The transformational process model, developed by Nigel Slack, is a framework for understanding how the inputs of a business (raw materials, finances, or man hours) become the outputs of the business. Output criteria such as tangibility, storability, transportability, customer contact, simultaneity and quality vary depending on the business’s main outputs. The implications of the transformational process model vary depending on whether the business is primarily a provider of goods or services. Examining the case of an automobile manufacturer and an advertising agency allows us to compare and contrast the implications of the Slack transformational process model for providers of goods and of services.
The Slack transformational process model is also referred to as the input-output model. The input-output model relies on business being seen as an open system, with the following attributes: receiving inputs, converting inputs to outputs and then discharging the outputs into the environment. Businesses are dependent on the environment, in particular the target market for their product.
Businesses are also composed of sub-organizations, which undertake their own activities leading to conversion of inputs to outputs. Because businesses are social systems, it is possible to reorganise them into different shapes. However, the manner of organisation of a business makes a difference in the efficiency of a business’s production process. Problems can arise from other factors, as well. For example, a micro-organisation within the business can cause problems by working toward its own goals rather than keeping the goal of the overall business in mind.Slack’s model concentrates on the operations function of a business, tracing the evolution of the business’s product from inputs to output through a number of stages.
There are three main outputs considered in Slack’s model: materials, information and customers. Inputs include people, materials, information, financing, and creativity.Many businesses have different organisations that focus on the transformation of inputs into one of these outputs. For example, a business’s manufacturing division may be responsible for materials; the technical writing division may be responsible for information regarding the materials; and the sales organization will be responsible for customers. Organizations have both micro-operations and macro-operations. Macro-operations are considered to be those operations directly involved with the production of a good or service, where micro-operations are activities that contribute to the macro-operation. For example, a sales department would be considered a macro-operation because it directly contributes to the transformation of a good or service, where a human resources department would be considered to be a micro-operation because it supports the macro-operations of the company.Businesses may focus on different types of transformed resources, as well. Some businesses offer pure goods, while some offer only services. Most business offerings are a combination of goods and services, with one aspect taking precedence over the other. Different aspects of goods and services include tangibility, storability, transportability, simultaneity, customer contact and quality. These aspects are expressed in different ways and differing amounts, depending on whether the firm’s offering is primarily a good or a service. Tangibility is a basic property of an output. Is it a physical product, or is it a relationship, a work of art or an application of specialised knowledge? A business with a primary product of a good will place high value on storability and transportability. A service business will value customer contact and simultaneity. All organizations will place a value on quality, whether the product is tangible or intangible; however, a tangible product will have an objective measure of quality, which may not be available for an intangible product.One example of a business that produces primarily goods is an automobile manufacturing business. The macro-organisations within an automobile manufacturing business include the manufacturing department, which produces materials (in this case, automobiles); the sales department, which produces customers; engineering and design, who provide specifications to which the production should be completed; and the technical writing department, which produces the owner’s manual and other documentation which is provided with the automobile. Microorganisations within the automobile manufacturer may include a customer support department, which supports the sales department’s efforts by helping to retain customers; a human resources department, which handles the acquisition of human resources; raw materials sourcing agents, who acquire the raw materials required for production; training staff, who prepare human resources for the work; company directors, who set policy and steer the direction of production; financial and accounting staff; information technology staff; and investors, who provide financing money. These microorganisations support the macroorganisations within the business that perform the production work.An automobile manufacturer’s outputs are primarily tangible products: automobiles, with accompany owner’s manuals and sales support. The main inputs in an automobile manufacturing business include raw materials, people, information, finance, and creativity. Raw materials such as steel, plastic, leather and paint are required in order to create the automobile. People are required to run the machinery, perform handwork, create and test automobile designs and perform other manufacturing tests. Information is required in order for the automobile designs to work properly, as well as to focus creative efforts in order to gain the maximum amount of business it is possible to gain. Finance is required because automobile manufacturing is an industry that is highly dependent on capital; large amounts of permanent infrastructure such as manufacturing plants, machinery and stocks of raw material, as well as a high amount of human labour which must be paid for, are required to operate efficiently. Creativity is required in order to create and market innovative automobile designs that capture the public’s attention; it is necessary for the automobile manufacturer to interact efficiently with its environment or market.The stages of transformation in the materials portion of an automobile manufacturer’s business are likely to include design and procurement, fabrication, assembly, test and distribution. At each of these stages, the initial inputs are used to create an intermediate output in preparation for the next stage. During the design and procurement stage, raw materials are required and some creativity and human resources are transformed into automobile designs and manufacturing processes. These designs and processes, as well as the raw materials, become the input for the next stage of manufacturing, that of fabrication. Parts and pieces of an automobile, such as engines, moulded side panels and steering wheels, are prepared for use in the next stage. Assembly takes the pieces fabricated in the previous stage and creates another output, in this case a completed or nearly complete automobile. The testing stage takes the completed automobile and performs quality checking in order to ensure that the quality criteria are met. The tested automobile is then passed to the distribution stage, where it joins with other outputs of the manufacturer, such as information (owner’s manuals and marketing material) and customers (sales department efforts) for final distribution.The main challenges for an automobile manufacturer include transportability, storability, simultaneity and quality. Automobiles are large and heavy, as well as expensive to produce. The manufacturer must be assured of its logistical optimization in order to avoid outputting too many automobiles and creating a storability problem. Automobile manufacturers also need to ensure their ability to transport their vehicles to their customer base. Vehicles can be transported by lorry in some cases, but often must spend part of their journey on rail, cargo boat or a combination of all three methods of transport before reaching their destination. Simultaneity is vital to an