Manufacturing Strategy: The Research Agenda for the Next Decade Proceedings of the Joint industry University Conference on Manufacturing Strategy Held in Ann Arbor, Michigan on January 8–9, 1990

256 Pages·1990·7.29 MB·English

by  John E. Ettlie

Manufacturing Strategy
The Research Agenda for the Next Decade
Manufacturing Strategy
The Research Agenda for the Next Decade
Proceedings of the Joint Industry University Conference on
Manufacturing Strategy Held in Ann Arbor, Michigan on
January 8-9, 1990.
edited by
John E. Ettlie
Michael C. Burstein
Avi Fiegenbaum
School oj Business Administration
The University oj Michigan
Ann Arbor, Michigan
K1uwer Academic Publishers
Boston/Dordrecht/London
ISBN-13:978-94-010-7481-0 e-ISBN-13: 978-94-009-2189-4
DOI:-10.1007/978-94-009-2189-4
Soft cover Reprint of the Hard cover 1st Edition
Contents
1. Introduction: Manufacturing Strategy in the Next Decade
John E. Eulie, Michael C. Burstein, Avi Fiegenbaum
2. Development of Manufacturing Strategy: A Proven Process 3
Roger G. Schroeder, T.N. Lahr
3. Europe 1992: Implications for Manufacturing Strategy 15
Emma Jane Riddle, Darrell Parlcer
4. Understanding Functional Decision Making at the Marlceting/Manufacturing Interface 27
Victoria L. Crittenden
5. The Nature and Dynamics of Technological Changes in an Automobile Tire Company - 39
A Case Study
C. Carl Pegels, James R. Meindl, John M. Thomas
6. Manufacturing Strategy in a Very Low Volume Production Setting: 49
The Reemergence of the U.S. Space Transportation Industry
Christopher E. Getner, Michael D. Packer
7. Manufacturing Strategy and Perfonnance of the New Venture Fmn 53
Richard H. Deane, Vidyaranya B. Gargeya, Patricia P. McDougall
8. Bridging the Strategic Outcome Measurement Gap in Manufacturing Organizations 63
Patricia L. Nemetz
9. Learning Effects in Cell Manufacturing 75
Eric Svaan, Srikant Datar, Sunder Kekre
10. A Confonnance -Perfonnance Model: Linking Quality Strategies to 85
Business Unit's Perfonnance
K. E. Maani, D. G. Sluti
11. Manufacturing Strategy, Manufacturing Strength, Managerial Success, 97
and Economic Outcomes
Aleda V. Roth, Jeffrey G. Miller
12. Markets, Manufacturing Strategy, and Technology Acquisition: 109
An Integrative, Developmental Approach
Michael C. Burstein, Pearson Graham
13. Pilot Plants to Assist Industrial FMS Applications 117
GEza Haidegger, Dr. George L. KOV3cs
14. Manufacturing Strategy and New Venture Origin: An Empirical Analysis 129
Derrick E. Dsouza, Patricia P. McDougall, Richard H. Deane
15. Technical Audit 141
Helmut Detter, Hans H. Hinterhuber
16. Focus, Modernization, and Manufacturing Technology Policy 153
John E. EUlie, Joan D. Penner-Hahn
17. Illuminating the Blind Spot: Examining Linkages Between Manufacturing 165
Technology and Competitive Strategy
Dean M. Schroeder, Steven W. Congden, C. Gopinath
18. Dimensioning the Service Factory 175
Richard B. Chase
19. Manufacturing Strategy: An Overview of Current Process and Content Models 189
Peter T. Ward, G. Keong Leong, David L. Snyder
20. The Focus, Span and Links in Research on Operations Management Strategy 201
John P. Matthews and Suan Tong Foo
21. Inventory Reduction and Productivity Growth: A Study of Japanese 213
Automobile Producers
Marvin B. Lieberman
22. Intended and Achieved Competitive Priorities: Measures, Frequencies, 225
and Financial Impact
Craig H. Wood, Larry P. Ritzman, Deven Sharma
23. Strategic Entry into Global Manufacturing Industries: Evidence and 233
New Theoretical Dimensions
Will Mitchell, Avi Fiegenbaum
24. The Productivity Improvement Process: (pIP) International Paper's Initiatives 243
to Transform a Manufacturing Organization
Gordon A. Enk, Nelson M. Fraiman, Dennis J. Colley, John T. Dillon
25. Radical Manufacturing Strategies for Failing Firms 251
Paul M. Swamidass
Manufacturing Strategy
The Research Agenda for the Next Decade
1
INTRODUCTION: MANUFACfURING STRATEGY IN THE NEXT DECADE
John E. EttIie, Michael C. Burstein, Avi Fiegenbaum
School of Business Administration
The University of Michigan
Ann Arbor, MI 48109-1234
[phone]
As we enter the new decade, global manufacturing is in a state of transition and
restructuring. Europe 1992 promises to be a watershed year in focusing attention on inter-plant
relations among manufacturers there. Further, small manufacturing in some countries might now
be at risk. On the domestic scene, companies with policies of manufacturing where they sell
products will continue to manufacture more products abroad, and most domestic industries are
restructuring--whether they are high-tech (high R&D intensity) or not.
