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7/28/2019 M Strategy1
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Manufacturing Strategy
Lecture 1
Professor Bernard HonProfessor Bernard HonSchoolSchool of Engineeringof Engineering
The Lecture ProgrammeThe Lecture Programme
Review of manufacturing
Competitive strategies Product & manufacturing analysis
Formulation of manufacturing strategy
Benchmarking
Global manufacturing.
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AssessmentAssessment
Module specifications published in VITAL.
Assessment by examination only.
One 2 hour paper, answer 3 out of 5 questions.
Outline of Lecture 1Outline of Lecture 1
The nature and importance of manufacturing.
Common problems of manufacturing industry. Opportunities and threats in manufacturing.
Global manufacturing issues.
Vital topics in manufacturing.
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What is Manufacturing?What is Manufacturing?
The use of machines, systems and humanresources to transform raw materials andsupply chain inputs into a value-addedsaleable product.
What is Manufacturing today?What is Manufacturing today?
Providers of lifetime service around a
manufactured product. A blurring of the distinction between
manufacture and services, leading to,
away from the initial sales revenue tolifetime revenue.
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Implications of Extended DefinitionImplications of Extended Definition
To lock out competitors
To lock in customers
To increase the level of differentiation.
Vandermerwe and Rada, 1988
Living in a Manufacturing WorldLiving in a Manufacturing World
Alarm clock electric shower towel toothbrush, comb, contact lens, glasses,clothes, watch, trainers, toaster, egg slicer,
knife and fork, coffee cup, cordless kettle,radio, TV, remote control, purse, creditcards coins mobile hone ba holdallbackpack, bus, car, train, lift, computer,digital projector, screen, cable, 13 ampplug, light bulb, pen, notebook.
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SIC Codes for Manufacturing
Importance of ManufacturingImportance of Manufacturing
The UK is the worlds sixth largest manufacturermeasured b out ut.
150 billion per annum to the economy.
Contributes 14% of UKs national output (21% in
1997).
Accounts for over 50% of UK exports.
Direct employment of just under 3 million people, i.e.,11% of all employment.
CBI estimated a further 3 million jobs through thesupply chain and service industries.
Total number of manufacturing enterprises is 158,528with a combined turnover of 447.2 billion in 2003.
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Importance of ManufacturingImportance of Manufacturing
Contributes 14% of UKs national output (21% in1997 .
Accounts for over 50% of UK exports.
Direct employment of just under 3 million people, i.e.,11% of all employment.
supply chain and service industries.
Total number of manufacturing enterprises is 158,528with a combined turnover of 447.2 billion in 2003.
Contribution of Different Sectors to the Total
Manufacturing Value Added in 2003
21855
16565
6145 Food products, beverages and tobacco
Textiles and textile products
4222
375
2662
18830
15598
Leather and leather products
Wood and wood products
Pulp, paper, paper product s, publishing
printing
Coke, refined petroleum product s and
nuclear fuel
Chemicals and products and man-made
fibres
Rubber and plastic products
Non-metallic mineral products
2609
15188
76675340
14782
11722 Basic metals and fabricated metal
products
Machinery and equipment not elsewhere
classified
Electrical and opt ical equipment
Transport equipment
Manufacture not elsewhere classified
ESRC
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Contribution of Industry to GDP
35
% GDP 1997
15
20
25
30
0
5
Japa
n
China
Italy
Can
ada
Germ
any
Indi
a
Franc
e UK
USA H
K
Size of Manufacturing Sectors
16
4
6
8
10
12
0
Food&Drink
Elect.Eng
Papers&Printing
Chemicals
MechEng.
Textiles
MotorVehicles
MetalProd.
Minerals
Aerospace
Metal
Others
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Company Size in Manufacturing Industry
40
50
60
70
80
0
10
20
u nd er 20 20-49 50-99 100-199 200-499 500-999 1000+
Common Problems of Manufacturing IndustryCommon Problems of Manufacturing Industry
Lon lead times for new roduct introduction and
change
Excessive stocks and work-in-progress
Low capital turnover ratio, i.e., too much under-utilised equipment
Too much non-value-added activities in offices and
shop floors
Low productivity due to inadequate planning and lowlevel of investment.
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Manufacturing Investment in the UKManufacturing Investment in the UK
Total Mfg Investment B Mfg as a % of total business investment
8
10
12
14
16
18
0
2
46
2001 2002 2003 2004
ESRC
Manufacturing as Percentage of GDP from1973-2000
OECD, CNS, US BEA
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Present/Future Market Characteristics- 1Present/Future Market Characteristics- 1
Shorter product life cycle.
Emphasis on new product development.
Globalization.
Single European currency.
Mobility of transnational companies.
