manufacturing strategy and its impact on product and process design

Technology and Innovation

Title: Manufacturing Strategy and its impact on Product and Process Design

Contents 1 Introduction

2 Diagrammatic Example of Manufacturing Strategy Chart

3 9 strategic manufacturing decision categories

4 New Competing Theory: Lean

5 Consequences of Lean Thinking

6 Reasons for Inconsistent Manufacturing Structures

7 Four Stages of the Strategic Role of Manufacturing

8 Manufacturing Strategy Formulation

9 Sample Manufacturing Strategy Framework

10 Major Manufacturing Decision Categories

11 Manufacturing Strategy and Product Design

12 Manufacturing Strategy and Process Design

13 Process Productivity - Process-Product Matrix

14 Contributions from Manufacturing to NPD

15 The Classic Plant Missions & Linking Strategies to Missions

16 Conclusions

17 References © 2016. All Rights Reserved.

Introduction

• Different companies within the same industry have different strengths and weaknesses and choose to compete in different ways.

• Different production systems have different operating characteristics and each involves a different set of trade-offs.

• A production system must have a customized design that reflects the priorities and trade-offs inherent in the firm’s own competitive situation and strategy

• Therefore, no one operating system is universally superior under all competitive situations and for all companies.

• Every operating system embodies a set of trade-offs. Some will be particularly good at producing standardized products in high volume at low cost; others will excel at responding quickly to shifting demand for more customized products.

© 2017. All Rights Reserved.

Diagrammatic Example of Manufacturing Strategy Chart


abc

9 strategic manufacturing decision categories

New Competing Theory: Lean Lean production achieves lower cost, higher quality, faster product introductions, and greater flexibility-all at the same time.

Lean production can dominate any competitive situation.

Lean production combines the advantages of craft and mass production, while avoiding the high cost of the former and the rigidity of the latter: requires less inventory, yields fewer defects, and produces an ever-growing variety of products.

Characteristics of a Lean Strategy:

• People should be broadly trained, rather than specialized. Staff is overhead and, with a high degree of work force "empowerment," not necessary.

• No amount of rejects or variance should be accepted (zero defects is the goal).

• Communication should take place informally and horizontally, among line workers rather than through hierarchies.


New Competing Theory: Lean


• Equipment should be general purpose and flexible.

• Production should be organized into cells rather than specialized by process stages.

• Continuous processes, with as little work-in-process inventory as possible, is preferable to batch processes.

• Inventory, like rejects, is waste.

• Throughput time is more important than labor or equipment utilization rates.

• Product development should be organized through cross-functional teams, which pursue activities in parallel rather than sequentially.

Implication:

Manufacturing Strategy should devote less effort to customizing a production system and more effort trying to adopt the principles of the already-proven Lean Production System.

Consequences of Lean Thinking

• Western companies embarked on a wide range of programs (TQM, JIT, DFM, CE, empowerment, re-engineering)

• Many of these programs worked quite well and helped companies regain parity on costs and quality.

• However, simply adopting a set of generic improvement programs is not enough. (Only about one third of all the operations improvement programs that US companies have undertaken were successful)

• Further, programs that did achieve operational objectives (e.g., lower costs), often did not contribute to overall competitiveness. E.g., programs may reduce costs but diminish customer service, responsiveness, or flexibility.


• So, TQM, JIT, and other dimensions of "lean production" can re-shape operating performance, But, companies still need coherent approaches that utilize these tools effectively and, develop enterprise strategies.

• Further, a static fit between operating strategy and competitive strategy is not enough.

• Competitive environments are more turbulent.

• Technological changes are more rapid.

• Competitors (from around the globe) are more able.

• Therefore, operating strategies cannot be static. They must provide the capabilities that both support and drive rapidly evolving challenges and strategies.


Consequences of Lean Thinking

Reasons for Inconsistent Manufacturing Structures Manufacturing has a new manufacturing task but continues the old manufacturing policies and structure.

Managers in manufacturing have no clear, consistent definition or understanding of the

manufacturing task facing the organization.

The manufacturing policies and the infrastructure being employed are inconsistent. Taken together, there is a distortion in coordination.

The organization lacks a focus. It is attempting to cover too many technologies or too many products and markets, too wide a range volume, and more than one manufacturing task.

The organization has the wrong equipment & process technology for the present

manufacturing task.

Selection of products and processes for each plant in a multi-plant setup results in mixing together, somewhat at random, a product organization, a process organization, and a volume-focused organization (or any two of the three) instead of focusing around one type of organization.


Four Stages of the Strategic Role of Manufacturing

1. INTERNALLY NEUTRAL

Minimize the “negative effect” of manufacturing

2. EXTERNALLY NEUTRAL

Achieve Parity with Competitors

3. INTERNALLY SUPPORTIVE

Provide Support to the Business Strategy

4. EXTERNALLY SUPPORTIVE

Manufacturing contributes significantly to competitive advantage


Manufacturing Strategy Formulation

1. Draft mission statement (advised by benchmarks)

2. Set operating objectives --Quality --Customer satisfaction

--Cost --Innovativeness

--Lead times

--Flexibility

3. Develop policies & procedures

Structural

Capacity acquis.

Facilities

Equipment/tech.

Vertical integ.


Infrastructural Human resources Quality assurance.

Product development. Capital allocation. Org. Structures.

Sample Manufacturing Strategy Framework

Value chain

Internal

-Procurement/supply

-Engineering

-Marketing/sales

-Design office

-Finance

-Labor relations © 2017. All rights reserved.

