Strategic Framework For Manufacturing
A company needs a ‘strategy’ that specifies the kind of competitive advantage it seeks in its market place and articulates how it shall be achieved. In today’s changing, challenging and competitive world, it is not enough for a company to have its goal to be as good as that of its toughest competitor, advanced equipment or the transfer of production to a low–wage area, rather, a need has arisen for ‘strategic flexibility’, better suited to respond to the market requirements of the time than to pursue a mere generic approach to competitive success.
It is, thus, obvious that the key to long term success of a company is being able to do things better than your competitors, besides selecting and creating operating capabilities in anticipation of market demands.
Mass Customization – Developing Unique Operating Capabilities
Providing remarkable services to customers is imperative in order to perform better than the competitors. One of the programs invented to meet every customer’s request is mass customization. This attempt has been on one hand, embraced as providing a unique value to the customers efficiently and on the other as a strategy that can produce unnecessary cost and complexity.
Later, four distinct approaches to customization namely - collaborative, adaptive, cosmetic and transparent have been identified, which provided a framework for companies to design customized products and to support business processes. Each of the approaches is important in its own way and differs on the conditions under which each should be employed.
Collaborative customization is apt for businesses which deals with customers who cannot easily articulate their requirements, and grow frustrated when forced to select from a plethora of options. The adaptive approach is appropriate for businesses whose customers want the product to perform in different ways in different situations. The cosmetic approach is appropriate when customer’s usage of a product is the same but differs only in how they want it to be presented. The transparent approach to customization is appropriate when customers’ specific needs are easily predictable.
The various combinations of the approaches to customization have to be explored and a company has to come up with the
combination that would create customer unique value at the lowest possible cost.
Product Development – A Way to Survive Competition
Creating a sustainable product development competitive advantage is the most effective organizational capability, which will have a greater impact on market share and the rate of share growth than other organizational capabilities. The company has to be adept at creating new products and extensions of them to be competitive, according to the changing market conditions and the product life cycle, a factor popularly known as time-to-market and to deliver this capability,being productive and timely is imperative. The rise in customer expectations in this competitive environment has made quality and accuracy (in design), a virtue of design, which also determines a business competitive status.
With the help of processes like Integrated Product Development and Sequential Development, smooth functioning is enabled, accurate budget allocations are made and the risk of performance issues at the functional block level are minimized. During product development stage, supply chain management plays a key role not only in operations to deliver new product, but also in adopting innovative processes such as IPD.
Technology Strategy – A Competitive Advantage for a Diversified Corporation
In a diversified corporation, it is essential for a corporate technology strategy to be an integral part of corporation’s business strategy. In fact, it has become an economic imperative of late. The developed strategy has to be continuously evolving and also must adapt to the changing competitive patterns. A well-structured strategy gives an opportunity for senior managers of the organization to understand the threats and opportunities faced by the corporation, which in turn helps in improving efficiency, effectiveness and profitability of the corporation (or business).
Human Capital Strategy
Human capital is the most valuable and important asset held by an organization today. Managing human capital effectively is directly proportional to the success of the company and an effective management in turn requires a well-formulated strategy. The strategy of human capital is based on two principles –
Quite a number of principles related to human capital management were put forth by various organizations, aimed at managing human capital efficiently. GAO in April 1995 sponsored a 2-day symposium of 32 leaders from leading private and public organizations, to discuss the approaches of these organizations towards managing people. The principles – Value people as assets rather than coasts; hold managers responsible for achieving results instead of imposing rigid, process-oriented rules and standards; choose an organizational structure appropriate to the organization, rather than trying to make ‘one size fit all’; integrate human resource management into the mission of the organization; provide sustained leadership that recognizes change as a permanent condition were put across by the participating organizations as principles for effective human resource management. The human capital practices have to be evaluated and the process has to be continuous in order to achieve the organization’s strategic objectives.
Strategic Flexibility – In Uncertain Times
To succeed in today’s competitive environment, a set of robust strategies that can respond to any scenario that challenges a business or a corporation, is needed. However, formulating strategies for a business, to withstand disruptions is a herculean task and this does not come easily. Though strategies for maintaining flexibility is different for different businesses, depending upon the various factors that bring about change, few steps like – challenge complacency, employee empowerment, open lines of communication, collaboration through cross functional teams, transparency in information sharing, will by and large stand valid.
Global Sourcing – Globalization at its Best
Global sourcing, which is a way of sourcing goods and services from the global market, is one of those strategies that is drawing increasing attention from organizations. It aims at exploiting global efficiencies in delivering goods and services at reduced cost and it shouldn’t come as surprise that it has become an integral part of the strategic sourcing plan and procurement strategy of many organizations.
Global sourcing largely involves integrating and coordinating common items, materials, processes, technologies, designs and suppliers across worldwide buying, design and operating locations. The issues (or rather disadvantages) confronted by an organization while it progresses from domestic purchasing to global
sourcing are far outweighed by the advantages. Some advantages of global sourcing include expanding supply capacity, withstanding competition in a potential market, tapping into skills or resources unavailable domestically. Some key disadvantages include increase in monitoring and hidden costs associated with different cultures and time zones, longer lead times.
