Manufacturing

Strategy

Unit 4

Product
Technology
And Process
Choice

*These lecture notes are prepared as a book to be used with the Strategic Manufacturing
Management Course. Any part of the material should not be copied or reproduced without
the permission from the author.

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Contents
Overview
Learning Outcomes

A Strategic View of Technology

Product Technology and the BCG Matrix

The Boston Consulting Group (BCG) Growth-Share Matrix

Process Choice
Generic Types of Process
The Product-Process Matrix
Use of the Product-Process Matrix

Business Implications of Process Choice

Adding Additional Dimensions to the Product-Process Matrix

Conclusion

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Overview
This unit examines, in a general sense, the technology alternatives that face
manufacturing companies both in terms of products and processes, and how
these should be matched to each other, and to the market and business needs
of the company. In particular the unit addresses how a company may
develop its product and process technology choices over time in line with
changing technology developments and market needs.

The first section underlines the importance of taking a strategic view of

technology decisions, and of relating them through the manufacturing
strategy to the business strategy as a whole.

The second section examines the different types of generic processes that a
manufacturing company may use, and how many companies may use
combinations of such processes.

The business implications of process choice are examined in the third

section in relation to products and markets, manufacturing, investment and
cost, and infrastructure, and it is seen how as a process moves from jobbing
through batch to line, so the particular business characteristic will change
from one form to the other.

The final section looks at the product-process matrix classification system

and some of its extensions, and its potential value in making explicit the
various types of product-process interaction over time, and in the context of
different types of competitive thrust.

Learning Outcomes
After studying this unit, you should be able to:

 understand the need for a strategic view of technology investment

 understand the importance of developing and maintaining a “core”
technology
 understand the different types of generic process that a company may
choose, and the factors that will influence its choice.
 appreciate the concept of the Product-Process matrix and how it can be
used to examine how product and process life cycles can interact over
time.

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A Strategic View of
Technology
The way in which a manufacturing company decides to make its products is
not merely a matter that should be left to technical specialists. As we shall
see in this unit, choice of appropriate technology can have major business
implications for the competitive posture of the company and the possible
ways in which this might evolve over time. Technology choice is also a
strategic rather than a tactical decision. In general, technology decisions are:

 high risk
 involve high stakes
 are irreversible
 have major impact on other important elements of the company (eg
human resources)

It is important therefore to include technology decisions amongst the

“pattern of decisions over time” that constitute a manufacturing strategy.

A strategic view of technology investment will have several benefits,

including:

 technology decisions will fit better with other key decisions

 managers at all levels are more likely to understand the strengths and
limitations of technological alternatives
 technology development is more likely to be resourced
 individual technology decisions are likely to be better co-ordinated
 technology is more likely to be acquired, developed, and exploited as
part of an overall process aimed at sustaining a competitive advantage

Many successful companies (e.g., 3M, Intel) have attributed their success to
the fact that they have developed and centred their business around a “core”
technology and avoided diversification into technologies about which they
know little. The following quotation illustrates this point:

“We observed that companies that attempted to build an overly

diverse portfolio of products either (through either internal
development or acquisition) found themselves, over extended periods,
with technologically mediocre products and diffuse marketing.
Companies that concentrated on the internal development of a single
technology or a closely related set of technologies, and that focused
on related market applications, achieved both technological product
excellence and a deep understanding of their customers”.

Meyer and Roberts

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Concentration on a core technology and developing markets to exploit this
technology implies that such companies may be to an extent regarded as
“technology driven” as opposed to “market driven” (Figure 4.1).

Figure 4.1 Iterative dialogue between technology and market driven

companies.