Present/Future Market Characteristics- 2Present/Future Market Characteristics- 2
Extensive practice of outsourcing.
Agility, flexibility and reconfigurability.
Increasing protectionism.
Volatile exchange rate for pound sterling.
Extended and virtual enterprises.
Advanced technology widely available.
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VW Beetles 1938-2003
The product life cycle of modern cars, unlike VWBeetles, is about 6-7 year.
Paradigm Shift in Manufacturing
Transfer Line
Group Technology
FMS
J IT
Holonic Systems?
Factory of the Future?
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Opportunities and Threats in ManufacturingOpportunities and Threats in Manufacturing
EconomicFactors
Demographyand
Lifestyles
TheEnvironment
ExternalThreats
MarketFactors
Technology Market, Product andService Opportunities
External Threats to ManufacturingExternal Threats to Manufacturing
EconomicFactors
The Credit Crunch
Financial volatility
US deficit effect
Demographyand
Lifestyles
Fewer supporting technicians
More demanding work patterns
Greater mobility of workers
TheEnvironment
Public and government pressure
Resources depletion
ExternalThreats
ro uc an process po u on
MarketFactors
More competition
Deregulated public procurement
TechnologyLoss of access
Substitution
Disruptive technology
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World Competitiveness ScoreboardWorld Competitiveness Scoreboard
Switzerland Hong Kong SAR21 1111
WEF
Singapore
Sweden
Finland
USA
Canada
Taiwan
Qatar
Belgium
5
4
6
1
2
3
4
5
10
17
26
19
12
13
14
15
GermanyNetherlands
Denmark
Japan
UK
orwaySaudi Arabia
France
Aust ria
Austral ia
WEF 2008 and 2011
78
3
9
12
67
8
9
10
1527
16
14
18
1617
18
19
20
Comparison of Manufacturing Labour Costs
$/hr
10
15
20
25
0
5
GER JPN USA FRA UK SGP SKO HK HUN PRC
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The Worlds Top Ten Banks by Profit- 2011The Worlds Top Ten Banks by Profit- 2011
Pre-tax ProfitB
China Construction BankJ P Morgan ChaseBank of ChinaHSBC
.26.44824.85921.46319.037
naChinaUSAChinaUK
Agricultural Bank of ChinaBNP ParibasBanco Santander
Goldman Sachs
.18.23017.40616.07912.892
ChinaFranceSpainUSA
The Banker, July 2011
International Comparison of Robot Usage
Unit ('000)
200
250
300
350
400Japan
Europe
US
0
50
100
1990 1994 1998 2002
FT 5/10/99
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Opportunities in ManufacturingOpportunities in Manufacturing
EconomicFactors
Dynamic Pacific rim
Single European UnionGlobalization
Demographyand
Lifestyles
Affluent population bulges and ageing
Need for Quality of Life product and
services
TheEnvironment
Preferences for green products
New EOL Directives
Market, Product andService Opportunities
MarketFactors
More open, multi-niche marketsHigh value products and services growth
Mass customisationShorter life cycles
TechnologyMulti-technology products
Intensification
EU Member States
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European UnionEuropean Union
Austria 8.3Belgium 10.5
Lithuania 3.4Luxembourg 0.5
Population, m
.Cyprus 0.8Czech Republic 10.3
Denmark 5.4Estonia 1.3Finland 5.3France 60.9
.Netherlands 16.3Poland 38.1
Portugal 10.6Romania 21.6Slovakia 5.4Slovenia 2.0
Germany 82.5
Greece 11.1Hungary 10.1Ireland 4.2Italy 58.8Latvia 2.3
Spain 43.8
Sweden 9.0United Kingdom 60.4EU27 491.0
2008
Distribution of World Population
Country size in proportion to Population. www.worldmapper.org
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Distribution of World GDP
Country size in proportion to GDP. www.worldmapper.org
Recent StudiesRecent Studies
Competing with the Worlds Best, CBI, 1991
Can Europe Compete, Financial Times, 1994 Technology Foresight, OST, 1995
Manufacturin 2020 2001
UK Manufacturing Strategy, 2004
High Value Manufacturing, 2008
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Trends in ManufacturingTrends in Manufacturing
Global manufacturing and outsourcing.
Strong emphasis on supply chain network.
Increase focus on service package.
Management of change and innovation.
Impact of ICT.
. New EU End-of-Life and Sustainable Development
directives.
Miniaturization.
Instructions Schedules Classical Key PerformanceIndicators
Systems Approach to Manufacturing
Manufacturing
System
Materials
Components
Tooling
Staff
Products
Waste
Scrap
DataAnalysis
Production
Output
Time
Yield
Time
Machines Test equipmentCost
per unit
Time
Byrne, G, 2009