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A competitive company strives to provide the strongest possible results in the outputs it must have to qualify for its market. To do so, the business owner concentrates efforts on the one or two outputs that will give the company an order-winning edge over its competitors.
How does this relate to strategy for SMEs? Manufacturing strategy can be described simply as specific requirements for production. When a formal manufacturing strategy exists, decisions follow a clean and logical pattern because there is a solid foundation to work from. When there is no strategy, the pattern is erratic and unpredictable. The essence of manufacturing strategy is to formulate explicitly how decisions will be to help the organization achieve a long-term advantage over its competitors.
A manufacturing strategy is comprised of a number of decisions within different areas supporting a company’s competitive advantage/s. To formulate an appropriate manufacturing strategy, the content needs to be well thought through, as well as widely accepted within the company. Content is usually split into competitive priorities and decision categories. Competitive priorities describe the targets the company aims for, while decision categories relate to the decisions that lead to achieving these targets.
Common competitive priorities include quality, delivery, flexibility and cost of a product. Frequent decision categories relate to production process, including process technology, capacity, facilities, vertical integration, quality, human resources, organization and production planning and control.
Key components in developing a manufacturing strategy should address the following:
The process to create a manufacturing strategy typically includes the following steps:
Our experience with SME’s as it relates to whether they have a documented manufacturing plan / strategy.
When the topic of manufacturing strategy is raised with small to medium size manufacturers, we find there is no formal written document they can produce. Rather, it resides in the senior stakeholder’s heads. When you question SME leaders further, it becomes apparent the plan is interpreted as a large comprehensive and detailed document. This response and interpretation are justified, as a documented manufacturing strategy or plan is not on the radar of most senior stakeholders. This isn’t because senior stakeholders don’t see the value of a plan. It has more to do with the organization’s capabilities.
If you dig a little deeper, you’ll find that SMEs often struggle with the formulation stage of the process, which speaks to the need for a simpler process. To date, mainly large companies have been aware of the role of manufacturing for competitiveness and thus have formulated manufacturing strategies. As a result, many of the frameworks that exist are for larger companies and are too complicated to use in smaller companies.
The need for a manufacturing strategy development / formulation process and framework is critical for SMEs. Research has uncovered that a key enabler in developing capability and capacity in this area is a tool that can facilitate the required process and thinking. Such a tool provides significant value for both short and long term strategy development.
An additional challenge for these smaller manufacturers are resources to create the plan. Typically SMEs don’t have the type of skills or capacity to develop the plan internally. This is where a relationship with a service provider can help with the integration. If done properly with an external partner, the skills and capacity can eventually be built internally.
In the absence of a formal process or approach, senior stakeholders or owners may want to challenge themselves to document their strategy on paper We would suggest that this plan be limited to 1-5 pages. It may not be fully developed or include a thorough examination of the factors listed above, however it is a start. This initial plan can serve as both a short-term solution and the starting point for a more robust process in the future.
Business models for manufacturing have changed and will continue to change with new technologies, management approaches and market demands. It is important to think through how you want your manufacturing operations to be configured to meet your customers’ requirements and remain relevant.
In summary, the benefits of developing a documented manufacturing strategy include:
Having a formal documented manufacturing strategy is imperative for manufacturers in an ever changing landscape.
To learn more, contact Derrick Somers at 647.943.4053 or
[email protected], or your local MNP Advisor.
Title -Manufacturing Strategy: How to Formulate and Implement a Winning Plan, Author – John Miltenburg, Productivity Press
Related Topics:Business Performance
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