. 1999, Olhager et al. 2001, Miltenburg 2005).

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Top management decisions Some decision choices in areas such as capacity, size, location and vertical integration may not be related to the choice of a process (Schmenner 1979, Slack and Lewis 2009) but to factors such as market, raw material sources and capability of the company to invest. Schmenner (1979) lists several factors for location decision that are non-process specific. Size of firm It is observed by some authors (Swamidass and Kotha 1998, Cagliano and Spina 2000, Spring and Dalrymple 2000) that the size of the company (e.g. number of employees) influences other decision choices. Swamidass and Kotha (1998) find that use of AMT in manufacturing is lower in smaller size firms than in larger firms. In organisation structure and control decision areas, Vickery et al. (1999) empirically found the size of the company to be positively related to the number of layers, the span of control and nature of formalisation.

2.4 Research framework

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Literature reviewed in this section clearly bring out facts that few decision choices are process specific to batch shop, while other decisions may depend on factors such as product complexity, strategic orientation, order winning criteria, top management decision and size of the company. The existence of non-process specific factors provides the possibility of alternative configurations of batch production system in practice. Based on the above observations, an operational framework to study choices in manufacturing strategy decisions in a batch production system is proposed in Figure 1. The framework considers six manufacturing decision areas containing various decisions called decision types. Few possible alternative choices are available for the companies in each of the decision types. A specific choice selected by a company is either affected by the process choice or other non-process specific factors as indicated by arrows (see Figure 1).

3. Research methodology Several authors (Adam and Swamidass 1989, Flynn et al. 1990, Swamidass 1991, Meredith 1998, Dangayach and Deshmukh 2000, 2001) in the manufacturing strategy literature indicated the need for case study research to reduce the gap between theory and practice making the research useful to practitioners. Yin (1984) suggests that the purpose of case research is not only to describe a situation but, more often, it is to understand how or why events occur. Generally, the findings obtained are based on empirical evidence. This paper attempts to conduct an

Decision area 1 Production planning and control

Decision types Planning strategy

Decision choices Chase/Level/Mixed

Type of production system (e.g. process choice) Batch shop

2 Facilities

3 Sourcing

Product volume and varieties - Product complexity Competitive priorities - Order winners

4 Process technology

5 Organisation structure and control 6 Human resource

Strategic orientation of manufacturing - stages in H&W model Top management decisions Size of company

Figure 1. A framework to study choices in manufacturing strategy decisions in a batch production system (adapted from Choudhari et al. 2010).

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exploratory research (see Table 1, McCutcheon and Meredith 1993) to identify possible alternative configurations of a batch production system by investigating process specific and non-process specific decision choices using case study methodology.

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3.1 Case sample selection The sample size of case companies has a significant effect on the quality of the research outcome (Yin 1984). Few case studies make it difficult to generalise findings while too many make it difficult to study to the level of details required. No overall consensus was found on the ideal sample size but there is general agreement that approximately 4 to 10 case studies would work well (Yin 1984, Eisenhardt 1989). Primarily, the selected case should fall in the boundary of what one wants to study and connect to the research questions than sampling logic (Yin 1984, Eisenhardt 1989). We started with three companies (cases A, B and C) and looked into commonalities and differences of decision settings. Subsequently, three more companies (cases D, E and F) were sequentially considered. Then it was felt that adding more cases is not likely to add any significant information for the purpose of this research and it was assumed that theoretical saturation had been reached. The final sample included six manufacturing companies. The case companys characteristics, products, order winners and size of company details are provided in Table 1. We use alphabets to ensure the anonymity and confidentiality of the companies participating in this study. Companies are classified based on its size as small, medium and large. Companies D, E and F are large with 500 to 600 employees, company B is medium with 250 employees and companies A and C are small with 25 to 60 employees.

Table 1. Case companies characteristics. Case A Drum mix plant 25 million Small (25) Cost, delivery speed Case B Marines coupling 380 million Medium (250) Quality (conformance) Case C Window and doors 130 million Small (60) Quality (conformance, performance) Case D Transmissions tower 9000 million Large (500) Quality (conformance, performance) Case E Case F Ginning machines 2000 million Large (550) Quality (conformance, performance), delivery speed

Product name Company size Sales (Indian Rupees) Size (number of employees) Competitive priorities (Order winners)

Furniture 1200 million Large (400) Quality (aesthetics)

Product details No. of product group Products in each group Total no. of SKUs Customisation offered in each product Individual products volume (order size) End product complexity (average no. of parts in BOM) End product experience (years)

