Manufacturing footprint strategy - Making the right things in the right places
identify an effective global manufacturing strategy for your business
achieve strategic supply objectives in the areas of cost, service, agility, innovation and risk
develop capabilities to enable rapid progress towards a future network vision
Today's chief operating officers have often inherited global networks of plants that have arisen through a set of incremental decisions rather than by overall design. The benefits of optimising these legacy networks can be huge in terms of cost savings and improved access to emerging markets. IfM research in this area has led to a number of innovative tools that have been applied in leading companies leading to impressive business benefits.
Companies operating in global markets often find that their network of plants is a reflection of historical development and does not always align with tomorrow’s needs. Developing a future strategy is complicated and, in the absence of a clear future vision, the tendency is to reinvest in the status quo. Decisions are further complicated by issues such as the degree of autonomy to be granted to each site, the management of product life cycles across the network, the availability of key resources and the uncertainty of future macro-economic conditions.
As international competition intensifies, the development and control of these global networks becomes increasingly critical to a company's success. Developing an appropriate network architecture and control system are key factors in determining whether a company can develop significant synergies via its global production scale and thereby secure leading positions in the most attractive markets.
IfM approach
The IfM offers a distinctive approach to these issues under-pinned by more than 15 years of research in this field. Our team of professionals, who have many years senior industrial experience, work with companies to co-develop a solution that is adapted to suit the particular circumstances of the business and supported by all the key stakeholders. We work with the management team to ensure that the process becomes embedded within the company giving them the competence, and confidence, to make revisions in the future as circumstances and business processes change.
The IfM has developed and applied its approach in collaboration with multi-national companies in a variety of different sectors, ranging from companies with 10 sites and a turnover of $0.5 billion to those with over 100 sites and turnover of more than $30 billion.
The development of an effective and appropriate global strategy enables companies to:
take advantage of low cost manufacturing opportunities
find the right balance between global, regional and local sourcing
support growth, market access and service improvements
enable more effective innovation and new product introduction
manage risks including IPR leakage and supply continuity
deal with legacy issues that hamper the new network vision
The IfM approach is divided into four stages:
Establishing reasons for change
An assessment of the company's strategic context and the factors driving the need for change.
Make-or-buy analysis
Identification of the products and processes key to the company's competitive position - those which need to be kept in-house and those which can safely be outsourced or for which alliances are appropriate.
Global network design
The most crucial stage of the process, including consideration of the role to be played by each plant, their locations and how they will be controlled and coordinated.
Manufacturing mobility
Processes to implement network change at global, regional and plant level: facilitating the transfer of operations between sites and helping individual sites to develop strategies to address their new roles within the network.
Case study 1
Working with the Institute for Manufacturing (IfM) since 2003, Caterpillar has now successfully developed and embedded a comprehensive strategic process across a large, complex organisation, comprising 10 different business divisions and more than 30 separate product groups.
Read the full case here: Global production network planning at Caterpillar Inc: a case study [956k PDF]
Case study 2
IfM practitioners worked closely with a $4bn, 100 plant company during 2003/4 to develop an innovative global manufacturing footprint strategy. This involved more than 100 senior managers in designing a complete business transformation. In 2008 the company achieved over $55m in repeating annual savings. The project also involved creating leading positions in emerging markets and investment in latest process technology.
Direct contact
Paul Christodoulou
Principal Industrial Fellow
T: +44 (0)1938 811103
M: +44 (0)7766 006852
E: pac46@cam.ac.uk
Ways to engage with the IfM
Our experienced practitioners work closely with your senior teams to tailor and apply the IfM tools to your context covering specific areas such as:
Making the Right Things in the Right Places (Download a free copy). This report describes a structured approach to understanding and exploiting a company's international 'manufacturing footprint' - the location of its plants around the globe, what their roles should be and how they interact with each other.
