The different Stages in Manufacturing Strategy

2056 words (8 pages) Essay in Management

18/04/17 Management Reference this

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1. Introduction

Manufacturing companies, particularly those in the United States, are today facing intensified competition. For many, it is a case of simple survival. What makes challenge so difficult is that the “strategy” of their fiercest competition is based not so much on better product design, marketing ingenuity, or financial strength as on something much harder to duplicate. Before describing the stages we must know about the framework First stages are not mutually exclusive, second it is difficult, if not impossible, for a company to skip a stage Third although it is appealing in theory for companies to move as a single entity through these stages With these three points we will give special attention to all the stages.

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2. Stages in Manufacturing Strategy

2.1 Internally Neutral

This lowest stage represents an “internally neutral” orientation toward manufacturing: Top managers regard the function as neutral incapable of influencing competitive success .Consequently, they seek only to minimize any negative impact it may have .They do not expect manufacturing to make a positive contribution Stage 1 organization typically view manufacturing capability as the direct result of a few structural decisions about capacity, facilities, technology and vertical integration .Managers attach little or no strategic importance to such infrastructure issues as work force policies, planning and measurement systems and incremental process improvements .When strategic issues involving manufacturing do arise ,management usually calls in outside experts in the belief that their own production organization lacks the necessary expertise

When faced with the need to make a change in facilities, location, or process technology, their production technology, their production mangers run into top level insistence to remain to flexible and reactive so as not to get locked into the wrong decisions. Similarly, they are expected to source all manufacturing equipment from outside suppliers and to rely on these suppliers for most of their information about manufacturing technology and new technological developments

On balance, Stage 1 organization thinks of production as a low-tech operation that can be staffed with low skilled workers and managers. They employ detailed measurements and controls of operating performance, oriented to near-term performance to ensure that manufacturing does not get too far off-track before corrective action can be taken. The aim is not to maximize the function’s competitive value but to guard against competitively damaging problems.

Not surprisingly, the top managers of such companies try to minimize their involvement with, and thus their perceived dependence on manufacturing. They concern themselves primarily with major investment decisions, as viewed through the prism of their capital budgeting process .As a result, they tend to regard their company’s production facilities and process as excellent of a series of once-and-for all decisions. They are uneasy with the notion that manufacturing is a learning process that can create and expand its own capabilities-and may therefore not be totally controllable. Hence, they will agree to add capacity only when the need becomes obvious and, when they do .prefer to build large general-purpose facilities employing known-that is, safe-technologies purchased from outside vendors. Eager to keep the manufacturing function as simple as possible, they feel justified in thinking that “anybody” ought to be able to mange manufacturing,” an attitude reflected in their assignment of people to that department.

This stage 1view occurs both in companies whose mangers see the manufacturing process as simple and straightforward and in those whose managers do not think it likely to have much impact on overall competitive position. Many consumer products and service companies fall into this category. So, too do a number of sophisticated high-technology companies, which regard product technology as the key to competitive success and process technology as at best, neutral.

Experience shows, however, that the competitive difficulties encountered by many U.S consumers electronics consumers and electrical equipment manufacturers have their roots in the attitude that manufacturing’s role is simply to assemble and test products built

From purchased components. Even in these high-tech companies, the manufacturing operation can appear clumsy and unprepared when with such straightforward task as providing adequate production capacity helping suppliers solve problems, and keeping equipment and systems up-to-date. With a self-limiting view of what manufacturing can do, mangers find it difficult to upgrade their labour-intensive, low technology process involving when products involving a new generation of technology appear. Nor can their unfocused, general-purpose facilities compete effectively with the highly focused, specialized plants of world-class competitors.

2.2: Externally Neutral

The second stage in our progression also represents a form of manufacturing “neutrally”, but Stage 2 companies seek a competitive or “externally” neutrality on the manufacturing dimension rather than the internal neutrality of stage 1.Typified by-but not restricted to companies in tradional, manufacturing-intensive industries like steel, autos, and heavy equipment, stage 2 organisations seek competitive by:

Following industry practise in matters regarding the work force, equipment purchases, and the timing and scale of capacity additions .Avoiding, where possible, the possible the introduction of major, discontinuous changes in product or process. In fact changes tend to come-if at all-from competitors well outside the mainstream of an industry, Treating capital investments in new equipment and facilities as the most effective means for gaining a temporary competitive advantage. Viewing economies of scale related to the production rate as the most important source manufacturing efficiency. As noted, this approach to manufacturing is quite common in America’s smokestack industries, most of which have an oligopolistic market structure and a well-defined set of competitors who share s vested interest in maintaining the status quo. It is also common in many companies engaged in electronic instruments assembly and pharmaceutical production, which consider manufacturing to be largely standardized and unsophisticated and which assume product development people can be entrusted with designing process changes whenever they are needed. Like those in stage1, Stage2 companies-when they make an improvement in their process technology-rely on sources outside of manufacturing; unlike companies in stage1, however, they often turn to their own R&D labs as well as to outside suppliers.