The Characteristics of Outstanding Global Sourcing
• Executive commitment to global sourcing
• Rigorous and well defined processes
• Availability of needed resources
• Integration through Information Technology
• Supportive Organizational design
• Structured approaches to communication
• Methodologies for measuring savings
Global sourcing which is a continuously evolving process reaps abundant benefits, if managed and supported properly. It offers the best opportunity to achieve a breakthrough in highly competitive industries. However, in order to achieve this, a thorough understanding of all aspects related to global sourcing, is required.
Six Sigma - An Approach to Quality
Six Sigma - a business management strategy is a data-driven approach and methodology for eliminating defects. To reach Six Sigma, a process must not produce more than 3.4 defects per million and this technique is far more advanced compared to other techniques like TQM, quality circles etc., as it focuses on defects per million. In order to achieve six-sigma, fine-tuning the existing systems alone is not sufficient. Rather, new methods and procedures should replace old ones existing in an organization. The techniques which were first formulated to improve the manufacturing processes are now being largely applied in other business areas. The Six Sigma DMAIC process (define measure, analyze, improve, control) is a five-step process for achieving the standards. The streamlining is started off by defining the project goals and customer deliverables, followed by measuring the process to determine current performance, analyzing the root causes of the defect, followed by improving the process by eliminating defects and lastly controlling future process performance.
Though there is another process known as DMADV process, most of the companies start implementing DMAIC process first, as it is considered the primary step to product/process improvement.
References
[1]. Robert H. Hayes and Gary P. Pisano, Beyond World-Class: The new manufacturing strategy, Harvard
Business Review, January-February 1994
[2]. James H. Gilmore and B. Joseph Pine II, The Four Faces of Mass Customization, Harvard Business Review, January- February 1997
[3]. John Kamauff, Robert D. Landel and Walter Sedlazek, Note on product development: A competitive edge for operations, Ivey Management Services, Version: (A) 2001-04-27
[4]. Thomas C. MacAvoy, Paul M. Hammaker, Technology strategy for a diversified corporation, University of Virginia Darden School Foundation, Charlottesville, VA, UVA-OM- 0659
[5]. Tom Cross, Senior Director of Executive Education, Human capital strategy, University of Virginia Darden School Foundation, Charlottesville, VA, UVAOB- 0848
[6]. Peter Jacobs, Five steps to thriving in times of uncertainty, Harvard Management Update, article reprint no. U0512A [7]. Robert J. Trent and Robert M. Monczka, Achieving excellence in global sourcing,
MIT Sloan Management Review, Fall 2005, Vol. 47 No.1
[8]. Hal Plotkin, Six Sigma: What it is and how to use it, Harvard Management Update, article reprint no. U9906C
A company needs a ‘strategy’ that specifies the kind of competitive advantage it seeks in its market place and articulates how it shall be achieved. In today’s changing, challenging and competitive world, it is not enough for a company to have its goal to be as good as that of its toughest competitor, advanced equipment or the transfer of production to a low–wage area, rather, a need has arisen for ‘strategic flexibility’, better suited to respond to the market requirements of the time than to pursue a mere generic approach to competitive success.
It is, thus, obvious that the key to long term success of a company is being able to do things better than your competitors, besides selecting and creating operating capabilities in anticipation of market demands.
Mass Customization – Developing Unique Operating Capabilities
Providing remarkable services to customers is imperative in order to perform better than the competitors. One of the programs invented to meet every customer’s request is mass customization. This attempt has been on one hand, embraced as providing a unique value to the customers efficiently and on the other as a strategy that can produce unnecessary cost and complexity.
Later, four distinct approaches to customization namely - collaborative, adaptive, cosmetic and transparent have been identified, which provided a framework for companies to design customized products and to support business processes. Each of the approaches is important in its own way and differs on the conditions under which each should be employed.
Collaborative customization is apt for businesses which deals with customers who cannot easily articulate their requirements, and grow frustrated when forced to select from a plethora of options. The adaptive approach is appropriate for businesses whose customers want the product to perform in different ways in different situations. The cosmetic approach is appropriate when customer’s usage of a product is the same but differs only in how they want it to be presented. The transparent approach to customization is appropriate when customers’ specific needs are easily predictable.
The various combinations of the approaches to customization have to be explored and a company has to come up with the
combination that would create customer unique value at the lowest possible cost.
Product Development – A Way to Survive Competition
Creating a sustainable product development competitive advantage is the most effective organizational capability, which will have a greater impact on market share and the rate of share growth than other organizational capabilities. The company has to be adept at creating new products and extensions of them to be competitive, according to the changing market conditions and the product life cycle, a factor popularly known as time-to-market and to deliver this capability,being productive and timely is imperative. The rise in customer expectations in this competitive environment has made quality and accuracy (in design), a virtue of design, which also determines a business competitive status.
With the help of processes like Integrated Product Development and Sequential Development, smooth functioning is enabled, accurate budget allocations are made and the risk of performance issues at the functional block level are minimized. During product development stage, supply chain management plays a key role not only in operations to deliver new product, but also in adopting innovative processes such as IPD.