Processes -Technology -Capability -Control -Flexibility -Std. Oper. Procs.

People -Skills, training, hiring practices -Knowledge, expertise, empowerment -Partnership w/ accountability -Flexibility -Environment

External -World-class benchmarks -Customers & dealers -Suppliers -Government -Universities

Major Manufacturing Decision Categories


Manufacturing Strategy and Product Design • The degree of difficulty of the manufacturing management task is influenced

strongly by the scope or range of products and processes with which the manufacturing organization must be proficient as well as the rate of new product introductions into the manufacturing organization.

• In well-run manufacturing organizations, the manufacturing management must have significant input into product scope and new product decisions.

• Firms in environments that demand rapid and frequent product introductions or broad product lines must design flexible, responsive, efficient manufacturing organizations, must have product designers who have intimate knowledge of the effects of product design on the demands put on manufacturing, and must have good communication among design, marketing, and manufacturing.


Manufacturing Strategy and Process Design

• The traditional approach to process choice has been to identify the principal generic process types (project, job shop, assembly line, continuous flow) and to choose among them for the production task at hand by matching product characteristics with process characteristics.

• Although crude, this framework is quite useful for conceptualizing some important trade-offs in process choice.

• Relative to assembly lines, job shops tend to use more general purpose machines and higher skilled labor, provide more product flexibility, and yield higher unit production costs.

• Recent innovations in computer-aided design (CAD), computer-aided manufacturing (CAM), robotics, and flexible manufacturing systems have added more complexity to technology decision problems.


Manufacturing Strategy and Process Design

• New highly-automated factories can be extremely expensive about Deere's $500 million factory in Waterloo, Iowa and GE's $300 million improvement in a factory in Erie, Pennsylvania).

• Many firms decide to invest in these new technologies because they believe their survival depends on it.

• Traditional financial and accounting evaluation tools are often unable to capture all of the benefits that can be attributed to the installation of these systems.

Because of these shortcomings, thorough strategic analysis is required to properly evaluate these investment choices.


Process Productivity - Process-Product Matrix


• Several authors claim the importance of design and manufacturing integration for a successful New Product Development(NPD) process.

• The NPD process can be described as dealing with two major issues, providing new or improved functionality and providing more efficient production of products.

• Often argued for is the need to effectively match new products to process technology. This, according to theory, is achieved by closely integrating the design and the manufacturing function at an early stage of the new product development process.

• However, some findings suggest that early and active participation by suppliers is as important for NPM as manufacturing involvement is.

• As firms are outsourcing more and more of their manufacturing, firms must to a great extent rely on suppliers to provide the manufacturing competence in the NPD process.


New Product Development Process

• Experts suggest three more specific contributions from manufacturing to the NPD process, each more proactive than the one before.

• First, to inform design about its existing capabilities. This makes it possible for design to take these capabilities into account when designing the product. It is a conservative and reactive approach, since designers are asked to adjust to existing manufacturing capabilities.

• Second, manufacturing can contribute in a more active way to the NPD. This is achieved by suggesting possible designs of the product which would make it easier to manufacture. Unlike the first approach, this is more proactive in the way that manufacturing makes suggestions rather than just informing about its capabilities.

• Third, and most ambitious and proactive, is if manufacturing can design the manufacturing process in parallel with the product design. This requires the most intimate communication of the three, and also has the most to be gained from. The benefit lies principally in the time saved.

• Integrated products are characterised by their de-coupled interfaces and multifunctional components. When designing integrated products, the need for a top-down design process, referred to as systems engineering. During this process the focus is on the entire system, and not on any single element in the system.


Contributions from Manufacturing to NPD

The Classic Plant Missions


Linking Strategies to Missions


Conclusion

• The manufacturing function can be a formidable weapon to achieve competitive superiority.

• After a set of painful experiences in a wide range of industries, this is clearly understood by most American managers today.

• Different companies will pursue different paths to manufacturing strategy design. However, the companies must capture every aspect in their framework .

• Methodology must contain all the essential elements that must be considered by any firm attempting to design a manufacturing strategy.


References • Bettis, R.A. and Hitt, M.A. (1995), “The new competitive landscape'', Strategic

Management Journal, Vol. 16, pp. 7-19.

• Biemans, W.G. (1995), “Internal and external networks in product development: a case for integration'', in Bruce, M. and Biemans, W.G. (Eds), Product Development: Meeting the Challenge of the Design-making Interface, John Wiley, London, pp. 137-59.

• Blois, K.J. (1980), “Market concentration ± challenge to corporate planning'', Long Range Planning, Vol. 13, August, pp. 56-62.

• Burgess, T.F. (1994), “Making the leap to agility: defining and achieving agile manufacturing through business process redesign and business network redesign'', International Journal of Operations & Production Management, Vol. 14 No. 11, pp. 23-34.

• Chase, R.B. (1990), “Dimensioning the service factory'', in Ettlie, J.E., Burstein and Feigenbaum, A. (Eds), Manufacturing Strategy ± the Research Agenda for the Next Decade, Kluwer Associates, Boston, MA, pp. 175-87.

• Duguay, C.R., Landry, S. and Pasin, F. (1997), “From mass production to flexible/agile production'', International Journal of Operations & Production Management, Vol. 17 No. 12, pp. 1183-96


manufacturing strategy and its impact on product and process design

Leadership & Management