1 4 4 Standard 1 to 2 4000

17 25 to 35 510 Yes 10 to 100 5

10 5 to16 74 Yes 100 to 700 50

2 3 to 4 7 Yes 200 to 1000 1000

9 4 to 25 73 Yes 1 to 1000 3 to 45

4 2 to 3 8 Standard 450 25 to 50

10

13

10

40

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The case companies considered in our study satisfy the key characteristics of the batch production system. Case companies were willing to participate in research and also found to be convenient for researchers to visit. The key characteristics of the batch shop production system are given below. . . . . Repeat orders for small quantities produced from time to time (Hill and Hill 2009). Materials moved in batches between two successive processing stages (Hill and Hill 2009). Many different products produced in low to medium volume (Miltenburg 2005). Process or cellular layout used for production system (Miltenburg 2005).

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3.2 Case protocol A case protocol facilitates the process of a systematic way to gather required information (McCutcheon and Meredith 1993). It is an essential tool when conducting multiple case studies (Yin 1984). A case study protocol was prepared before visiting all six companies. It included overview of research, general company information, product information, product volume and varieties, customisation offered, number of employees, turnover, experience in current product line and orders winners competitive priorities. It also seeks information related to various decision choices made by manufacturing companies in six decision areas. The possible questions to be asked during the visit and sources for obtaining the required information are also listed in the case protocol. The protocol is not included in this paper because of space limitation but is available from the authors upon request.

3.3 Validity and reliability The quality of empirical research is generally judged on how the issues related to external validity, construct validity, internal validity and reliability are dealt with by researchers (Yin 1984). The sample size considered in this paper (Table 1) covers a good range of data in terms of product varieties, product volume, number of employees, etc., thereby enhancing the external validity of the findings for batch process. Nevertheless, no empirical study offers with certainty that its findings are valid for other populations. Direct observation of production system, asking information from more than one source (triangulation) and additional clarification improved the construct validity. Internal validity was taken care of by pattern matching and explanation building from available literature. Yin (1984) talks about case study protocol and development of case study data base as general ways of approaching the reliability problem. Proper documentation of protocol and seeking information from more sources helped us to solve the reliability problem.

3.4 Data collection and tabulation During our visit, we first contacted the head of production department or general manager of the company. To meet the required research objectives, the unit of analysis considered in this study was the production system of the company. We started the process by explaining research objectives, details of information required and the possible human resources required for seeking information. The data was collected by semi-structured interview of people who had knowledge of the production system. The people with whom interaction was done were general managers and middle managers in production planning, production, quality, marketing, purchase and human resources. We visited the shop floor to get a feel of the actual production system. Additional information was sought by direct observation of the production system, company documents and website. On average two to three visits were made to each plant. Each visit lasted for three to four hours. In case of ambiguity, information was clarified from more than two sources with final confirmation from higher authorities. Further, numerous telephone calls were made to seek any additional clarification. Data was tabulated where column titles are company names and row titles correspond to data items related to company profile, product complexity, decision choices, competitive priority etc. The data collected on choices made by the six companies in each decision area are summarised in Tables 38 and discussed in Section 4. Competitive priorities (order winners) for all case companies were identified from our discussion with key people in the companies. They were asked about the background of some key decisions made by the companies to understand the rationale for some top management decisions.

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Case A 3 2 2 3 5 3 18 Low

Case B 5 6 6 5 2 3 27 High

Case C 4 5 4 4 3 5 25 High

Case D 6 5 3 5 5 3 27 High

Case E 5 5 5 4 3 4 26 High

Case F 2 2 2 6 3 1 16 Low

1. Product standardisation 2. Product variety 3. Individual products volume (order size) 4. Product simplicity 5. End product complexity (average no. of parts in BOM) 6. End product experience (years in business) Product complexity index (out of 42) Product complexity level

Note: *Using items proposed by Kotha and Orne (1989) and each item rated on a 7 point scale suggested by Choe et al. (1997).

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As discussed earlier, product complexity is one of the non-process specific factors considered in this research. Product complexity index for all six companies were computed (see Table 2) using the method proposed by Choe et al. (1997). Accordingly, each item comprising product complexity (see Section 2.2) is rated on the Likert scale. It is observed that product complexity of cases B, C, D and E are high while that of cases A and F are low.

4. Case analysis and findings This section presents within case analysis and cross-case analysis of six case companies. Specific findings from the analysis are shown in the last column of respective decision areas in Tables 38.