Top managers of stage 2 companies regard resources allocation decision as the most effective means of addressing the major strategic issues in manufacturing. Offensive investments to gain competitive advantage are usually linked to new products; manufacturing investment are primarily defective and cost-cutting in nature They are usually undertaken only when manufacturing’s shortcomings have become obvious

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2.3. Internally Supportive

Stage 3 organisations expect manufacturing actively to support and strengthen the company’s competitive position. As noted in abstract the contributions include: Screening decisions to be sure that they are consistent with the organization’s competitive strategy. Translating that strategy into terms meaningful to manufacturing personnel. Seeking consistency within manufacturing through a carefully thought-out sequence of investments and systems changes over time. Being on the lookout for longer-term development and trends that may have a significant effect on manufacturing’s ability to respond to the needs of other parts of the organization. Formulating manufacturing strategy, complete with plant charters and mission statements, to guide manufacturing activities over an extended period of time.

Companies often arrive at stage 3 as neutral consequences of both their success in developing an effective business strategy, based on formal planning processes, and their wish to support that strategy in all functional areas. They want manufacturing to be creative and to take a long term view in managing itself. When push comes to shove, however the majority of them act as if such creativity is best expressed by making one or two bold moves-the introduction of robots, just in time, or CAD/CAM ,for example-while they continue to run most of the function as a stage 2 activity. The beer industry is good case point: After building a number of new, large scale facilities in the 1970’s and rationalizing existing operations, it began to drift back into a “business as usual” attitude toward the manufacturing function .While stage2 companies at times also pursue advances in manufacturing practise, they tend to regard these in strictly defensive terms: as a means of keeping up with their industry. Stage 3 companies, however. View technological progress as a natural response to changes in business strategy and competitive position.

Another characteristic of stage 3 organizations is that their manufacturing managers take a broad view of their role by seeking to understand their company’s business strategy and the kind of competitive advantage it is pursuing. Some of these managers even follow career paths that lead to general management. Notwithstanding the potential for advertisement the greater quality of titles and pay across all the functions in stage 3companies, manufacturing managers are expected only to support the company’s business strategy. not to become actively involved in helping to formulate it

2.4. Externally Supportive

The fourth and most progressive stage of manufacturing development arises when competitive strategy rests to a significant degree on a company’s manufacturing capability. By this we do not mean that manufacturing dictates strategy to the rest of the company but only that strategy derives from a coordinated effort among functional peers- manufacturing very much among them. The role of manufacturing in stage 4 companies is “externally supportive”, in that it is expected to make an important contribution to the competitive success of organization. The leading companies in process-intensive industries, for example, usually give manufacturing a stage 4 role, for here the evolution of product and process technologies is also so intertwined that a company virtually must be in stage 4 to gain a sustainable product advantage.

What then is special about Stage 4 companies?

They anticipate the potential of new manufacturing practices and technologies and seek to acquire expertise in them long before their implications are fully apparent. They anticipate the potential of new manufacturing practises and technologies and seek to acquire expertise in them long before their implications are fully apparent. They give credibility and influence to manufacturing for it to extract the full potential from production-based opportunities. They place equal emphasis on structural activities as potential sources of continual improvement and competitive advantage. They develop long range business plans in which manufacturing capabilities are expected to play a meaningful role in securing the company’s strategic objectivities. By treating the manufacturing function as a strategic resource-that is as a source of strength by itself as well as a means for enhancing the contribution of other functions -they encourage the interactive development of business, manufacturing and other functional strategies. Stage 4 organizations are generally of two types.

The first includes those companies like those companies like Emerson electric, Texas instruments, Mars and Blue bell, whose business strategies place primary emphasis on a manufacturing based competitive advantage such as low cost. In fact, these companies sometimes regard their manufacturing functions as so important a source of competitive advantage that they relegate other functions to a secondary or derivative role-an action which can be just as dysfunctional as relegating manufacturing to a reactive role. The other type of stage 4 company seeks a balance of excellence in all its functions and pursues “externally supportive” Stage 4 roles each of its integrated functions. We describe in detail two such organizations in alter section of this article

In both types of organization, manufacturing complements its traditional involvement in the capital budgeting process with a considerable amount of qualitative analysis to compensate for the blind spots and biases inherent in financial data. In addition, there are extensive formal and informal horizontal interactions between manufacturing and other functions that greatly facilitate such activities as product design, field service, and sales training. Manufacturing’s direct participation in formulating overall business strategy further enhances this functional interaction. Finally, equally with the other function, manufacturing is a valued source of general management talent for the entire organization

3. Conclusion

Manufacturing can contribute significantly to the competitive success of any business. But it takes managers with determination, vision, and the ability to sustain focused effort over a long period of time and often in the face of stiff organizational resistance. The industrial race is no longer decided by a fast and furious last minute cavalry charge. It is a long patient, persistent process of working together to clear the land, cultivate the fields, and continually extend the frontiers of an organization’s capability ties.

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