BEYOND WORLD-CLASS: THE NEW

MANUFACTURING STRATEGY

- Robert H. Hayes and Gary P . Pisano

Companies need strategies for

building critical capabilities to

achieve competitive advantage.

Goal Of U.S Manufacturing Companies

To develop & implement a

manufacturing

strategy

“ “

Methods Adopted

JIT TQM DFM Lean Manufacturing Reengineering Benchmarking Ubiquitous Team Approach

Drawbacks of the Strategies

Abandoning central concept of strategy.

Illicit focus on form rather than substance.

Assumption of the market environment being stable

Overcoming the drawbacks Integrating manufacturing strategies

with: Core Competences Learning Organization.

Focusing on substance rather than form only.

Early Manufacturing Strategies Until 1980’s- manufacturing in terms of a

paradigm. The dogma. 1969- Wickham Skinner Focused factory Strategic Flexibility Strategic fit: Two companies may adopt

similar strategies and production processes, but one can end up being far more successful!

Japanese Manufacturing Strategies

Japanese companies began in the late 1970’s to assault world markets in a number of industries with increasing ferocity.

The Japanese produced products similar to those of the western manufacturers.

They used the same marketing strategies.

Yet they conducted better business compared to the western companies.

LEAN APPROACH TO

MANUFACTURING

Are Trade-Offs really necessary? Trade offs mean choosing between low

costs, high quality or fast response approaches, Since one production unit cannot follow all these.

Lean manufacturing helps eradicate trade offs. It uses half of the efforts and resources that mass manufacturing uses.

Do Factories Have To Be Focused? Japanese companies were restricted

when it came to product variety in the 1970’s but many elite Japanese companies embarked on an orgy of product proliferation during the 1980’s

Lean manufacturing was flexible enough to incorporate various products within one factory or one unit.

Is Strategic Fit Enough?

Once a company settled on a competitive strategy, its manufacturing organization should develop the specific capabilities required to implement that strategy.

The Japanese were using the most flexible form of manufacturing thus, were rapid changers.

Japanese companies had apparently found an approach to manufacturing uniformly superior to the “Taylor system”.

The Japanese approach has brought around a full circle from the days of Frederick Taylor: once again, we have settled for “one best way” to compete.

What role is left for

manufacturing strategies when we have settled on “one best

way” to compete?

• During the 1960’s and 1970’s the strategy was to find an attractive position in study and build a competitive advantages.

• Later both competitive and manufacturing strategies became outdated.

•Centralizing production vs. Product Innovation.

What is the problem then ? It is the way how managers apply these

practices to the organizations problems.

Managers define their problems in terms of starting points and end points.

Problem in terms of Time Periods.

Equating an improvement in manufacturing capabilities with a manufacturing strategy.

Failing to recognize the new practices build new capabilities that can form the basis of a new manufacturing strategy.

After major manufacturing effort. Just when they appear to have solved a

problem, they encounter new problems that require new approaches.

Such changes priorities simply reflect the need for continuous improvement. EG

Companies often solve one

problem only to face new ones, whose solutions

contradict programs just put

in place.

Key role for a company’s manufacturing strategy is to guide the selection of improvement programs.

“Just In Time” (JIT) or “Manufacturing Resources Planning” (MRS) .

Manufacturing Improvement

Programs “MEANS NOT

ENDS”

Problem Solving

InStatic

frameworkV/S

Dynamic Setting

Long-Term Strategies

Continuous differentiation from it competitors.

Proper selection & implementation of improvement programs to develop unique operating capabilties

How to create such a strategy?

An idea that the primary way manufacturing adds value by doing certain things better than the competitor.

Developing a plan for building the capabilities it wants acquire.

Conclusion