Process Innovation Revisited: Two Routes for Process Integration

Abstract

It is no exaggeration to say that research on product and process innovation is one of the most important areas of innovation management research. Abernathy (1978) provided an important framework for explaining the dynamics of innovation at the industry level. Although Abernathy’s framework explains that process innovation is moving from a fluid phase to a specific (rigid) phase, it oversimplifies the characteristics of process technology and does not examine changes in process technology in detail, such as process modularization, functional consolidation, process shortening, and process integration. This study focuses on the development stages of manufacturing process technologies and presents a typology of process innovation leading to process integration. Specifically, this paper explains process modularization and process interlocking as methods for managing manufactur-ing processes and clarifies the characteristics of those methods. This paper defines ‘process inte-gration’ that incorporates the following elements: (compared to existing processes) (1) superior quality, cost, and lead time, (2) flexible production capabilities to accommodate product diversity (product types and quality grades), and (3) flexible selection of process functions and scope. This paper analyzes two industrial cases to explain the two routes for process innovation. Firstly, to elaborate on the process modularization route for process innovation, this paper intro-duces a case study of functional consolidation in the machine tool industry, which is an assembly industry. Secondly, the process interlocking route for process innovation is explained using steel industry case study, which is a process industry.