Strategic Clarity in Manufacturing

Author : Carlos Gaspar

Clarity in Manufacturing Strategy refers to the establishment of premises, guidelines, and action plans to properly use the company's resources, aiming at sustaining the competitive strategy in the long term.

There are five factors traditionally recognized as the “competitive advantages directly impacted by Manufacturing. We consider them: 

  1. price (with low cost)
  2. product quality
  3. agility of delivery
  4. reliability
  5. flexibility

What is a Clear Manufacturing Strategy?

The definition of a Clear Manufacturing Strategy can be understood as a structured “path” of decisions that are taken with the purpose of directing the manufacturing activity to the performance that is desired. There are several long, medium, and short-term decisions, relating to the manufacturing system that directly affect the company's competitive position in the market. These issues include: 

  • choosing the location of the manufacturing facilities
  • identifying the most appropriate process technology and the physical arrangement of resources
  • going through the organization philosophy
  • defining the human resources policy, supply, quality, and maintenance systems until achieving inventory planning and activity scheduling. 

It is not simple to achieve a clear strategic alignment. One unsuccessful alignment will impact the results. 

It can be a challenge to implement these decisions in an integrated, consistent, and oriented way towards the established priorities and complex to achieve given the number and variety of decisions involved. This complexity makes some of the most prominent specialists in the area suggest the adoption of management models that lead to focused manufacturing strategies, aiming to reduce the dimension of the problem and thus favor a better performance of the system through specialization, learning and waste elimination. Given this, it is recommended to have:

  • fewer and clear objectives
  • restricted selection of products to be manufactured
  • the choice and use of individualized process technologies
  • the adoption of management technologies suited to the characteristics of the business

The reflection for decision makers is: What is the established culture that directs and promotes a clear and aligned strategy with manufacturing and the business?

Decisions in the context of manufacturing, an example

A simple way of understanding the set of decisions and choices related to manufacturing can be organized into 3 categories:

  1. Hardware: Physical aspects (installations, machines, among others) or parameters related to them.
  2. Peopleware: The grouping of decisions of a more methodological or organizational nature where human resources are the main object or are involved. The second group brings together a list of decisions related to scheduling and material flow control systems. 
  3. Software: are comparatively situated in a short-term planning horizon supported by production management methods, tools and technologies (i.e. LEAN, TPM, Six Sigma, MPS, Theory of Constraints, Integrated Management by the current Industry 4.0, among others. other management philosophies.)

In the figure below, you can see which questions help us address and map the decision making.


The strategic role of short-term decisions

There is a growing recognition of the potential of “management software” in the competitiveness of companies. However, the strategic content of short-term decisions is often neglected. Sometimes these are viewed as merely operational decisions or “means” activities rather than an “end” activity with direct repercussions on the company’s performance in the market. Many companies still do not consider this strategic perspective when they decide to invest in improving processes and production control systems. A careful analysis of the characteristics of the production process is often neglected in a performance assessment and the careful analysis of the business characteristics and its production processes implemented to support the choice of the management system. As a result, it is common to see “fads” and conventional culture prevail over technologies that are much more appropriate due to the apparent benefits advertised. 

Nevertheless, evidence suggests that a company's competitive performance (especially regarding time-related factors such as punctuality and speed) is directly affected by these short-term decisions. Therefore, the key question that should guide these choices is to what extent does the management system strengthen (or weaken) the company's competitive position in the face of defined strategies and existing market opportunities? Each of the different parts or modules of a production planning and control system (flow management, capacity, materials, activities, people, partnerships, and suppliers) needs to be evaluated, designed with strategic needs in mind, and operational aspects of the production structure in question. 

How Can Performance Solutions by Milliken Help?

It is important to assess the current situation to identify the main points that strengthen the company's business, as well as understand the gaps identified in these sets explained above that need short-, medium-, and long-term countermeasures in a way that helps to establish Strategy Clarity in Manufacturing.

Performance Solutions can help through its MPS (Milliken Performance Solutions) Assessment process. The Performance Assessment will provide an understanding of the current situation – organization and activities used to conduct operations. The assessment will establish a baseline and enable the Performance Solutions team to develop cost justification, an implementation plan, and performance goals to direct future activities