This Proceedings represents the first real attempt to capture in a snapshot the ongoing
research in the area of manufacturing strategy. It comes at this most important time when
manufacturing is under great pressure to change. There have been fundamental developments this
decade that may eventually set aside many of the assumptions that have driven our manufacturing
strategies--implied or formalized. For example, flexibility in manufacturing, when realized,
changes the rule of volume dependency in most decisions made for productive capacity--whether
short-range or long-range. Once this iron law of volume dependency is broken, all other issues take
on a new dimension and several new horizons open. There are other developments during this
period, including manufacturing taking an active role in marketing the firms' products, partnerships
in manufacturing as well as product and process development, and the increasing number of
managers being promoted to the executive suite who have significant manufacturing experience.
All these trends promise new directions in the 1990's.
However, making appropriate choices of market commitments and technology investments
to support these commitments is becoming increasingly complex and risky with the burgeoning set
of options and the strength of interuational competition. Under these circumstances, manufacturing
strategy becomes a critical link between market considerations and technological opportunities.
Distinctive competences from manufacturing and from partnerships of manufacturing with other
activities inside (e.g., product engineering) and outside (e.g., suppliers, customers) the firm might
well determine the survival and growth of manufacturers in the decade of the 1990's and beyond.
The crucial role of manufacturing strategy seems to be well recognized both in the public
statements of CEO's and in the selection criteria for executives throughout manufacturing
industries.
All of these developments place special responsibility upon those individuals in academia
and industry alike with backgrounds and interests in manufacturing strategy. For the academicians,
the training of students, particularly the industrially-experienced, in the disciplined determination of
strategically-appropriate distinctive competences poses major challenges. The ability of academics
to organize knowledge in this area and to find pedagogical approaches for its effective dissemination
is a renewed agenda. The industry savants, on the other hand, face the difficult task of overcoming
the "stockade" mentality of special interest groups within manufacturing companies to enable the
development of effective organizational processes for strategic planning and associated technological
change. There is the ever growing tendency to trivialize the "other" functions 'or disciplines in this
rush to become excellent in manufacturing. We cannot allow ourselves to succumb to this
temptation.
Clearly, the burden on both academics and practitioners in the "trenches" could be
lightened considerably through a stronger partnership between the two groups. This Proceedings
and the associated conference provide a vehicle for this movement to occur. The joint academic
industry papers are a sharing of insights, each academic bringing an exposure across a variety of
2 MANUFACTURING STRATEGY
industries, each industry author bringing a depth of experience within a particular manufacturing
area. Thus, the academic-industrial combination presents the potential for that exchange of
important ideas across industry lines within the manufacturing arena to which often has been
credited significant industrial progress. Papers within this Proceedings from either academics or
industrialists exclusively provide an opportunity within the larger context of the Conference for the
sort of dialogue that leads to joint endeavors of the two communities. The juxtaposition of these
papers should be part of the stimulus we used to plan the research agenda. Such dialogue and the
associated strengthening of the partnership between these communities is one of the salient goals
for this Proceedings and the associated Conference.
In the last decade we have witnessed the growth in the academic disciplines of strategic
management and operations strategy. The field of strategic management has experienced a
significant escalation in the 1980's which has been indicated by two important events: first, the
publication of Porter's (1980) book on competitive strategy; second, the publication of the
Strategic Management Journal. In parallel, the field of operations strategy has witnessed similar
growth with the emergence of new journals and revived interest in production and operations
management (POM). Therefore, it is our belief that the integration of these two academic fields can
benefit each other, as well as establish new foundations for the study of manufacturing strategy.
ACKNO~DGEMrnNTS
A conference of professionals is a chore to plan and execute. We had a great deal of help
along the way. Our steering committee provided ideas and inspiration as well as reviewing time
and insights. Our early planning efforts were helped by advice and support from Dan Schendel and
the Strategic Management Society. The Operations Management Association was a big help in
getting the word out on the conference and for moral support. We had two conference coordinators:
Jackie Grant and Regina Jamison. The book manuscript was prepared for the publisher with the
assistance of Sheila Graham. Mary Molter was consistent in her production of the numerous
mailings on the project. Zac RoInik was a tireless editor, and we thank him for all his help. We
thank our presenters and our colleagues for their patience and support, and we hope the first stake in
the ground is a good one. We take sole responsibility for any errors of commission or omission
that remain.