4.1 With-in case analysis Each case starts with company background and then discusses the decisions determined by competitive priorities (order winner) and preferences and considerations of the top management. These relationships were arrived based on in-depth interview with company people and support from literature. Case A: Company A manufactures drum and mix plant used to prepare asphalt for construction of bitumen road. It produces few standard products in very low volumes with assemble to order (ATO) policy on repeat basis. It serves in a price sensitive market of small road contractors in surrounding areas. The cost and delivery speed are order winning criteria for this company. The company does not invest in advance manufacturing technology such as CNC, quality and maintenance practices in order to keep cost at a low level. The delivery speed is achieved by keeping critical subcomponents ready as WIP inventories. The company is located in an industrial belt of a small town where the owner resides. With limited financial capability and customer reach, the company started with a small manufacturing facility of 25 employees. The process involves two stages: (i) fabrication of major components, and (ii) assembly and installation at the customers site. It uses traditional general purpose machineries with a handful of skilled workers. Fabrication work is labour intensive. There is an acute shortage of labour in the nearby area and hence the company employs people in excess (e.g. uses lead capacity strategy) to meet the demand. The company makes 80% of the total components in-house and the remaining 20% involving products such as electronic panels are procured from outside vendors. Case B: Company B is a medium size company with 250 employees and is part of a multinational group. It manufactures marine couplings used in power transmission applications. The finished products are available in large varieties with required customisation by size as demanded by the customers. There are few competitors and quality (conformance) is the order winning criteria for this company. The company has invested AMT and use backward integration to produce raw casting to improve the quality of products manufactured. The company is located in a big industrial hub with easy access to raw material suppliers, labour and vendors providing machining services. Initially, the company was set up to supply the requirements of couplings of its parent company. Currently, 60% of its products are supplied to its parent company with the rest sold to other industries.

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Table 3. Cross-case comparison of data on choices for production planning and control. Case A Forecasting/ customers MTS/ATO MTO Chase Time-ph TOC 30 days (high) 15 days (medium) 15 days Many 30 to 45 min 30 days Decentralized Small 15 to 20% 7 days 7 days 20% Centralized Zero Decentralized Small 5 to 10 % 30 days TOC 45 days (high) 2 days (low) 3 days Many 10 to 15 min 30 days TOC 40 days (high) 6 days (low) 15 days Many 30 to 45 min 90 days Chase Time-ph Chase Time-ph Chase Time-ph Push 45 days (high) 5 days (low) 10 days Many 10 to 15 min 15 Days Decentralized Small 5 to 10 % 7 days MTO MTO MTO Level Rate based Push 60 days (High) 60 days (High) 2 days Less than 5 15 to 20 min 240 days Centralized Zero Less than 5% 3 months Customer Customer Customer Customer Case B Case C Case D Case E Case F Forecasting MTS Level Rate based TOC 60 days (high) 7 days (low) 30 days Many 60 min 240 days Decentralized Small Less than 5% 7 days Decision linked to Product complexity Product complexity Product complexity Product complexity Process specific choice Process specific choice

Decision type

Planning inputs

Process specific choice Product complexity Size of company Process specific choice Product complexity

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Master production schedule (MPS) Planning strategy Material requirement planning (MRP) Shop floor control Raw materials (RM) Work in process (WIP) Finished goods (FG) No. of planning points Set up time Length of planning horizon for FG Planning process Batching of backlog for planning Frequency of re-planning Length of frozen schedule

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Table 4. Cross-case comparison of data on choices for facility area. Decision types Capacity planning Size of capacity addition Size of facilities Location of facilities Multi-plant strategies Number of facilities Case A Lead Small pieces Small Local place One Case B Lag Small pieces Medium Suppliers /industry /labours One Case C Lead Small pieces Small Market Market Three Case D Track Medium pieces Large Suppliers /tax/labour Product /market Three Case E Lead Medium pieces Large Local place One Case F Lead Medium pieces Large Market One Decision linked to Top management decision Size of company Top management decision Top management decision Top management decision Top management decision

