Contingency theories of order management, capacity planning, and exception processing in complex manufacturing environments

Abstract

Technological development and market diversification increase the complexity of modern manufacturing environments. Although the popular literature on lean management practices and quality improvement programs describe numerous ways of decreasing the complexity of manufacturing processes, the complete elimination of complexity is seldom possible. Thus, one needs to understand how to mitigate the performance effects of complexity with appropriate management practices. The research questions of this dissertation ask first, what do we already know about operations management under complexity, and second, how the applicability of day-to-day operations management practices depends upon the different dimensions of complexity. The research question on the existing knowledge about operations management under complexity is answered in two steps. First, I present a comprehensive review of organization-theoretical literature on the concept of complexity. This review results in a number of propositions on different ways of managing complexity. Second, I analyze the evidence for those propositions in a systematic literature review of recent operations management research. The results of that review point to a number of contribution opportunities, which guide the empirical studies that address my second research question. The research question on the applicability of operations management practices under different kinds of complexity is addressed with three studies within the same focused sample of 163 machinery manufacturing processes. The first study examines how the applicability of different order management practices depends upon the complexity arising from product customization. The second study examines the effects of process complexity on the applicability of different capacity planning methods. The third study examines the effects of different kinds of uncertainties on the applicability of different exception processing routines. As the studied practices begin from the acquisition of orders and end in the delivery of products, they constitute a holistic view of day-to-day operations management in manufacturing firms. The empirical analyses result in three contingency-theoretical propositions. First, I argue that product configurator tools, available-to-promise verifications, and configuration management practices are only applicable with specific levels of customization in products' configurations and components. Second, I argue that rough-cut capacity planning methods are only applicable with job-shop processes, capacity requirement planning is only applicable with batch-shop processes, and finite loading methods are only applicable with bottleneck-controlled batch shops and assembly lines. Third, I argue that only formal automated exception reporting channels are applicable when urgent glitches are being resolved in production processes. Meanwhile, only formal interpersonal exception reporting channels are applicable when equivocal glitches are being resolved. The theses have immediate practical implications for managers who are responsible for production processes in complex task environments. The studies show that none of this dissertation's theses are commonly known by practitioners nor discussed in the literature. In addition to the immediate implications for the studied environments, the theses can be theoretically generalized to other environments that satisfy certain boundary conditions. Examples can be found in service production, healthcare operations, and software development. The resulting middle-range theories of operations management in complex task environments can be tested in future studies with random samples of processes from other operations management contexts.