In fact, being entirely technology driven and being entirely market driven
represent two extreme situations that can be equally undesirable. In the
market driven situation, a firm runs the risk of having unrealistic or
impossible demands being placed on engineering and manufacturing
functions by marketing. In the technology driven situation, the firm runs the
risk of products that are over-engineered and not sufficiently responsive to
the customer’s real needs. In reality, some form of iterative dialogue
between technology and marketing perspectives is required. An example of
a company in which these two alternative perspectives have been reconciled
is given below

Exercise 4.1
Try to think of an example either from your direct experience, or from you
reading, of a company whose business performance has severely suffered
through lack of integration of technology and make notes on this in the
space below.

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Although a business may be developed around a single “core” technology, a
single technology strategy is unlikely to be universally applicable or
relevant over the whole of a business that is selling multiple types of
products into markets with differing characteristics that the organisation
would be divided into individual strategic business units, with a separate
technology strategy being developed for each unit. Indeed, in multi-industry
conglomerates, it would be assumed

In general, a good technology strategy is one that is likely to be:

 internally consistent and focused (i.e., individual technology decisions

concerning such areas as product development, production processes,
production management systems, should be fully integrated and directed
towards the achievement of competitive advantage in the market
concerned)
 integrated with the other components of manufacturing strategy such as
human resources strategies, capacity strategies, supplier management
strategies etc.
 supporting of the marketing strategy in such a way that the technology
delivers the effective basis for the competitive posture (e.g., cost
flexibility, quality etc.) that the company has decided to adopt in the
marketplace.

Five important principles may be identified for achieving technological

competitiveness:

1. Understand the fundamentals of the technology and their match

with market opportunities. This implies that technology should not be
a “black box” to business and marketing managers, but that to create
value and competitiveness, technology must be brought together with
business and marketing factors.
2. Work to acquire and develop competitive development in a global
perspective. This implies that to remain competitive in a global
marketplace it is necessary to access to information on related product
and process technology innovations on a global scale. The use of less
than state-of-the-art technology will leave a company vulnerable to
competitors that do.
3. In technology, there are only the quick and the dead. In the new era
of time-based competitiveness, where both product development cycles
and production lead times have been reduced in some cases by factors of
ten, speed of adoption of new product and process technologies (i.e.,
faster than or at least the same rate as one’s competitors) is essential.
4. Orient functions and activities around the value-adding process
(production and distribution). This implies a high degree of
integration of the functions of product design and engineering, process
design, production, marketing, and distribution - in other words these
activities should be seen as closely linked components of the value-
added process for a particular group of products, rather than as a series
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 of separate and functionally divided activities. The term “concurrent
engineering” aptly describes this new emphasis and focus on the
effective addition of value rather than pure functional efficiency.
5. Use the information system to ensure integration of activities. An
increasing number of companies are demanding total integration of the
information contained in any particular functional area with the
information in other functional areas. Powerful synergies can be
achieved by using company-wide information systems to enable local
decision making to occur within a global context.

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Products and Product
Technology
Whether a company produces commodities (e.g., iron ore or sugar) or
elaborately transformed goods such as automobiles or computers,
technology must be aligned to competitive positioning, persuading the
customer to “buy from us” rather than “buy from them”.

In commodity markets, little or few forms of differentiation in the product

itself are possible, and the emphasis is on process - for example in designing
processes of lower costs, better quality, or faster throughput. Commodities
are normally low in added value and product technology is relatively
unsophisticated. For more complex and higher value-added products on the
other hand, there is much that can be done to influence design, technology
and quality in such a way as to influence customer purchasing decisions.
The customer does not see the product design process, or the manufacturing
process, but judges them indirectly by their output. Product and product
technology strategies must be adopted which ensure that both are aligned
with customer needs.

The main types of strategic decision relating to products and product

technology are:

 innovation vs copying existing technology

 degree of investment in new technology

The Boston Consulting Group (BCG)

Growth-Share Matrix
Companies that are large enough to be organized into strategic business
units face the task of allocating resources among those units. In the early
1970's the Boston Consulting Group developed a model for managing a
portfolio of different business units (or major product lines). The BCG
growth-share matrix displays the various business units on a graph of the
market growth rate vs. market share relative to competitors as shown in Fig
4.2. The names “star”, “cash cow”, “question mark” and “dog” have been
used to describe products in various quadrants. Resources are allocated to
business units according to where they are situated on the matrix as follows:

 Cash Cow - a business unit that has a large market share in a mature,
slow growing industry. They generally constitute products in the mature
phase of their life cycle. Cash cows require little investment and
generate cash that can be used to invest in other business units.

