MANUFACTURING

STRATEGY
Prepared by-
Prashant Tripathi
(60007150006)
Manufacturing strategy

• Manufacturing strategy as a concept was first recognised by Skinner (1969),

referring to a manufacturing strategy as to exploit certain properties of the
manufacturing function to achieve competitive advantages.

• Hayes and Wheelwright (1984) describe manufacturing strategy as a consistent

pattern of decision making in the manufacturing function linked to the business
strategy.

• Swamidass and Newell (1987) describe manufacturing strategy as a tool for

effective use of manufacturing strengths as a competitive weapon for achievement
of business and corporate goals.
Competitive Priorities

• Link between market requirements and manufacturing .

• Hill (1995) presented the concept of order winners and qualifiers related to the importance of competitive
priority dimensions.

• Competitive priorities defines the set of manufacturing objectives and represents the link to market
requirements .Dimensions commonly used are; cost, quality, flexibility, and delivery .

• Qualifying criteria (dimensions) are those that a company must meet for the product to even be considered
in the market place. Common criterions considered qualifiers are conformance quality and delivery
reliability .

• Order winning criteria are those that differentiate the manufacturer from its competitors and “win” the order
Decision categories
• The operationalisation of manufacturing strategy comes through a pattern of decisions.

• Decisions within the manufacturing functions determine which resources to use, what
routines to use, i.e. what practices to employ and emphasise in order to achieve the
manufacturing objectives.

• The set of practices, resources, routines used ultimately determine the operating
characteristics of the manufacturing system, i.e. the manufacturing capabilities.
Manufacturing strategy in context

In business the word “strategy” is commonly used at three levels:

• (1) Corporate strategy – what set of businesses should we be in?

• (2) Business strategy – how should we compete in XYZ business?

• (3) Functional strategy – how can this function contribute to the competitive advantage of the
business?

Within this hierarchy, manufacturing strategy can appear in two places, first at the corporate level, taking
a broad view over a set of related or separate businesses. Second, it can appear as one of the functional
strategies at the business level and it is with this level that this article is predominantly concerned.
The manufacturing strategy process framework
• The most common manufacturing strategy framework has consisted of “process”, or how strategy is made,
and “content” – the constituents of a manufacturing strategy.
• Matthews and Foo extended this framework to “process, content, performance, consistency and
implementation”.
• Other frameworks are available from the business strategy literature, for example Pettigrew’s framework of
“process, content and context”.
• His view of “context” included both external factors such as sectoral, economic, social, political and
competitive environments and internal factors covering the enterprise’s structural, cultural and political
facets.
• The central focus is the manufacturing strategy process.
Discussion – using the framework
Manufacturing strategy formulation process

• The structure of this section uses and develops four aspects of process –
point of entry, participation, procedure and project management.

• Platts argued that a process was not mere procedure – a set of steps.

• To be useful a process should specify how an organization might be

attracted to implement the process; who should participate in the process
and how the project of implementing the process should be managed.
Point of entry
• It is necessary for the strategy process to provide a method of entry into the
company or business unit and provide a platform to develop the
understanding and agreement of the managing group.

• At another level it is asserted that an important responsibility of a company

board is to ensure that a process for developing manufacturing strategy
exists.

• Many opportunities to question current strategy assumptions are available at

the earliest stages of new product introduction; thus the strategy process
might be usefully initiated at such a time.
Participation
• There are, perhaps, three dimensions of participation – width across the business
involving contributions from other functions; depth of participation within the
manufacturing function; and the participation of others from outside the business unit.

• The function most consistently involved in the process was marketing.

• Marketing began by identifying order-winning and order-qualifying criteria.

• Participants from outside the business unit are typically corporate specialists or external
consultants in facilitation or project modes.

