The process management triangle: An empirical investigation of process trade‐offs

Advancing theory and understanding of process management issues continues to be a central concern for operations management research and practice. While an insightful body of knowledge – based primarily on studies at the process‐level – exists on the management of capacity and inventory, the dynamism characterizing most operating and competitive systems poses an ongoing challenge for managers having to mitigate the impact of variability across different levels of operating systems (e.g., production processes, facilities, and supply chains). This paper builds on a conceptual framework, derived from queuing theory and termed the “process management triangle”, to explore the extent to which fundamental trade‐offs between capacity utilization, variability and inventory (CVI) generalize to complex operations and business systems. To do so, empirical analyses utilizing comparatively unique data for the study of these process management issues – and collected from two distinct, vastly different levels of analysis – are presented. First, a simulation‐based facility‐level analysis using teaching case study data is presented. Second, an industry‐level analysis employing archival economic data spanning three multi‐year periods is considered. Collectively, these empirical analyses provide exploratory support for the generalization and extension of analytical insights on CVI trade‐offs to both complex operations and business systems, although with decreasing explanatory power. The implications of these studies for furthering process management theory and understanding are framed around additional research propositions intended to guide future investigation of CVI trade‐offs.