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 Star - a business unit that has a large market share in a fast-growing
industry, generally in the earlier part of the life cycle. Stars may generate
cash, but because the market is growing rapidly, they require investment
to maintain their lead. If successful, a star will become a cash cow when
its industry matures.

 Question Mark (or Problem Child) - a business unit that has a small
market share in a high growth market, often at the very beginning of its
life cycle. These business units require resources to grow market share
but whether they will succeed and become stars is unknown.

 Dog - a business unit that has a small market share in a mature industry.
These may often be products nearing obsolescence and at the end of
their life cycle. A dog may not require substantial cash, but it ties up
capital that could better be deployed elsewhere. Unless a dog has some
other strategic purpose, it should be liquidated if there is little prospect
for it to gain market share.

The BCG matrix provides a framework for allocating resources among

different business units and allows one to compare many business units at a
glance. Using this method, a company can analyse its business strengths on
a product-by-product basis with its competitors to examine future trends in
market growth. However, the approach has received some negative criticism
for the following reasons:

 The link between market share and profitability is questionable since

increasing market share can be very expensive.

 The approach may overemphasize high growth, since it ignores the

potential of declining markets

 The model considers market growth rate to be a given. In practice the

firm may be able to grow the market.

Figure 4.2 BCG matrix for portfolio analysis.

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Traditional portfolio analysis has tended to focus on business expansion or
contraction by acquisition or divestment of different product lines (i.e.,
through buying and selling of different businesses. The technological
reasons as to why a particular product might be occupying a particular
position in the matrix, or the technology implications of acquiring of
divesting individual product lines was rarely considered, with only the
financial aspects being considered as relevant to the decision.

The current positioning of products in this matrix can often be understood in

relation to the product technology used. For a dog may be so because it is
using obsolescent technology, which should perhaps be abandoned. A star
may be so because it is at the leading edge of product technology, and a cash
cow may be so because it is using a mature and well understood technology.
For star and cash cow products, decisions need to be made as to whether to
invest further in these products, or whether to allow them to move into
question mark or dog positions. These decisions can only be made with an
understanding of the technological competencies and limitations of the
company itself.

Exercise 4.2
1. For a company with which you are familiar, try to classify some of their
products in the relevant quadrants of the BCG growth/share matrix

2. What technological issues are important in decisions involving future

investment in these each of these products (or product groups)?

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Process Choice
The way in which a business decides to make its products is often
considered to be purely an engineering issue, and as such is left to the
technical specialists in the field. This however runs the risk of ignoring
critical manufacturing and business perspectives of which the technical
specialists may be unaware.

Choice of the appropriate way to manufacture ones products will involve the
following steps:

1. Deciding how much of the product to buy out, which in turn determines
how much will be made in.
2. Identification of the technology alternatives to complete the tasks
involved in the made-in sections of the product.
3. Choosing between these alternatives in such a way that best satisfies
current and future market needs.

Generic Types of Process

An important generic dimension of manufacturing process is in terms of
typical size of batch. In terms of this dimension, there are six classic types
of manufacturing process as shown in Figure 4.3:

1. Project (e.g., shipbuilding, civil engineering construction)

2. Jobbing (e.g., classical light engineering job shop)
3. Small Batch (e.g., specialised components for machine tools)
4. Large Batch (e.g., domestic appliances)
5. Line (e.g., automobile assembly)
6. Continuous production (e.g., foods, liquids)

Figure 4.3 Types of manufacturing processes.

