Production Processes and Organizational Policies

Abstract

The Profit Impact of Marketing Strategy (PIMS) database was used to test the relationship between production process type (small batch, large batch/assembly, and continuous) and eight organizational policy decisions (new products, new plant and equipment, finished goods inventory, raw materials/work‐in‐process inventory, capacity utilization, fixed capital assets, manufacturing costs, gross margin). In addition, the effect of six broad industry types on the proposed relationships was also investigated. Overall industries, raw materials/work‐in‐progress, capacity utilization, manufacturing costs, fixed assets, and gross margin varied with production process type while new products, new plant and equipment, and finished goods inventory did not vary. Within each industry, the findings showed less support for the relationships between production process type and the eight organizational policy decisions. Further analysis showed that most of the industries are dominated by a production process type. Suggests a movement away from the traditional differentiation of production process technologies and a shift of research emphasis to the differing uses of a particular production process technology within an industry.