Technology Strategy – A Competitive Advantage for a Diversified Corporation
In a diversified corporation, it is essential for a corporate technology strategy to be an integral part of corporation’s business strategy. In fact, it has become an economic imperative of late. The developed strategy has to be continuously evolving and also must adapt to the changing competitive patterns. A well-structured strategy gives an opportunity for senior managers of the organization to understand the threats and opportunities faced by the corporation, which in turn helps in improving efficiency, effectiveness and profitability of the corporation (or business).
Human Capital Strategy
Human capital is the most valuable and important asset held by an organization today. Managing human capital effectively is directly proportional to the success of the company and an effective management in turn requires a well-formulated strategy. The strategy of human capital is based on two principles –
- People are assets whose value can be enhanced through investment. As with any investment, the goal is to maximize value while managing risk.
- An organization’s human capital approaches should be designed, implemented and assessed by the standard of how well they help the organization achieve results and pursue its mission.
Strategic Flexibility – In Uncertain Times
To succeed in today’s competitive environment, a set of robust strategies that can respond to any scenario that challenges a business or a corporation, is needed. However, formulating strategies for a business, to withstand disruptions is a herculean task and this does not come easily. Though strategies for maintaining flexibility is different for different businesses, depending upon the various factors that bring about change, few steps like – challenge complacency, employee empowerment, open lines of communication, collaboration through cross functional teams, transparency in information sharing, will by and large stand valid.
Global Sourcing – Globalization at its Best
Global sourcing, which is a way of sourcing goods and services from the global market, is one of those strategies that is drawing increasing attention from organizations. It aims at exploiting global efficiencies in delivering goods and services at reduced cost and it shouldn’t come as surprise that it has become an integral part of the strategic sourcing plan and procurement strategy of many organizations.
Global sourcing largely involves integrating and coordinating common items, materials, processes, technologies, designs and suppliers across worldwide buying, design and operating locations. The issues (or rather disadvantages) confronted by an organization while it progresses from domestic purchasing to global
sourcing are far outweighed by the advantages. Some advantages of global sourcing include expanding supply capacity, withstanding competition in a potential market, tapping into skills or resources unavailable domestically. Some key disadvantages include increase in monitoring and hidden costs associated with different cultures and time zones, longer lead times.
The Characteristics of Outstanding Global Sourcing
• Executive commitment to global sourcing
• Rigorous and well defined processes
• Availability of needed resources
• Integration through Information Technology
• Supportive Organizational design
• Structured approaches to communication
• Methodologies for measuring savings
Global sourcing which is a continuously evolving process reaps abundant benefits, if managed and supported properly. It offers the best opportunity to achieve a breakthrough in highly competitive industries. However, in order to achieve this, a thorough understanding of all aspects related to global sourcing, is required.
Six Sigma - An Approach to Quality
Six Sigma - a business management strategy is a data-driven approach and methodology for eliminating defects. To reach Six Sigma, a process must not produce more than 3.4 defects per million and this technique is far more advanced compared to other techniques like TQM, quality circles etc., as it focuses on defects per million. In order to achieve six-sigma, fine-tuning the existing systems alone is not sufficient. Rather, new methods and procedures should replace old ones existing in an organization. The techniques which were first formulated to improve the manufacturing processes are now being largely applied in other business areas. The Six Sigma DMAIC process (define measure, analyze, improve, control) is a five-step process for achieving the standards. The streamlining is started off by defining the project goals and customer deliverables, followed by measuring the process to determine current performance, analyzing the root causes of the defect, followed by improving the process by eliminating defects and lastly controlling future process performance.
Though there is another process known as DMADV process, most of the companies start implementing DMAIC process first, as it is considered the primary step to product/process improvement.
References
[1]. Robert H. Hayes and Gary P. Pisano, Beyond World-Class: The new manufacturing strategy, Harvard
Business Review, January-February 1994
[2]. James H. Gilmore and B. Joseph Pine II, The Four Faces of Mass Customization, Harvard Business Review, January- February 1997
[3]. John Kamauff, Robert D. Landel and Walter Sedlazek, Note on product development: A competitive edge for operations, Ivey Management Services, Version: (A) 2001-04-27
[4]. Thomas C. MacAvoy, Paul M. Hammaker, Technology strategy for a diversified corporation, University of Virginia Darden School Foundation, Charlottesville, VA, UVA-OM- 0659
[5]. Tom Cross, Senior Director of Executive Education, Human capital strategy, University of Virginia Darden School Foundation, Charlottesville, VA, UVAOB- 0848
[6]. Peter Jacobs, Five steps to thriving in times of uncertainty, Harvard Management Update, article reprint no. U0512A [7]. Robert J. Trent and Robert M. Monczka, Achieving excellence in global sourcing,
MIT Sloan Management Review, Fall 2005, Vol. 47 No.1
[8]. Hal Plotkin, Six Sigma: What it is and how to use it, Harvard Management Update, article reprint no. U9906C
This Article was submitted by Dr. Dinesh Likhi, Director (Production and Marketing) and I/C Projects & HR at MIDHANI (Mishra Dhatu Nigam Limited)
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