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Project Manufacture

The selection of project as the appropriate process would be based on the

fact that

 the product is a one-off customer specified requirement

 it is fixed in a specific location and cannot be moved, either at all or
until completed

Obvious examples of products requiring this type of production are civil

engineering constructions, ships, or aerospace programs. Some
organisations engaged primarily on project work will organise into matrix
structures where each project (considered as a row in the matrix) draws on
resources (considered as columns in the matrix). Individual projects may
draw on individual resources, or resources may divide their time between
several projects.

Individual projects will normally be managed by decomposing into

individual activities and adopting a total systems approach to the co-
ordination of these activities using powerful managerial techniques such as
PERT or CPM.

Often, projects will involve the offsite production of parts or assemblies for
use on the project site, and these can often be produced using a different
choice of process than project.

Jobbing Production

Job shops are flexible producers of one-off products and will require
interpretation of the customer’s design and specification, followed by the
use of appropriate knowledge and skills in the type of area in which the job
shop may specialise. Different jobs may be quite different in size and type,
and the order in which operations are performed may be different between
one job and the next. Equipment must be general purpose and flexible and
human resources must be skilled at working to constantly varying
specifications. A particular product will either not be manufactured again in
the same form, or a long period of time will elapse before it is ordered
again. Any investment in specialist plant jigs, fixtures etc. is therefore rarely
warranted.

Small Batch

Small batch producers provide similar items on a repeat basis and in larger
volumes than is associated with jobbing. Small batch manufacture is
generally associated with substantial product variety, but with sufficient
frequency of repeat orders and similarity of individual products that some
specialisation of plant and equipment can occur, and individual products can

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be made on a cyclical basis. Changeover times must generally be small for
this mode of manufacture to be economic.

Large Batch

Where a firm produces a relatively small number of similar products in

volumes that are high, but insufficiently high to economically justify the
dedication of a single line to one product, and when difference between
products is substantial enough to make off-line customisation work
infeasible, large batch manufacture may occur. Large batches may involve
days or weeks of continuous work on the same product before changeover
occurs. In some cases, technical considerations, and constraints force
batching of processes, even when product variety is very low. For example,
some types of chemical reaction and liquid mixing processes have to be
batched even though the same constituents are reacted or mixed together
time after time. Large batch manufacture is generally associated with make-
for-stock companies, and the choice of batch sizes and how they are
scheduled can have substantial impact on production efficiencies,
inventories, and competitiveness.

Line

If demand volume for a product requiring little or no customisation is

sufficiently high, great efficiencies can be achieved by dedicating a single
production line to produce just that product. In a line process, all items are
passed though an identical series of operating steps.

Some production lines may be batch and line hybrids. For example, a
production line may operate for a certain amount of time producing one
product, and then reset to produce another batch of slightly different items.
Alternatively, a certain amount of flexibility might be built into the line so
that a product mix can be produced. For example, a car plant might produce
the same model of car but of different colour and body continuously on the
same line (although it would not be feasible to produce a totally different
model on that line). A critical decision in setting up a line operation is very
often the degree of flexibility that should be built in, and this must be
addressed simultaneously with capacity and volume/variability
considerations. Once an assembly line has been set up, there is generally
little scope for volume changes.

Continuous Process

Continuous flow processes are generally highly automated processes with

low labour content. Choice of this type of process is generally based on high
demand and that the materials involved lend themselves to be moved easily
from one part of the process to another - e.g., fluids, gases, foods.
Continuous flow generally implies automated materials handling, low in-
process storage, and low flexibility to allow product mix changes. High

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investment is generally involved, with continuous running due to the high
cost of start-ups and shutdowns.

Group Technology/Flexible Manufacturing Cells

Group technology implies the grouping together of similar parts or

components based on some form of similarity (e.g., geometric shape, similar
machine set-ups etc.) and the manufacture of these groups of parts on
different, dedicated groups of machines (often termed flexible
manufacturing systems or “cells”). The (usually) very small changeover
times between individual parts results in the possibility of production in
very small batch sizes, or even in the production of a continuous “mix” of
different parts within the group.