2
DEVELOPMENT OF MANUFACfURING STRATEGY: A PROVEN PROCESS
Roger G. Schroeder T.N. Lahr
Professor of Operations Management Director, Manufacturing Technical Support
Curtis L. Carlson School of Management 3M Company
University of Minnesota 800 East Minnehaha Street
27119th Avenue South st. Paul, MN 55144
Minneapolis, MN 55455
ABSTRACf
A proven process for the development of manufacturing strategy is described in this
chapter. The purpose of this process is to assist managers in developing and implementing
manufacturing strategies in their divisions or strategic business units. The process described here
consists of ten steps including business strategy summary, examination of the external and internal
business environment, and development of manufacturing mission, manufacturing objectives, and
manufacturing strategies. Each of these steps is described in detail and examples are given of how
this process can be used.
INTRODUCfION
Recently, American Industry has exhibited a great deal of interest in strategic planning
for the manufacturing function. This has been brought about by increased competition, particularly
from overseas, declining productivity growth and the need to revitalize manufacturing. As a result
many large and small manufacturing firms have begun to develop manufacturing strategies
including: 3M, Honeywell, FMC, IBM, General Motors, General Electric, Westinghouse, Hewlett
Packard, Copeland, and others.
While this activity in manufacturing strategy in industry is quite recent, within the last few
years, the literature dates back to 1%9 when Wickham Skinner of the Harvard Business School
published his famous article, "Manufacturing: the Missing Link in Corporate Strategy," (1). Since
then, over 80 articles and books have been written as reviewed by Anderson, Cleveland and
Schroeder (2). However, few of these references describe a planning process which can be used
for strategic planning in manufacturing, the subject of this paper.
In order to conduct strategic plauning for manufacturing it is necessary to have a planning
process. The process should describe the steps to be used, who should be involved, what
information is needed, and what outputs should result. The process should be simple enough so
that it can be easily followed, and it should also be integrated with business planning and corporate
planning. The purpose of this paper is to present such a process that the authors have developed
and used in practice.
For the last three years we have been using the process described here in a variety of
settings in large and small companies, and in manufacturing and service industries. Managers
have found the process to be useful for developing manufacturing strategy in actual practice in
over thirty different business units that we have assisted. Some of the benefits of this process are
as follows.
1. Helps the business compete successfully
2. Guides tactical decision making in manufacturing
3. Helps to cope with a changing environment
4 MANUFACfURING STRATEGY
4. Provides a long-run view of manufacturing
5. Enhances communications with other functions
6. Puts manufacturing in a proactive mode.
The fIrst, and most important, reason for manufacturing strategic planning is to help the
business compete. Strategic planning is externally oriented and can help manufacturing gain a
competitive position or maintain its current lead. Manufacturing strategic planning is also intended
to guide the day-to-day tactical decision making which goes on in manufacturing. Tactical decisions
can be put into a strategic context and an overall policy framework. As such strategic planning
helps set priorities among daily activities by establishing long-range objectives and strategies. This
should result in a better utilization of manufacturing resources.
Whenever the environment of the business is changing, strategic planning becomes all the
more important. In these cases staying with the present strategy and technology can be disastrous
as the external world changes. Strategic planning in manufacturing is intended to identify the
external environment and adapt to it in a strategic sense.
Many manufacturing people want to take a long-run view toward manufacturing and their
jobs, but they are bogged down in day-to-day details. Manufacturing strategic planning provides
the opportunity to get out of the current rut and to think about what the future holds and what
manufacturing must do to help the business gain a competitive advantage.
By using a broad planning process which involves other functions in the company,
manufacturing can signifIcantly improve its communications with other functions. The planning
process will help others understand where manufacturing is headed and why certain objectives and
strategies are being pursued. In surverys of managers who have used our process this is often the
most valuable part of the planning effort.
Finally, strategic planning for manufacturing casts manufacturing in a proactive role.
Manufacturing is often caught on the defensive by reacting to other peoples plans. By doing
strategic planning, manufacturing can get out in front and determine its own destiny. Manufacturing
can also explain more clearly why certain things cannot be done, because they do not fIt with the
manufacturing strategy.
Before beginning strategic planning for manufacturing it is important to have a defInition
of manufacturing strategy in mind. The following defInition is offered:
Manufacturing strategy provides a vision for the manufacturing organization
based on the business strategy. It consists of objectives, strategies and programs
which help the business gain, or maintain, a competitive advantage.
Two things in this defInition should be highlighted. A manufacturing strategy is more than just a
plan. It should provide a vision for where the organization is headed. Manufacturing management
must provide the leadership to develop the vision. Second, the manufacturing strategy should
contain long-range objectives, as well as, strategies and programs for manufacturing. Thus a very
broad defInition of manufacturing strategy is proposed here.
The manufacturing strategy must, of course, be linked closely with the business strategy
and other functional strategies. This is accomplished by explaining the business strategy as the
fIrst part of the manufacturing strategic planning process and by involving various functional people
from outside manufacturing in the process.
STRATEGIC PLANNING PROCESS
Our strategic planning process for manufacturing consists of the following ten steps.
Figure 1 shows the interrelationship of these steps.
1. Business Strategy Summary