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The company makes steel casting and subsequently does machining work. They use lag capacity strategy as vendors are easily available to handle the excess demand. At present, they outsource around 40% of machining activities. Case C: Company C is a small firm with 60 employees and is part of an industrial group. It manufactures special window and door frames for residential and commercial buildings. The finished products are available in a number of styles and customised to different sizes according to the customer requirement. Profile is the raw material used for making window and door frame which is specially designed and supplied by the sister plant. This also results in backward vertical integration. The frame made of this raw material provides sound proof characteristics to the building. The company is competing in quality (performance and conformance) market segment where the customer is willing to pay a premium price for the quality. The company has invested in labour and machineries to facilitate lead capacity strategy. The company has located its three plants having similar facilities to serve three markets. These are located close to its market to reduce transportation cost. The company makes 60% of the components itself and the other required components are imported from abroad. Case D: Company D has 500 employees and is part of a large conglomerate group. It manufactures power transmission towers. The products are available in a few variants and customised in size. Quality (conformance and performance) is the order winning criterion for the company. The company has made extensive investment in AMT and quality practices to achieve quality of a high level. The company enjoys good market shares. The company has kept adding capacity regularly in smaller increments over a period of time in response to demand growth. Thus, it follows track capacity strategy. The plant was located to get benefits of raw material, supplier availability, labour supply and tax benefit. The facilities are duplicated in two locations to serve the two markets separately. The components are manufactured in the plant and then final assembly and installation are done at the customers site. The company makes 80% of the components in house. Case E: Company E, with 400 employees, manufactures office and home furniture. Products are manufactured in a large number of styles, sizes and colours. Quality of material used and aesthetics are order winning criteria for the company which competes in the premium customer segment. The company has made extensive investment in special purpose machineries, AMT in design and manufacturing and use high quality raw materials to attain product quality. The company follows a lead capacity strategy and has added sufficient manpower and machinery anticipating growth in the industry. The owner has decided to locate this company in his home town. About 80% of the components required in the final products are made within the plant while the rest are procured from outside suppliers. Case F: Company F is a large firm with 550 employees and manufactures ginning machines and presses used for cotton processing. It offers a few standardised products. Quality (conformance and performance) and delivery speed are order winning criteria. The company has made extensive investment in AMT and quality practices to meet quality requirements. They use make-to-stock (MTS) policy and ship the order from inventory to facilitate shorter delivery time.

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Table 5. Cross-case comparison of data on choices for sourcing area. Case A Two Many (80%) Nil Nil Few 34 Low: other materials Average Average High: outsourcing Low: other materials Average Low: other materials High: outsourcing Low: other materials Average Few 23 Few 24 Many 44 Nil 60% Nil Nil Many 44 Low: other materials Average 60% Nil Nil Nil Some (60%) Some (60%) Many (80%) Many (80%) Two One Two One Two Many (80%) Nil Nil Many 44 High: cast products Low: other materials Average Case B Case C Case D Case E Case F Decision linked to Top management decision Top management decision Top management decision Top management decision Size of company Stages in (H&W) model Stages in (H&W) model

Decision types

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Average Average Average Average

Average

Average

Average Average

Average Average

Average Average

Stages in (H&W) model Stages in (H&W) model

Vertical integration: Stages Vertical integration: Breadth Vertical integration: Degree forward Vertical integration: Degree backward Number of suppliers per item Supplier involvement in problem solving and product development Supplier responsiveness w.r.t. to changes in delivery schedule, volume and product mix Supplier performance w.r.t. quality, delivery reliability Purchasing skill, e.g. technical capability to deal suppliers

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Table 6. Cross-case comparison of data on choices for process technology. Case A Process General Medium Nil Medium Medium Extensive Extensive Extensive Extensive Size of company Process General 80% Special 20% Little Process General 50% Special 50% Nil Process General 40% Special 60% Extensive Process General 20% Special 80% Extensive Process General Case B Case C Case D Case E Case F Decision linked to Process specific choice

Decision types

Type of layout Nature of machineries

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Nil

Little (Excel based) Medium (LAN) Medium Loose /separate Medium Medium Little Little Loose /separate Little Medium (LAN) Extensive (JD Edward) Medium Loose /separate Extensive Extensive

Medium (BM software)

Medium (software based low)

Extensive (ORACAL) Extensive (Software) Medium Loose /separate Medium Medium

Extensive (software based high) Extensive (SAP) Medium Loose /separate Medium Extensive

Size of company

Use of AMT for product and process design, e.g. CAD, CAE Use of AMT for manufacturing, e.g. CNC, automatic material handling, GT robotic Use of AMT for planning and control, e.g. MRP, bar code and EDI Use of AMT for integration, e.g. CIM, ERP, LAN and WAN Degree of automation Degree of coupling Nil Nil Loose /separate Little Little

Size of company Process specific choice Process specific choice Stages in (H&W) model Stages in (H&W) model

Use of maintenance TPM and Kaizens Use of quality practices, e.g. SQC, QC, TQM

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Table 7. Cross-case comparison of data on choices for organisation structure and control. Case A De-centralisation Medium (46) 6 layers High Wider Minimum Average Fast/easy Fast/easy Narrow Extensive Wider Minimum Medium (46) 4 layers High Medium (46) 6 layers Low De-centralisation De-centralisation Case B Case C Case D Case E De-centralisation Medium (46) 6 layers Low Wider Minimum Average Case F De-centralisation Medium (46) 5 layers Low Wider Extensive Fast/easy Size of company Size of company Size of company Decision linked to

