MANUFACTURING STRATEGY

INTRODUCTION The term Strategy has its origin in a military context to mean Generalship or maneuver-ability in a war. The term signifies, in a business, an integrated pattern of decisions made and subsequent actions taken to reach specified goals. It is expressed in terms of both the intent (i.e. goals or objectives) and means i.e. actions to be undertaken. It is thus a plan, a position, a ploy, or a mental image. It includes the determination of basic long-term goals and the objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals. It governs important decisions having long term organization makes between its internal resources and skill and the opportunities and risks created by its external environment. Such a broad definition of strategy covers a multitude of decisions from "What business should we be in?" to "How can manufacturing contribute to the competitive advantage of this business?" Recognizing this has led to the idea of a hierarchy of strategy with three major levels: Corporate Strategy what set of businesses should we be in? Business Strategy how should we compete in a given business? Functional Strategy how can this function contribute to the competitive advantage of the business?

Corporate strategy is concerned with what types of business the company, as a whole, should be in and how changes to be made in those types. These issues constitute corporate planning. Financial return, growth and fulfillment of other powerful stakeholders interests are the objectives which are pursued in deciding such issues. Business strategy is concerned with how to compete in a specific product-market situation. Such a strategy is also known as a competitive strategy. With the boundaries of the business and the desired competitive advantages identified, each strategies are formulated upon the different functional areas (typically, marketing and sales, manufacturing and R & D) to support the business focus. Each of the functional strategies will have interactive relationships with business strategy and among one another. Relationships are proactively decided. MANUFACTURING STRATEGY: UNDERSTOOD A manufacturing strategy is one of the functional strategies laid down to achieve competitiveness at a business unit level. Although there is no generally accepted definition of a manufacturing strategy, several explanations have appeared which specify what it does or what it addresses. There seem to be an agreement that manufacturing strategy should act to support corporate objectives, provide manufacturing objectives which offer the firm a competitive advantages and focus on a consistent pattern of decision making within key manufacturing resource categories

The concept of manufacturing strategy is often traced to Skinner's 1969 Harvard Business Review article, "Manufacturing- Missing Link in Corporate Strategy". Skinner suggested a topdown approach to manufacturing. According to Skinner Manufacturing objectives should be derived from business objectives, and then manufacturing policies developed to address these objectives. Manufacturing objectives cover such things as cost, quality, delivery and flexibility and usually there are trade-offs between them. Trade-off decisions are also required in a number of key areas in order to support the manufacturing objectives. Skinner identified five decision areas: 1) 2) 3) 4) plant and equipment production planning and control labour and staffing product design / engineering 5) organization and management. These basic ideas (trade-offs and consistency of objectives/policies) have formed the foundation from which the current understanding of manufacturing strategy has developed. We can thus be defined as follows: A manufacturing strategy is defined by a pattern of decisions, both structural and infrastructural, which determine the capability of a manufacturing system and specify how it will operate to meet a set of manufacturing objectives which are consistent with overall business objectives. Manufacturing Strategy can be considered as a pattern of choices made in order to achieve the full competitive capability of a business unit. These strategies are either explicitly drawn up or implicitly realized as manifested in a stream of real time decisions made at different points of time. MANUFACTURING OBJECTIVES Manufacturing process has to equip itself with the right capability so that the concerned business could keep on winning the battle at any point of time. These performance objectives have been termed differently by various authors. Manufacturing mission, competitive priority, manufacturing advantages, manufacturing objectives, etc. are some of the examples. Manufacturing objectives play an integral part in defining the manufacturing strategy for a particular business venture. Manufacturing objectives include: Cost: Low cost having direct and easily understood effect on price has been dominating

performance objective for the manufacturing function in many countries. Factors related to location, volumes of production, resource utilization, etc. contribute to lowering the cost. Long-term manufacturing decisions are often made to ensure higher resource productivity. Lower volume, higher variety and frequent variations are the three

principal market related factors that often contribute to higher costs. Importance of low cost as an objective rises with the price-sensitivity of the market.