Group technology is an approach that can allow the concept of “mass

customisation” i.e., to produce individual products as though on a job shop
basis but with the same scale economy and short throughput time as line
production.

Many companies of course use combinations of one or more of these types,

and some have little choice as to which category they belong to. It is
important for such companies to recognise clearly which to category they
are “forced” to belong and what the business implications are.

Product and Process Life Cycles

Although the typical product life cycle is mainly useful in planning a firms
marketing strategy, one can also relate it indirectly to the firm’s
manufacturing strategy. Different product life cycle stages have
implications for issues that are directly linked to manufacturing: production
volume, production variety, industry structure, and the dominant form of
competition. For example, manufacturing has a major stake in decisions
that may affect such variables as product customisation (versus
standardisation), volume per model, and the average time before
obsolescence or replacement. Given this perspective, the product life cycle
can be used to summarise the customer and product requirements that must
be satisfied by the manufacturing function and its product technology.

A second aspect of the product life cycle that has a direct impact on
manufacturing has to do with the nature of industry competition and the
firms as major competitors. The maturation of a market generally leads to
fewer competitors, increasing industry concentration, and competition based
more on price and delivery than on unique product features. As the
competitive focus shifts during the different stages of the product life cycle,
the requirements placed on manufacturing (in terms of cost, quality,
flexibility, and delivery dependability) also shift. A third aspect has to do
with the nature of the product itself. The stage of the product life cycle
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affects the product design stability, the length of the product development
cycle, the frequency of engineering change orders, and the commonality of
components, all of which have implications for the manufacturing
technology process. In short, the product life cycle concept (Figure 4.4)
provides a framework for thinking about both the product evolution through
time and the kind of market segments that are likely to develop at various
points in time. It also highlights the need to change the priorities that govern
manufacturing behaviour as product and markets evolve. These priorities in
turn have important repercussions for the process technology employed. As
products move through different phases of their life cycle so processes need
to be changed in order to satisfy the required characteristics at each
particular phase of the life cycle.

Figure 4.4 Product life cycle concept and its relation to product volume,
industry, and form of competition.

In the same way that the product life cycle concept has been used for
analysing manufacturing requirements in relation to product evolution,
manufacturing processes also have life cycles. A process generally starts as
one which is flexible but not very cost efficient, then moves into increasing
degrees of standardisation and cost efficiency towards a highly automated,
capital intensive, repetitive production line.

As we shall see below, the concept of the product-process matrix has

proved useful in examining how the product life cycle and the process life
cycle can interact, particularly over time.

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The Product-Process Matrix
For those companies that do have a choice, it is very important that the
alternative options are realistically assessed, and decisions are made as to
what parts of their process will be manufactured in which category. Choices
will depend on such factors as:

 type of product
 market requirements
 competitive positioning
 product variety
 product volumes

Of these factors, product volume (i.e., quantity x work content) is perhaps

the most significant, as it is this that provides the link between the demand
for a product and the investment in the manufacturing processes. The type
of relationship that tends to exist between product volume and process
choice is shown in Fig 4.5.

Figure 4.5 Relationship between product volume and process choice.

Reading 4.1
Now read the extract from Chapter 7 of “Restoring our Competitive Edge”,
Robert H. Hayes and Stephen Wheelright, New York, John Wiley, 1984

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Exercise 4.3
1. Develop some examples from a company of your choice of a situation for
which alternative types of process choice would be possible

2. What are the business/market implications (if any) of each of these

choices?

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Use of the Product-Process Matrix
The Product-Process matrix is useful in the evaluation of new and existing
proposals as to the most appropriate type of generic technology to be used
for a particular product or product group. A number of steps are involved
here:

Step 1 involves plotting two axes, one for the product families which the
firm currently make and one for the processes which it uses. This effectively
defines the area within which the firm is operating in terms of its
technological competence.