Decision types

Locus of decision making authority (delegation) No. of layers

Centralisation

Few (flat) 3 layers High

Narrow Minimum

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Level of horizontal integration Spans of control Nature of formalisation Level of communication

Fast/easy

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Table 8. Cross-case comparison of data on choices for human resource. Case A Casual Skilled 40% Semi 60% Broad 4 3 Extensive Medium Medium Medium Medium Skilled 80% Semi 20% Broad 4 3 Skilled 40% Semi 60% Broad 4 3 Skilled 80% Semi 20% Two to three Skilled 20% Semi 80% Two to three Particular Particular Particular Particular Case B Case C Case D Case E Case F Particular Skilled 80% Semi 20% Two to three Medium Decision linked to

Decision types

Size of company Stages in (H&W) model

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Medium Individual /short term Medium Medium Medium Medium Extensive Extensive Medium Individual /short term Little Individual /short term Extensive Group based Extensive Extensive Extensive

Medium

Medium

Medium

Medium Individual /short term Extensive Medium Medium

Medium Individual /short term Medium Medium Medium

Stages in (H&W) model Stages in (H&W) model Stages in (H&W) model Stages in (H&W) model Stages in (H&W) model

Recruitment & selection Level of skilled worker Job specialisation/ nature of job Job expansion, e.g. enlargement, enrichment, rotation, empowerment Ergonomics and work methods standards Performance appraisal Training and development Sharing information Top management commitment

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This company has been in operation for four decades and has developed a good reputation and market share. They have made investment in facilities and manpower and follow lead capacity strategy. The location of the plant was chosen to gain access to the cotton industry market. The components are made in batches and finally assembled to make finished products; 80% of the components used in the finished product are made in-house. The following are important observations from within case analysis. Whether to have lead or lag capacity strategy are affected by the demand growth of the company and outsourcing possibility. The ability of the company to invest and its market influence the size of facilities. Location decision of the case companies is based on raw material availability, possibility of process outsourcing, labour availability, nearness to market and owners preference. Multi-plant strategy and number of facilities are decided considering nearness to the market. Vertical integration is preferred by the case companies if it provided certain competitive advantage and if the company had the expertise in it. In some instances the choices are influenced by the order winner of the companies such as AMT usage and quality practices to improve quality.

4.2 Cross-case analysis

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In cross-case analysis, we focus on finding patterns of commonalities and differences across case companies (McCutcheon and Meredith 1993). This is achieved by comparing data across columns/cases (see Tables 38) for each decision. The decision choices which were the same for all five companies were considered as process specific choices. In cases where decision choices were not the same, relationships of non-process specific decisions with factors such as strategic orientation of manufacturing (stages in H&W model) and size of the company were identified. Decision choice is considered one at a time and the companies were grouped based on different decision settings. Subsequently, possible correlation of this decision setting with non-process specific factors was examined using support of literature or through conceptual reasoning as the case may be. Production planning and control (PPC) Literature in PPC area for batch shop indicate the use of customer order (e.g. Safizadeh and Ritzman 1997, Miltenburg 2005) as planning inputs and MTO (make-to-order)/ATO (assemble to order) policy (Olhager et al. 2001, Miltenburg 2005) for master production schedule (MPS). It is observed that cases B, C, D and E use customer order, case F uses forecasting while case A uses customer order with more emphasis on forecasting. Case A specifically keeps numerous components ready in anticipation of customer orders. Our cross-case analysis findings suggest that this decision is influenced by product complexity. High product complexity makes the company consider customer orders while low product complexity allow one to plan on forecasting as planning inputs. In MPS, cases B, C, D and E use MTO, case A uses ATO but case F uses MTS (make-to-stock) approach. It is obvious that a company using forecasting is likely to use MTS policy while a company using customer order is likely to use MTO/ATO policies and hence related to planning inputs. It is suggested that a chase planning strategy (Safizadeh and Ritzman 1997, Olhager et al. 2002) and time-phased material requirement planning (MRP) is most suited in batch shops to schedule and track customer demand (Bhattacharya and Coleman 1994, Olhager and Rudberg 2002). Bhattacharya and Coleman (1994) argue that high product complexity requires chase policy. The cases B, C, D and E having high product complexity use chase planning strategy. The time-phased MRP is followed by cases B, C, D and E while cases A and F use rate based MRP. It is observed that even being a batch shop, cases A and F deviate from past studies in terms of choices like MTO, chase policy, customer orders and time-phased planning. As discussed earlier, cases B, C, D and E have high product complexity while cases A and F have low product complexity. We find product complexity as an important variable for decision choices just discussed. Cases A and E use the push system for shop floor control (SFC) and cases B, C, D and F use TOC ensuring optimum utilisation of critical resources and thus consistent with earlier literature (Bhattacharya and Coleman 1994, Olhager and Rudberg 2002). Centralised or decentralised planning process is one of the pertinent issues for production system. The smaller companies A and C use centralised planning process and larger companies B, D, E and F use decentralised planning. It appears from case data that planning process is influenced by the size (number of employees) of a company. It is argued that the size of raw materials inventory will usually be high for batch shop (Safizadeh and Ritzman 1997). All case companies keep more than 30 days (high level) of raw materials as inventory. We observed that it would depend upon the commonness of raw materials across product varieties as customisation happens in the processing stages. It is considered that job/batch shop carry more work-in-process (WIP) than line because of long