Product quality conformance: This refers to conformance to product specifications. It is equivalent to doing right thing or doing error free. Product specifications may refer to those attributes which relate to not only functionality but also other dimensions of quality like reliability, durability, economy in use, etc. This objective has now been a matter of essential requirements in many markets. Such an objective is sometimes divided into two conformance of design with market requirements and conformance of production with designs. Process certification through ISO 9000 ensures continuous adherence to such a conformance especially when market requirements are specified. High performance product: To win customers over competitors, certain additional features are added in order to enhance the value of a product. This additional feature differentiates the product from other competing products so as to carry premium with the customers. Dependability: It means keeping delivery promises honoring the delivery contract with the customer. It is sometimes called on-time delivery or timeliness. The scheduling and coordination of all elements of a manufacturing system determine its ability to produce on time. Customer service: A Hardware product alone seldom sells. It is often accompanied with certain kinds of services provided to the customer. These services relate to those provided during pre-transaction, transaction periods. Post transaction or After-sale services as it is commonly known, becomes sometimes an important criterion in some market places. Speed: This refers to Delivery Time. Shorter delivery time is always an advantage with a customer process technology deployed, relationship built up with vendors, coordination between different workplaces, etc. contribute to shorter delivery time. It has become an important issue in many industries where the competition is getting intensified. Flexibility: It refers to two kinds of characteristics: ability to accommodate changes (response flexibility) and ability to exhibit a range of capabilities (range flexibility). Manufacturing system should have necessary technology and other infrastructure to show greater degree of flexibility as customers are perceived to require varieties of product or services. Lack of knowledge and uncertainty regarding future state of affairs is also responsible for needing greater flexibility.

 Innovativeness: It is an ability by which a manufacturing system could bring out a new

process or a product in order to meet market demands. Co-ordination of technologies and creation of supportive environments are often pre-requisites for stimulation of greater innovativeness.

ELEMENS OF MANUFACTURING STRATEGY: There are several areas of manufacturing in which choices are required to be made. Since manufacturing is a part of the total value adding processes which is further a small part of cycles of production and consumption in our modern industrial society, its important decisions will relate to:(i) inputs and their suppliers (ii) outputs and their users (iii)transformation activities along with their physical and communication configuration (iv)overall orientation of the organization towards the manufacturing process. As a result following decision category areas needed to be studied in the formulation and/ or evaluation of a manufacturing strategy. Physical structural configurations Facilitating system and procedures Interface with other key functions Relationship with external agencies Continuous improvement dynamics

As we have already discussed that manufacturing strategy is one of the functional strategies laid down to achieve competitiveness at a business unit level. A business unit, for its success, requires effective and coherent working of all the important functions Marketing, Personnel, Finance and research & Development besides manufacturing. This interpretation of the role of manufacturing strategy in a context of functional network is very important. A consistent pattern of decisions in manufacturing could therefore be ensured if interfaces of manufacturing functions with key functions like marketing, personnel, finance and research & development are effectively managed. It is, therefore, visualized that such interface management should be strategically viewed to evolve a proper manufacturing strategy. DEVELOPING A MANUFACTURING STRATEGY There appears to be no single universal process for manufacturing strategy development. Developing a manufacturing strategy is a difficult proposition for any company. A manufacturing strategy should be developed alongside a company's marketing and corporate philosophy, and should cater to the end needs of the distributor. While the type of manufacturing