Step 2 involves asking whether the new proposal fits somewhere within this
space or lies outside it, in other words, somewhere which will require the
acquisition of new competence.

If it does, then it implies that the new development will require new
combinations of existing knowledge and the challenge is one of internal
learning. But if it lies outside current competence, then it will be necessary
to think about how the gap will be closed, and whether it represents a high
risk jump into completely new territory or an incremental advance in the
firm's knowledge base.

Much innovation involves progress along one axis, keeping the other
constant. For example, developing a new product family using processes
with which the firm is familiar is relatively low in risk. Similarly employing
a new process to make a well-understood product is relatively low risk.
Where the change involves both product and process, the risks are high. The
basic principle can be applied in a number of ways. First the axes can be
changed, for example, to explore the space around products and markets, or
processes and materials. And the matrix can be extended to three, four or
five dimensions, although by this time it becomes difficult to work with. But
in each case the principle is the same, the axes represent 'knowledge space'
within which the firm has experience and outside of which will involve
higher risk learning of new competence. As with all tools of this kind its
main purpose is to focus thinking and discussion, to help firms 'look before
they leap'.

Typical examples of alternative types of process choice are:

A manufacturer of canned soups has the choice of line production

with two different types of soup being produced and canned in
different sizes on a continuous basis, or large batch production of a
wider range of soups with line changeovers between each batch. (note
that in the first case, the soup production process would be line and
the canning process would be batch (due to the different sizes
involved)

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The choice here would clearly depend on whether the company is operating
in the “high volume, low cost” end of the market with standard soups, or the
“high variety, higher cost” end of the market with variety soups.

A manufacturer of standard components for the heavy engineering

industry has the choice of making each individual customer batch
separately and delivering in the shortest possible time (small batch
manufacture) or waiting until a sufficient number of orders have
accumulated that they can be made together in one large batch.

The choice here would depend on whether manufacturer was trying to

compete on the basis of short delivery time (small batch manufacture) or
low cost (large batch manufacture).

Reading 4.2
Now read the further extract from Chapter 7 of “Restoring our Competitive
Edge”, Robert H Hayes and Stephen Wheelright, New York, John Wiley,
1984

Exercise 4.4
1. Develop some examples from a company of your choice of a
situation for situations in which process choice has evolved over
time or has move “off” the diagonal of the Product Process Matrix.

2. What is the business/market implications of each of these choices?

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Business Implications of
Process Choice
Although the process types described above are discrete choices, most
businesses will select two or more as being appropriate to the products they
manufacture. For example, batch processes may be used to manufacture
product components and line processes to assemble them. This is because
the work content of most components is insufficient to justify the total work
volume that would justify a more dedicated process such as line.

The underlying factor used for choosing the most appropriate process is
volume, which we define as quantity x work content. As volume increases,
the justification for investing in processes dedicated to make that product
increases as shown in Figure 4.6.

Figure 4.6 Matching stages of product and process life cycle

However, choosing a particular type of process purely on volume

requirements will tend to lock the organisation into a whole set of more
complex business implications many of which can be unintended
consequences of that particular process choice. For example, choice of line
production for a particular high-volume product will bring with in all the
normal business attributes associated with line production (eg standard
products only, pressure for high equipment utilisation, centralised
organisation etc). When regarded in the light of long-term business
implications, it may not always be appropriate merely to assess the product

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volume and then “read off” the appropriate technology from the product-
process matrix.

Reading 4.2

Stop now and read pp116-130 from “Manufacturing Strategy, Text and
Cases” by Terry Hill, McGraw-Hill, 2000

Exercise 4.5
Consider the case of a manufacturing company that has been heavily
involved in large batch production product of a very limited range of
products, but which is increasingly being asked for customized or on-off
variants. As a result, the company is thinking of changing its technology to
small batch or jobbing production. Use the relevant material in Reading 4 to
develop business-based (as opposed to technology-based) arguments as to
why this might be a bad move.