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production lead time and desire to decouple different operations (Safizadeh and Ritzman 1997, Hill and Hill 2009). It can be seen that WIP is relatively low for all the cases except case A. Case A operates ATO policy keeping high WIP in anticipation of customer demand. This helps in shortening the delivery time which is an order winner for them. In batch shop, finished goods (FG) inventory is expected to be low as the production is believed to be against customer order (Safizadeh and Ritzman 1997, Hill and Hill 2009). Cases A and C maintain very low FG. Cases B, D and E hold high FG inventory for clearance and logistics approval from customers before shipment. Case F holds high FG as it follows MTS policy helping them to meet delivery speed. None of the cases achieves economy of scale by combining several customer orders as backlog and this observation is not in line with earlier studies (Ashton and Cook 1989, Safizadeh and Ritzman 1997). Despite potential, cases B, C, D and E do not use this policy as orders for similar products are not assured from various customers and such a policy may impact on the delivery. In batch shop, the set-up time is believed to be large compared with run time and this is the case in all case companies because of varieties produced. Safizadeh and Ritzman (1997) state that the planning horizon in line/continuous shops is shorter than that of job/batch shops due to less uncertainty in the former case. However, case companies B, C, D and E have a shorter planning horizon than cases A and F. This is attributed to high product complexity in cases B, C, D and E. To accommodate varieties of customer order (MTO) and their priorities, cases B, C, D and E have more re-planning frequency while cases A and F keep low re-planning frequency. This is also attributed to product complexity of the company. There was no definite pattern observed for length of frozen schedule for case companies. In our case companies, it changes from 7 days to 3 months. Facilities Size of capacity addition in companies A, B and C is in small increments (i.e. one or two machines only) while that in D, E and F is in large increments. The increment in capacity addition corresponds to the size of the company. As discussed in Section 4.1, all other facility decisions such as location, multi-plant strategy, etc., are decided by top management for reasons such as raw material availability, process outsourcing and market reach. Sourcing Sourcing decision area includes elements of vertical integration and supplier relationships. Vertical integration decisions have been discussed in Section 4.1. Narasimhan and Das (1999) and Cousins et al. (2006) found that a better relationship with suppliers had a positive impact on delivery speed, delivery reliability and flexibility. We observe that smaller and medium companies A, B and C use an average of two to three suppliers per item while larger companies D, E and F have more than four suppliers per item. Cases D, E and F use multiple suppliers firstly for price control and secondly to improve the reliability of supply. Number of suppliers appears to be related to the size of company. Companies A, B, C, D, E and F procure the raw materials that are common to many industries and hence do not see any benefit in involving suppliers. However, cases B and D outsource some of their activities to vendors; involve them in problem solving and development. Similarly, case F involves one of its suppliers who supplies customised component that are critical to final product functioning. All the case companies have an average level of supplier responsiveness, supplier performance and purchasing skill. The supplier policies of the case companies suggest that they are in stage 1 in H&W model. This shows potential to improve in this area and move to higher stages. Process technology The literature cites use of process layout and general purpose machineries in job/batch production system (Hayes and Wheelwright 1979a, b, Miltenburg 2005). All six case companies A, B, C, D, E and F use process layout wherein machineries are arranged according to functional requirement. Cases A and F use general purpose machineries predominantly. However, other case companies (B, C, D and E) also use special purpose machineries besides general purpose machineries. Percentage of special purpose machineries ranged from 20 to 80 for these cases. These special purpose machineries are capable of producing varieties within a product group. It shows the possible use of special purpose machineries in batch shop. Zhang et al. (2006) categorised advance manufacturing technology (AMT) into four types based on its use: (i) (ii) (iii) (iv) product design technologies (i.e. CAD, CAE, CAPP, etc.), manufacturing technologies (i.e. CNC, CAM, FMS, etc.), planning and control systems (i.e. MRP, MRPII, EDI, etc.), and integration technologies (i.e. ERP, LAN, WAN, etc.).