a company produces -- single piece vs. multiple items, low volume vs. high volume -- may impact a strategy, manufacturing needs and capabilities should also be considered. Just as there are many business philosophies that may fit inside an industry, no single manufacturing strategy works best in any situation. The traditional approach to manufacturing strategy development evident in the literature is founded on the idea of matching manufacturing structure and infrastructure with business strategy through a formal planning process. This approach is the essence of the top-down approach to developing manufacturing strategy in which the manufacturing function is devoted to performing specified manufacturing tasks that derive from business strategy and/or corporate strategy. The top-down approach The top-down approach has universal and intuitive appeal, it is the classical approach of developing a manufacturing strategy originally proposed by Skinner. The stages of this top-down process are: (1) Define corporate objectives. Corporate objectives may include items such as frequent introduction of new products, low costs, or product customization, which have profound implications for manufacturing. (2) Select product families. Group products by the similarity in their competitive requirements and establish strategic manufacturing priorities in terms of differentiation, cost, quality, delivery and flexibility. (3) Audit of external conditions. This audit addresses market requirements and competition for each group. This stage uses input from the marketing function of the company. Benchmarking may assist in understanding competitors and the nature of competition. (4) Audit of internal capabilities. Evaluate the manufacturing capability of the firm in the context of the manufacturing strategy priorities established in Stage 2 above. This stage assesses the state of the current manufacturing facilities, technology and infrastructure with respect to the priorities. (5) The gap between actual and desired performance (gap analysis). Evaluate the manufacturing capabilities of the firm in the context of the strategic manufacturing priorities. (6) Prioritize and set objectives for manufacturing. Use the results of the gap analysis to address the shortcomings of the manufacturing system through a set of tangible objectives. (7) Choose manufacturing strategies. The objectives from the previous stage are translated into specific action plans.

Other Examples of Manufacturing Strategy Development Flexible Manufacturing Firms that adopt a flexible manufacturing strategy develop a manufacturing process that's easily customizable to fit ever-changing market solutions. These systems stress the process' ability to make modifications to their product quickly and adapt to changes in the volume of goods produced. Manufacturers that employ this strategy attempt to remain competitive by allowing for small-run batches and the ability to cheaply customize their products for clients to provide an advantage. Flexibility also allows manufacturers who employ this strategy to adapt to market changes more readily than competitors with other strategies. Lean Manufacturing Lean manufacturing strategies, also known as just-in-time manufacturing, aims to make the manufacturing process as efficient as possible by eliminating inventories and streamlining the manufacturing process to reduce wasted labor and materials. Companies that employ this strategy must employ workers with multiple skill sets to assume different roles as needed, and must develop a process that produces a high percentage of goods that passes quality control on the first pass. By maximizing efficiency, companies who use lean manufacturing plan to reduce costs and make themselves more competitive in the market. Service Based Manufacturing Often employed by companies with established customer bases or by those that sell goods with a low profit margin, this strategy attempts to focus profitability not on the initial sale of a good, but on continued aftermarket purchases. This strategy may focus on providing spare parts for goods with a long lifespan, or leasing big-ticket items for a limited term and providing full service to the product during the course of the lease term. This strategy puts a premium on producing profits not from sales of the item, but on aftermarket sales and service.

MANUFACTURING STRATEGY: WHY? The main objectives of manufacturing strategy development are to translate required priorities into specific performance requirements for operations to make the necessary plans to assure that manufacturing capabilities are sufficient to accomplish them. Developing priorities involves the following steps: 1. Segment the market according to the product group.

2. Identify the product requirements, demand patterns, and profit margins of each group. 3. Determine the order winners and order qualifiers for each group. 4. Convert order winners into specific performance requirements. CONCLUSION An appropriately built up manufacturing function only could make a business unit realize a competitive performance by producing error free products, getting goods to the customer quickly invariably keeping delivery promises, being able to introduce innovative new products on a timely basis, providing a range of products wide enough to satisfy the customer requirements, being able to change volumes or delivery dates to customer demands and always important, it determines the companys ability to offer products at a price which either undercuts the competitors or gives a high margins or both . Thus the manufacturing function is going to be the key focus formulation and execution of a competitive strategy. A proactive manufacturing strategy will provide the needed strength and linkages as shown below:

REFRENCES:-

Chandler, 1962, Strategy and Structures: Chapters in the History of the Industrial Enterprise, MIT Press. Hayes, R.H. & Wheelwright, S.C. The dynamics of process-product life cycles, Harvard Business Review Paul.M.Swamidass, Evolving forms of manufacturing strategy development, Auburn University Press. http://www.ifm.eng.cam.ac.uk/csp/summaries/ms.html

http://www.enotes.com/manufacturing-reference/manufacturing