Centre for Strategy and Performance

Manufacturing Strategy

Strategy has been defined as:

" ..the determination of the 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." (Chandler, 1962, Strategy and Structures: Chapters in the History of the Industrial Enterprise, MIT Press, Cambridge, Mass)

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?"

Recognising this has led to the idea of a hierarchy of strategy with three major levels (Hofer and Schendel, 1978) Strategy Formulation: Analytical Concepts, West, St. Paul):

• 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?

Manufacturing strategy is one such functional strategy. 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 top-down approach to manufacturing. 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) plant and equipment; 2) production planning and control; 3) labour and staffing; 4) product design / engineering; and 5) organisation 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 formally define it 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.

Useful introductory books to manufacturing strategy concepts are:

• Hayes, R.H. & Wheelwright S.C.(1984) Restoring Our Competitive Edge (Competing through Manufacturing) ,Wiley, New York.
• Skinner, W. (1985) "Manufacturing – the formidable competitive weapon", Wiley, New York

Practical books on how to develop manufacturing strategy can be found at:

http://www.ifm.eng.cam.ac.uk/csp/workbook_software.html

 by Dr Ken Platts, < kwpeng.cam.ac.uk >