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This classification is more or less consistent with other studies (Boyer 1999). The extent of AMT use in product design for case companies D, E and F is extensive, moderate in company A and low in company B. Company C does not use AMT at all in its product design. Swamidass and Kotha (1998) found no relationship between the use of AMT in product design and other factors. This observation is true in our case analysis as AMT uses in product design do not seem to have any relationship with other factors. Further, we find the use of AMT in manufacturing to be lower in smaller firms than in larger firms as observed by Swamidass and Kotha (1998). Company A uses only traditional machineries for manufacturing. Companies B and C use AMT at medium level while other companies D, E and F use AMT extensively for manufacturing. This may be because larger firms can justify investment in AMT than smaller ones as cited in the literature. Company A does not use any AMT in planning and control. Company B just uses computer software (Excel) for planning. Companies C and D have procured software for planning their production. Companies E and F extensively use integrated software (ERP) for planning and scheduling their production. This clearly suggests that the use of AMT in planning and control is related to size of the company. Further, company A does not use AMT in integration. Companies B and C use LAN for integrating various activities of department while companies D, E and F use ERP software for integrating various functions. Thus, the use of AMT for integration is moderate in companies B and C and high in companies D, E and F. This suggests that the extent of use of AMT in integration is related to the size of firm. Due to large product variety and process layout it is difficult to automate material handling in batch production system. Case C uses little automation for loading and unloading of parts on CNC with single operations. Cases B, D, E and F use medium level of automation as CNC can perform multiple operations in addition to loading and unloading. Human intervention is still required in moving product from one workstation to another. Thus automation is limited to mainly processing, loading and unloading activities in batch production system. All six companies use process layout and workstations are separated to maintain the independence of operations by keeping inventories. This finding is consistent with earlier literature (Slack and Lewis 2009). Use of quality practice (e.g. SQC, QC, TQM) in case A is low as cost is an important competitive priority of this company. Quality practices in cases B, C and E are medium and are extensive in cases D and F. It is observed that conformance is an important quality parameter for case B, conformance and performance are important for cases C, D and F and aesthetics is important for case E. Use of maintenance practices (e.g. TPM, Kaisen) is low in cases A and C, medium in cases B, E and F and extensive in case D. Thus in terms of quality and maintenance practices, strategic orientations of companies A and C is stage 1 of H&W model, stage 2 for companies B and E and stage 3 for companies D and F. Organisation structure and control The locus of decision making authority is the degree to which decisions are passed to lower levels of the organisation. No specific pattern was found related to locus of decision making authority. The number of layers in a hierarchy is the degree to which an organisation has many (hierarchical) versus few levels (flat) of management (Nahm et al. 2003). It can be observed from the case data that the number of layers is influenced by the size of firm more than product customisation as per the findings of Vickery et al. (1999) but this contradicts the belief that it is generally flat in batch shop (Miltenburg 2005, Hill and Hill 2009). Small companies (cases A and C) have three to four layers while large companies B, D, E and F have five to six layers. Low level of horizontal integration means departments and workers are functionally specialised while a high level of horizontal integration means they are integrated in their work, skills and training. A high level of integration promotes decision making to a lower level (Nahm et al. 2003). Companies A, B and C are highly integrated and work as co-ordinated teams. In companies D, E and F, tasks of workers are confined to specific areas indicating a low level of integration. Our analysis indicates a relationship between the level of horizontal integration and the size of company. Span of control of the supervisor is said to be narrow if more subordinates report to him/her (Vickery et al. 1999). Companies A and C have narrow span of control wherein many subordinates report to higher level authority. However, the companies B, D, E and F have wider span of control as very few subordinates report to the supervisor. It seems from the case pattern that span of control is related to size of firm and number of layers in the firm and this observation has also been indicated by Vickery et al. (1999). The nature of formalisation is the degree to which the worker is provided with rules and procedure that deprive versus encourage creative, autonomous work and learning (Nahm et al. 2003). Companies C and F follow rules and regulations as products are standardised while cases A, B, D and E provide sufficient flexibility to workers. The cases do not support the correspondence of the size of the firm with the nature of formalisation or product