automobile manufacturer; in order for the business to achieve economies of scale, it must be able to produce a large number of outputs at the same time or in quick succession. Quality is measured by comprehensive, objective testing which ensures that each output is up to standards set by the manufacturer and demanded by the business’s environment (both its customers and the regulatory or government rules).Transportability and storability of raw materials is also a concern, because automobile raw materials are often bulky and can sometimes be difficult to source, being subject to their own market pressures which may divert or halt supply of a given material. An entire microorganisation may exist within an automobile manufacturer for supply-chain management and logistics. One way in which American and Japanese automobile manufacturers have attempted to solve transportability and storability problems on both the input and output side of the transformation model is by using just-in-time (JIT) production methods. In the JIT model, suppliers provide raw materials and components to the manufacturer on an as-needed basis, often varying supply daily in order to avoid storing an excess inventory of raw material. In turn, the automobile manufacturer provides automobiles to dealerships in the same way, providing only a short-term supply for storage or in some cases only providing cars after completed sales.An advertising agency is a very different business from an automobile manufacturing business. An advertising agency may provide a small amount of goods, including marketing materials, posters and other promotional material. The outputs of an advertising agency may also be used as inputs in creation of tangible output from another firm, as in the case of development of products bearing advertising logos, mascots or symbols. However, their primary business is intangible and service-based. The major inputs in an advertising agency are people, knowledge and creativity. The major outputs are information and customers.An advertising agency also reacts to its environment differently from an automobile manufacturer. While an automobile manufacturer does pay attention to customer input and gather market information, the main production process involves the automobile manufacturer producing automobiles, and the customer base purchasing automobiles (or not purchasing automobiles, if the manufacturer has not responded appropriately to the information provided). An advertising agency does not produce work for public purchase; rather, it produces work on a bespoke basis, with each client driving the creative process and determining what services should be provided by the agency. Because of this, simultaneity is not as important to the advertising agency as it is to the automobile manufacturer; an advertising agency’s outputs are unique, and the agency may produce no more than a few outputs at once, depending on the size of the agency – no economies of scale are possible, so the number of possible outputs are directly related to the amount of input.The advertising agency’s main macroorganisations are its sales department and its creative staff (depending on the size and nature of the agency, this may be divided into several sub-organisations including graphic artists, copywriters and video production specialists as well as other creative workers). Its microorganisations are human resources, directors, and finance departments. Unlike the automobile manufacturer, the advertising agency does not have a high number of microorganisations devoted to support of logistics or supply chain management, as it has no need for these functions. While the advertising agency has high requirements for the criteria of quality and customer contact, it has almost no requirements for transportability, storability or simultaneity because it does not provide a tangible product that requires these criteria.The stages of transformation an advertising agency’s product goes through are client solicitation, information gathering and the creative process, delivery of the product and account management. Where the automobile manufacturer’s primary output was tangible, and was supported by intangible products from the marketing and sales macroorganisations, the advertising agency’s primary output is almost entirely intangible, with only minor support from a macroorganisation which provides a tangible product (marketing brochures, promotional materials and so on).Like the automobile manufacturer, each stage in the transformation of an advertising agency’s input provides an intermediate output for use as the next stage’s output. The first stage, that of client solicitation, requires human resources (the account managers) and information of the market and the customers. There may also be an element of creativity in this stage, as the account manager proposes details and new ideas for the new account.The output from the client solicitation stage (finances, information and creativity) is used in the next stage, which is information gathering and the creation of the advertising material required by the contract. This stage makes a far greater use of information and creativity than the previous stage. Information about what the client requires must be joined to knowledge about legal matters such as copyright information, understanding of the client’s market to be able to judge whether the intended impact of the proposed campaign is realistic, information about design principles and the given medium the client desires work in (for example, graphic arts, advertising campaign design, commercial production or other techniques required for the client’s requirements). Creativity is required as well, in order to ensure that the impact of the campaign is what was required. While the automobile manufacturer must meet its customer’s requirements for a vehicle, the advertising agency’s job is more complicated; grabbing the attention and imagination of not only current customers, but potential customers, requires attention to detail, knowledge of psychology and cultural trends and artistic creativity. This is the stage at which one of the main outputs of the advertising agency, information, is complete.The output of the creative process is passed to the next stage, that of client delivery. This stage of transformation is closely tied to the next stage, that of customer retention, both of which are involved with the second major output of the advertising agency, customers. The account manager who completed the first stage, of client solicitation, is likely to be involved in these stages as well. The quality of the information output (the advertising campaign) is judged during this stage of transformation – does the client like it? Does the public like it? Is the client going to come back to the advertising agency for their next campaign or a continuation of this one? These subjective measures of quality are unlike the automobile manufacturer’s objective tests and specifications, as they are completely dependent on the client’s requirements and tastes, as well as the demographic the advertising campaign is to be directed at.Slack’s transformation process model is expressed differently, depending on whether the business’s primary output is a good or a service. For a business that primarily focuses on goods delivery or tangible output, transportability and storability are key; if the business is one that benefits from economies of scale, a high degree of simultaneity is also desirable. A business which focuses primarily on a service or intangible output depends heavily on customer contact and quality. Quality, while important for both goods and services output, is defined differently for each type of business. A tangible output can be objectively checked for quality using standard measurements and tests to determine its compliance with use requirements and regulations. An intangible output’s quality is determined by the value derived by the customer rather than quantitative measurements or regulatory factors. In both cases, however, Slack’s transformation process model can be used as a framework for understanding how a business takes raw inputs such as human resources, financial resources, information, raw materials and creativity and produces materials, information and customers.