The present scenario in the manufacturing is that the amount of the capacity fat and the inventory fat present in the supply chains have been reduced a great deal by the various hard efforts put in by the competitive businesses in the last some of the years (nearly a decade). By this, the operational efficiency has also increased handsomely, along with the emergence of the lean and the responsive manufacturing strategy. Both these steps act as critical steps in the arena of competition and are also surely required for achieving the success in this arena.
But a very common observation among the various companies is that for the achievement of the full competitive status, the companies integrate its comprehensive business strategy to the manufacturing strategy. The distribution links with good free – flow are very much necessary for the business efficiency but a very important point to be kept in mind here is that these good, free – flowing distribution links play a very vital role towards the business efficiency, only when they have full support of the manufacturing process, that responds as needed to the changing conditions and factors.
The companies must possess the following in order to create a manufacturing strategy linked to the comprehensive business strategy and the process that is continuously aligned with the current requirements –
1. Applications and the technology for making a connection with the ‘plan – execute – sense – respond – learn’ operations, should be leveraged very intelligently.
2. Link the factory processes, production equipment and the factory systems to the supply chain operations.
Fat includes the inventory, capacity, labor and this fat drains continuously – as a result of this the companies in which the manufacturing capabilities are not able to respond quickly to the variable demands, ultimately become very vulnerable in the nature.
In the scenario existing today, the companies mainly prefer to integrate all of their manufacturing activities and then connect them with the comprehensive business strategy. It has been observed that the companies which are able to lead their peer groups surely show much faster asset velocities. This is called as the Return on Assets (ROA). The ROA can be referred to as the most important and essential performance indicator and also helps in the measurement of the manufacturing effectiveness. ROA is a direct function of the profit margin and the asset turns. There are mainly two types of the asset turns and these can be categorized as follows –
1. Fixed Asset Turns –
a. Refer generally to the machinery and the equipment on the shop floor.
2. Variable Asset Turns –
a. Refer to the inventory impacted by the manufacturing.
b. This inventory can be the raw material (RM), the finished goods (FG) or the work in progress (WIP).
Although a lot is said and some amount has also been done in the field of the manufacturing – but it is not that easy to produce stuff that is near to the real time demand and the driving forces that are responsible for the increase in the variability and ultimately that help in the achievement of the adaptive capabilities can be summarized as follows –
1. Fragmented manufacturing facilities.
2. Mass customization.
3. Shrinking the life – cycles.
4. Response velocity.
5. Zero defect quality.
Meaning of strategy
The concept of the strategy comes from the military, so usually it is said that it has been borrowed from the military and is used in the business.
First of all the strategies, like in the military, in business bridges the gap present between the policy and the tactics. Then both the strategy and the tactics work together and also help in bridging the gap between the ends and the means. Strategy is actually considered as a element present in a four – part structure, first are the ends that are to be obtained, second are the strategies for obtaining them, third are the tactics and the last are the resources.
According to George Steiner (a professor of management and one of the founder members of The California Management Review), a strategy is “that which the top management does and which is of great importance to the organization. Strategy refers to the basic directional decisions that are to the purposes and the missions. Strategy consists of the important actions necessary for the realization of these directions.”
So now strategy can be defined as the term referring to a complex web of thoughts, ideas, insights, experiences, goals, expertise, memories, perceptions and the expectations that are responsible for providing the general guidance for carrying out the specific actions in pursuit of the particular ends.
Key steps towards a Strategic Plan
1. The vision
a. Can be presented as a pen picture of the business in three or more year’s time in terms of its likely physical appearance, size, activities etc.
2. The mission
a. Depicts the nature of a business.
b. Indicates the purposes of the business.
3. The values
a. Governs the operations of the business.
b. Addresses the relationships with the society at large, customers, suppliers, employees, local community and also the other stakeholders.
4. The objectives
a. Decided in terms of the results that are required to be achieved.
b. Can relate to the expectations and the requirements of the entire major stake – holders.
5. The strategies –
a. Acts as the guidelines by which the mission, objectives etc may be achieved.
b. Can cover the business as the whole.
c. Can relate to the primary matters in the key functional areas.
6. The goals –
a. Act as the specific interim or the ultimate time based measurements to be achieved by implementing strategies in pursuit of the company’ s objectives.
b. Should be quantifiable, consistent, realistic, and achievable.
c. Can relate to the factors like market, products, finances, utilization etc.
7. The programs –
a. Set out the implementation plans for the various essential strategies.
b. Should cover resources, objectives, time – scales etc.
In general terms, manufacturing strategy can be defined as the set of the co – coordinated objectives and action programmes that are applied to a firms manufacturing function and aimed at securing the medium and long term, sustainable advantage over that firm’s competitors.
Manufacturing strategy generally involves issues like the following –
1. Manufacturing capacity
2. Production facilities
3. Use of the technology
4. Vertical integration
6. Production planning/materials control
Procedure for the formulation of the manufacturing strategies is
Hill Methodology –
a. Provides a connection between the different levels of the strategy making.
b. The first step involves the understanding of the long term corrective objectives of the organization.
c. The next step involves the development of the marking strategy in order to achieve the corporate objectives.
d. The third step is the translation of the marketing strategy into the ‘competitive factors’ which are further split into the ‘order winners’ and the ‘order qualifiers’.
e. The fourth step is the selection of the manufacturing process.
f. This selection depends on the volume/variety analysis ‘structural feature’.
g. The last step is selecting the ‘infrastructural features’ of the manufacturing process.