Organizational Structure & Manufacturing Evolution: Thompson’s Theory to AMT
James D. Thompson’s Interdependence Theory
James D. Thompson proposed that organizations must adapt their structure based on the type of interdependence between activities. He identified three types, from simplest to most complex:
Pooled Interdependence
- Definition: Units work independently, but their outcomes contribute to a collective result.
- Example: Bank branches or retail chains.
- Coordination: Low. Standard rules and policies are sufficient.
Sequential Interdependence
- Definition: One unit’s output is the input for another. Work flows in a linear sequence.
- Example: Assembly line in manufacturing.
- Coordination: Moderate. Requires precise planning and scheduling.
Reciprocal Interdependence
- Definition: Units interact and influence each other continuously.
- Example: Medical teams or R&D departments.
- Coordination: High. Requires constant communication and mutual decision-making.
Conclusion: The more complex the interdependence, the more flexible and integrated the coordination mechanisms must be. Organizations should design their structure according to the type of interdependence between their operations.
From Mass Production to Advanced Manufacturing Technology
Traditional mass production is based on the use of:
- Dedicated Machinery: Machines that can only perform one operation at a time, producing a limited range of products at a low cost.
- Fixed Workers: Workers who follow standardized work procedures, which increases the level of control over the transformation process.
Organizations engaged in mass production aim to reduce costs by protecting the transformation process from environmental uncertainties.
Mass Production Phases
- Input Phase: Inputs are received in advance from suppliers and stored until needed.
- Transformation Phase: Inputs are assembled into subcomponents, which are stored for use by the next workstation.
- Output Phase: Finished products are stored until needed, and then shipped to the customer.
To overcome this rigidity, Advanced Manufacturing Technology (AMT) was introduced. AMT reduces uncertainty by developing the ability to quickly adjust and control procedures to eliminate inventory.
Advanced Manufacturing Technology (AMT) Phases
- Input Phase: Inputs arrive from suppliers as needed.
- Transformation Phase: Inputs are assembled into semi-finished components, which are immediately used by the next workstation.
- Output Phase: Finished products are immediately shipped to the customer according to orders.
AMT supports this production process through inventions such as:
Computer-Aided Design (CAD)
Allows a new component to be designed and visualized on a computer screen, and created at the push of a button. It enables quick and cost-effective experimentation, offering a competitive advantage either through lower costs or product differentiation.
Computer-Aided Materials Management (CAMM)
An advanced manufacturing technique used to manage the flow of raw materials and components during the transformation process, schedule production, and control inventory.
The difference between traditional materials management and new CAMM techniques is similar to the difference between push and pull approaches:
- Push:
- Inputs are pushed into the transformation process according to a defined schedule.
- Pull:
- Inputs are requested based on customer orders.
Just-In-Time (JIT)
A system where the inputs and components required for production are delivered to the transformation process precisely when needed—no earlier, no later—keeping inventory levels to a minimum.
In summary, JIT, CAMM, and CAD increase technological complexity and activity interdependence, bringing traditional mass production closer to continuous flow production technology.