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Adding Additional
Dimensions to the Product-
Process Matrix
The two-dimensional product-process matrix has been criticised on the
grounds that since the alignment of process with product is likely to depend
on the type of strategic thrust the company is adopting, a better strategic
representation of the relationship between product and process can be
obtained if a third axis is added to the matrix, in which it is shown each of
the four key competitive thrusts of cost, quality, flexibility and customer
service, relate to the different stages of the product and process life cycles.

Reading 4.4
Stop now and read Thomas J. Crowe and Jose Pablo Nuno “Deciding
Manufacturing Priorities: Flexibility, Cost, Quality and Service” Long
Range Planning, Vol. 24, No6, pp 88-95, 1991.

Exercise 4.6
From companies known to you, develop one example for each of the four
cubes where a company has succeded in operating to advantage on the front
face of each cube

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Conclusion
To compete effectively, a manufacturing company must establish a match
between its product technology, its process technology, and its current
business and market requirements. Choice of appropriate technology is not
purely an engineering decision but will also involve dimensions of
product/market, investment/cost, and infrastructure. Various mapping
procedures are available for examining the relationships between product
technology, process technology and business dimensions, and for examining
how these are likely top change or evolve over time, so that sensible
technology investment decisions can be made.

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Case Study
Fastflo Pumps
Fastflo Pumps is a family-run business which manufactures pumps for
specialist application in a wide range of different industries who require to
pump diverse types of fluid of very different properties and viscosities, such
as liquid concrete, liquid helium, highly corrosive acids etc. Fastflo prides
itself on its design and engineering skills, and its motto has been "whatever
type of pump you want, we can make it". It thus deals with a very wide
variety of customers in a low volume market, where every pump is
designed, engineered and produced to specific customer order, and has
established a reputation as being a market leader in its field.

Fastflo has recently received an order from a major distributor of swimming

pools, Mutual Pools, to produce a prototype pump using newly developed
low friction materials that would reduce the power consumption of the
pump by over 50%. The swimming pool market is expanding, and the
government has recently announced that the price of electricity is likely to
rise sharply in the near future, thus increasing the potential market for
pumps with low power ratings. The low friction material was developed by
a multinational company LANCO who also makes a variety of pumps, but
in much higher volume than Fastflo. This company is in fact a major
supplier of pumps to Mutual Pools, from a local plant with a high-volume
dedicated production line. Use of the new material on this line would
require a considerable amount of capital investment in changing the
characteristics of the line, and at present LANCO has decided that they will
only use the new material in specific ranges of industrial pumps made in
other plants, where the production facilities are more flexible, and the
production lines could be changed with less capital investment. They have
decided that better financial returns would in fact come from manufacturing
the low friction pump components themselves, using their proprietary
technology, and selling them to other pump manufacturers. To produce the
prototype, Fastflo purchased the low friction components of the pump on a
one-off basis from LANCOM.
The prototype pump, after being subjected to may tests and market analysis
by Mutual Pools appeared to have the potential to revolutionise the market
for swimming pool pumps. On this basis, Mutual approached Fastflo with
an initial order for 1500 similar pumps with the strong possibility of more
follow-up orders, and a long term, close partnership.

This is currently under discussion in Fastflo and there is considerable

disagreement. The Owner/Managing Director, who founded the company in
1936 and is now aged 80, is opposed to the idea, seeing his company being
in the business of high-tech specialised pumps. His elder son, who will take
over the business, and the Finance Director, are strongly in favour of a long

Manufacturing Strategy: Unit 4 - Product Technology and Process Choice 4-23

© Sami Kara February 2022
term collaboration with Mutual Pools, as they see opportunities for massive
growth.

Analysis Question

Analyse the issues faced by Fastflo Pumps in relation the material covered
up to this point of the subject.

4-24 Manufacturing Strategy: Unit 4 - Product Technology and Process Choice

© Sami Kara February 2022