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customisation that was indicated by Vickery et al. (1999). The level of communication is the degree to which vertical and horizontal communication is slow, difficult and limited versus fast and easy (Nahm et al. 2003). Company needs to have increased learning and responsiveness to the customers. All case companies indicated that they have average to fast level of communication among their employees. This is due to the size of company being small in case of A and C while use of information technology facilitating this in all other cases. Human resource The specific decisions are related to selection, appraisal, rewards, management development and employee relations (Hax and Majluf 1996). Higher skills are needed in workers in batch production system to handle product varieties. In the six companies, there is mixed use of skilled and semi-skilled workers. Companies B, D and F have employed around 80% skilled workers and 20% semi-skilled workers. Companies A and C engage 40% skilled workers and 60% semi-skilled workers while company E has 20% skilled workers and 80% semi-skilled workers. It appears that skill level is to some extent related to the use of general purpose machinery. Higher use of general purpose machinery will require more skilled people while more specialised machineries could be managed with semi-skilled workers. With reference to job specialisation, workers in todays manufacturing environment are usually required to be cross-trained to understand processes better and be responsive to changing production needs (Nahm et al. 2003). Workers in companies A, B and C are trained to do more than three tasks. However, in companies D, E and F, workers can do two to three tasks. This shows that large companies generally have very explicit job definition while small companies expect their workers to do many jobs. Case A has extensive job expansion while other cases have medium job expansion. The decisions in ergonomic and work methods standards, performance appraisal, training and development, sharing information and top management commitment could be enhanced further by making additional investment in improvement programmes. There is lot of scope for improvement in these decisions. Human resources practices of all six companies are command and control based and they represent stages 1 to 3 in the H&W model.

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5. Research implications and future work The paper is an exploratory case research to investigate configuration of batch production system in six manufacturing decision areas. Data was collected for the choices made by six case companies to investigate the decisions that are process specific to batch shop and non-process specific decisions that are influenced by other factors. The other factors considered in this study are product complexity, competitive priorities (order winner), strategic orientation of manufacturing (stages in H&W model), top management decisions and size of the company. It was observed through case analysis that batch shops in practice are able to use different alternative configurations to serve different markets. The company can form alternative configurations by improving or changing non-process specific decision choices. Manufacturing strategy literature discusses the possibility of specific choices for a batch production system as discussed in the literature review. But, we argue that two batch shops may choose two different choices for the same decisions based on our findings. We observed two distinguishing groups in six case companies considered in our study based on product complexity factor. One group (cases B, C, D and E) was having high product complexity while another group (cases A and F) was having low product complexity. This is a significant contribution to the existing literature on manufacturing strategy. It is observed that very few choices are process specific and limited to PPC and process technology decision areas. Product complexity is found to be a distinguishing factor for many decisions in PPC area. The choices in facility and some part of sourcing are usually taken by top management. It is essential for the top management to be conscious of the strategic consequences of such decisions. It is seen that case companies occupied different stages in the H&W model in the sourcing, process technology and human resource decision areas. The appraisal of stages can help the management in determining the scope for improvement in these decision areas. It will further help to design action programs such as TPM, TQM and supplier involvement to bring the company in the higher stages of H&W model. There are few decisions across all the decision areas that were found to be influenced by size of the company. This aspect is more predominant in organisation structure and control and process technology areas. It can be inferred that a change in size of company may be accompanied by appropriate alignment of related decisions. These findings would help practitioners in developing effective manufacturing strategy for their companies.

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As with any case study research, there are limitations to the findings generated from this research. Research findings based on six cases considered in this study may not be valid for other industries. We could not explain reasons for few decision choices considered in this study. It may be possible that there are other factors that may be influencing these decisions. There are a number of avenues for future research. Similar research can be repeated for other companies to enhance the validity of the findings with the same research objectives. A number of propositions can be developed and tested using a large scale questionnaire survey to validate the findings. Research can also be conducted for other production systems (i.e. job, line and continuous) to enhance knowledge in manufacturing decision areas. Further, research can also be extended to study the influence of decision choices on performance in terms of competitive priorities.

6. Conclusion This case study based research makes several contributions to existing literature on manufacturing strategy. This study identifies decision choices that are specific to a batch production system. It was observed that batch shops in practice are able to use different alternative configurations which provide a manufacturing company with the option of differentiating its market position from its competitors. This is due to various non-process specific choices influenced by . . . . . product complexity, competitive priorities (order winner), strategic orientation of manufacturing (stages in the H&W model), top management decisions, and size of the company.

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These findings have immediate relevance to practitioners and researchers. The practitioner will benefit from the insight obtained about decision choices and possibility of alternative configurations in developing a sound manufacturing strategy. This study also identifies limitations and provides future directions for researchers.

Acknowledgement
The authors are grateful to the six case companies for their participation in this research. The authors thank the two anonymous reviewers for their valuable comments, which helped in improving the content and presentation of the paper.

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