• There are potential advantages in using external participants – they generally arrive
without the assumptions that members of the business unit carry and typically understand
and are experienced in the process.
Procedure
• Once point of entry and participation issues have been covered, the major stages in the strategy process are
generally threefold.
• The first is typically an audit of current strategy against a set of manufacturing objectives; the second
stage is the formulation of a set of action plans – the strategy – which is designed to close any gaps
identified in the first stage.
• These two stages are not universally separated.
• The final stage is implementation of the action plans.
• The output of the audit or data gathering and analysis stage is a comparison of manufacturing performance
and current action plans with the requirements of business strategy.
• The formulation stage is documented in much less detail than the audit stage.
• The implementation stage is usually based on the management of a number of projects, sometimes seen
within an overall improvement plan.
• Implementation is a key issue since strategy is what is implemented not what is speculated, written down
or presented.
Project and process management
• Platts identified two project management issues on strategy formulation and audit
processes.

• Adequate resourcing for managing, supporting and operating groups should be

identified.

• In addition, a time scale should be agreed.

• Hayes and Wheelwright view the manufacturing strategy formulation process as

continually ongoing over time.

• If it is believed that manufacturing strategy is the pattern of actions implemented in

manufacturing’s strategic decision areas then since actions may be required at any time
then strategy making is an ongoing process.

• This has great significance for the strategy process and the tools it might use.
STRATEGY FORMULATION

• SWOT Analysis
▫ Identifies Organization’s Strengths, Weaknesses, Opportunities, and Threats
• Core Competency
▫ A special strength that gives an organization a competitive advantage
Implementation
• In the implementation stage, consistency of the manufacturing strategy with other functional
strategies and its credibility are still assisted by regular feedback of progress and wide and deep
dissemination of the content and logic of new strategy.

• At least three assumptions have been made in this example:

(1) It has been assumed that all manufacturing strategy decisions are alike in the sense that they can
be addressed by similar, generally wide participation.
(2) The example was oriented to the big bang or project approach to the development of
manufacturing strategy; that is strategy is assumed to be made when people sit down to make
strategy.
(3) There was an implicit assumption that manufacturing was a-three strategic role.

From this application of the framework the multi-dimensionality of the strategy process and its
design becomes evident, lending support that:
• There is perhaps no process in organizations that is more demanding of human cognition than
strategy formation.
 18

Competitive Priorities- The Edge

• Four Important Operations Questions: Will you compete on –

Cost?
Quality?
Time?
Flexibility?

• All of the above? Some? Tradeoffs?

 19

Competing on Cost?

• Offering product at a low price relative to competition

▫ Typically high volume products
▫ Often limit product range & offer little customization
▫ May invest in automation to reduce unit costs
▫ Can use lower skill labor
▫ Probably use product focused layouts
▫ Low cost does not mean low quality
 20

Competing on Quality?

• Quality is often subjective

• Quality is defined differently depending on who is defining it.
• Two major quality dimensions include
▫ High performance design:
 Superior features, high durability, & excellent customer service

▫ Product & service consistency:

 Meets design specifications
 Close tolerances
 Error free delivery
• Quality needs to address
▫ Product design quality – product/service meets requirements
▫ Process quality – error free products
 21

Competing on Time?

• Time/speed one of most important competition priorities

• First that can deliver often wins the race
• Time related issues involve
▫ Rapid delivery:
 Focused on shorter time between order placement and delivery
▫ On-time delivery:
 Deliver product exactly when needed every time
 22

Competing on Flexibility?

• Company environment changes rapidly

• Company must accommodate change by being flexible
▫ Product flexibility:
 Easily switch production from one item to another
 Easily customize product/service to meet specific requirements of a customer

▫ Volume flexibility:
 Ability to ramp production up and down to match market demands
Competitive Dimensions

• Cost
• Product Quality and Reliability
• Delivery Speed
▫ Delivery Reliability
• Volume Flexibility
• Flexibility and New Product Introduction Speed
• Other Product-Specific Criteria - Technical support, after-sales support
Steps in Developing a Manufacturing Strategy
1. Segment the market according to the product group.
2. Identify product requirements, demand patterns, and profit
margins of each group.
3. Determine order qualifiers and winners for each group.
4. Convert order winners into specific performance requirements.
References
1. www.diva-portal.org
2. https://hbr.org
3. www.dspace.mit.edu.co.in
4. www.strategy-business.com
THANK YOU!