Hayes-Wheelwright matrix

Distinctive competence is a characteristic or aspect of the company that gives it a comparative advantage over its competitors, usually categorized by cost/price, quality, flexibility and service/time. The matrix can be used as a framework to identify and analyze a company's distinctive competence to better inform decisions on processes and alternatives and marketing alternatives.[1]

The wide range of skilled labor and use of general-purpose equipment allows upper-left processes to have distinctive competence in flexibility in their product/service provided, specifically in unique product designs.[1] Lower-right processes do not have that aspect of flexibility since they rely on specialized machinery with unskilled or semi-skilled workers. However, they have better flexibility when it comes to quantity.[1]

Upper-left processes excel in quality when it comes to unique designs based on the customers' specifications or if the product is considered artisan. While upper-left processes cater products to specific customers, lower-right processes can take advantage of consistently producing homogeneous products to eliminate flaws and improve designs over time for a more reliability to the end user.[1]

Upper-left processes can claim distinctive competence through face-to-face interaction and personal attention while lower-right processes are more time-efficient.[1]

Businesses that use the upper-left processes are likely able to charge higher prices because of their ability to cater to individual customers and to compensate for the skilled labor.[1] Lower-right processes are more cost-efficient because their large volumes allow them to take advantage of economies of scale.[1]

Firms operating along the diagonal matrix are assumed to perform better than those too far from the diagonal because it impairs them from competing effectively. For example, a commodity produced by a job shop would be economically impractical.[1] There are niche players that do not operate exactly on the diagonal but near it; for example, Rolls-Royce manufactures automobiles using job shop. Management must consider the disadvantages and implications of doing so.[1] Management can also consider the strategic implications of their position on the matrix compared to their competitors. A firm's position on the matrix can change over time; it can predict the consequences of any future products or process changes.[1]

The nature of a product can be identified using the matrix. Hayes and Wheelwright illustrate this using a specialized manufacturer of printed circuit boards that produced customized products in low-volumes using an interrelated assembly-line process, placing the business in the undesirable lower-left corner of the matrix. Knowing this, the company concluded its product lay in design capability rather than the circuit boards themselves, which placed them nearer along the diagonal.[1]

Another diagnostic use of the matrix is to organize individual operating units according to the suitable process choice while maintaining the overall coordination of the manufacturing procedure. Most firms use more than one process for a product. For example, batch processing may be more suitable for individual components because of its nature or the volume needed is not sufficient for the line process, but the product itself is constructed on an assembly line. Firms may need separate facilities for the parts or products.[1] Firms can also produce similar products using different process options. Fender Musical Instruments mass-produce electric guitars using the line process while also producing custom guitars using job shop (Fender Custom Shop).[1]

The company's approach to manufacturing is reactive,[3] dealing with day-to-day problems like machine breakdowns, quality and delivery difficulties. They cannot use the potential of manufacturing as they struggle with foundation issues. The management will emphasize increasing equipment and technological investments rather than improving infrastructure like planning and measurement systems and workforce policies.[4]

Companies would have long-term goals to achieve industry standards.[3] The focus will be on productivity enhancement and economies of scale meeting standard practice. Companies would favor capital investments as the means for gaining competitive advantages. Their main aim is competitive parity in the manufacturing process.[4]

The business strategy would generate the manufacturing strategy. Charter and mission statements are used to improve the company's competitive position by guiding manufacturing activities and decisions. Advancing manufacturing technologies like Computer-aided design (CAD), Computer-aided manufacturing (CAM) and Flexible manufacturing system (FMS), as well as practices like Just-in-time and lean manufacturing will be taken into consideration to enhance the product.[3]

Firms will strategize to use manufacturing to boost their corporate competence.[4] Their internal process and product improvements will advance past industry standards, eventually leading the sector. This will result in a sustainable competitive advantage. The manufacturing strategy will significantly motivate the competitive strategy and will influence major decisions of the company.[3]

Projects is a process choice added by later writers. It refers to large-scale unique products. They are unique to the customer and are often too big to move, thus the project is the process of choice.[1]

Job shops are semi-custom manufacturing processes with small-to-medium volume. Products are either unique to the order or have inconsistent demand with long gaps between orders. Because each output is different, efficiency is difficult. Each order requires varying structure, materials, form and possibly processing in accordance with the customer's design and specification, resulting in a jumbled flow with no repetitive pattern. This usually requires a process layout in which the machines are grouped in different areas of the shop according to purpose or function. This manufacturing process also requires highly skilled and experienced labor. Besides manufacturing operations like tools, machine and die manufacturers, it can also apply to service operations such as law offices, medical practices, automobile repair and tailor shops.[1]

Batch processes produce similar items on a repeated basis, often in higher volumes than job shops. Management might accumulate products so they can be processed together. The larger volume and repetition of requirements allows management to take a more effective manufacturing route as they optimize capacity and significantly reduce costs. There is a disconnected line flow or intermittent flow since the work-in-process move about different machine grouping in the shop in a jumbled fashion. It is smoother than job shop processing because the volume is higher and similarity in items allows the manufacturer to take advantage of the repetition. Printing and machine shops that have contracts for higher volumes of products are examples of the batch process in manufacturing. Examples of service operations could include some offices, some operations in hospitals, university and school classes and food preparations.[1]

Where the product has a consistent demand and large enough, the business can employ process referred to as mass-production such as the assembly line and continuous manufacturing.[1] In the assembly line process, operations do not change with a standard and uninterrupted flow with a homogeneous output. This process is heavily automated with special-purpose equipment. Unlike the previous process, there is no variation in production. Managers would have a larger span of control and less skilled workers are needed because the standardization of the product means individual units do not have to me as closely monitored and controlled, easing routing, scheduling and control. The assembly line process also means machinery is organized according to sequence and is usually connected by an automated conveyor system, thus as a connected line flow. This is called a product layout. The set of inputs and outputs are often fixed and consistent with a continuous flow of work. An example of assembly-line manufacturing is automobile manufacturing. Car washes, class registration in universities and many fast food operations are services that employ assembly lines.[1]

Continuous production involves raw materials undergoing successive operations such as refining and processing to a narrow range of extremely standardized products characterize as commodities in very high volumes. Continuous manufacturing requires substantial capital investment, so demand for the product must be exceptionally high. The cost of starting or stopping the process can be detrimental to the business. Thus, the processes often run non-stop with minimum downtime. High production levels also minimize the average fixed cost per unit. The process is self-monitoring with a fixed and automated route, which limits labor requirements to monitoring and maintaining the machinery. Industries that use this process include, gas, chemicals, electricity ores, rubber, petroleum, cement, paper, wood, and certain foods like milk, water, wheat, flour, sugar and spirits.[1]