Developing a Management Strategy Dr.

Austin Coffey 2009

Developing a Management Strategy

to many executives, manufacturing and the production function is a necessary nuisance it soaks up capital in facilities and inventories, it resists changes in products and schedules, its quality is never as good as it should be, and its people are unsophisticated, tedious, detail oriented and unexciting. This makes for an unreceptive climate for major innovations in factory technology and contributes to the blind spot syndrome (Skinner, 1983) Wickham Skinners view of Senior Management making strategic decisions relating to operations strategy is quite clear. This brings with it many important consequences. One is that senior executives do not perceive the strategic potential of manufacturing. Typically it is seen in its traditional productivity efficiency mode with the added need to respond to the strategic overtures of marketing and finance. The result is that manufacturing concentrates its effort and attention to the short term while adopting its classic, reactive posture towards the long-term strategic issues of business. There are two important roles that manufacturing can offer as part of the strategic strengths of a company. The first is to provide manufacturing processes that give the business a distinct advantage in the market place. In this way, manufacturing will provide a market edge through unique technological developments in its process and manufacturing operations that competitors are unable to match. Typically this is quite rare in the broad sense of manufacturing. However, it has been shown that this is achievable such as is the case in Irelands dominance in the world manufacturing stakes in enabling and enticing medical device companies to set up in Ireland in a manufacturing and R&D capacity. Evidence of this stems from the fact that over 10% of all Irish exports in 2007 were from the Medical Technologies Sector (Source: IMDA Strategic XXXX 2008). The second is to provide coordinated manufacturing support for the essential ways in which products win orders in the market place that is better than such support provided by the manufacturing functions of its competitors. This for example, can be achieved through continuous improvement (CIM) and the R&D process in which there is constant development
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Developing a Management Strategy Dr. Austin Coffey 2009

of new, improved and innovative products and services. These can be manifested as flexibility in manufacturing to react to changes in demand and product type, supply network optimisation where most / all aspects of the operation are of a pull nature, and technology expertise where the company is a leader in intranet offerings and communication is fluent. The need for a sound and progressive operations strategy is vital. It is not only to do with the critical nature of manufacturing within corporate strategy but also a realisation that many of the decisions are structured in nature. This means that they are difficult to change. If the business does not fully appreciate the issues and consequences, it can be locked into a number of manufacturing decisions that will take years to change. Decisions not in line with the needs of the business can contribute significantly to a lack of corporate success. To change them is costly and time consuming but even more significant they will come too late. Traditionally management were more conscious of doing things right (efficiency) rather than doing the right things (effectiveness). By developing an optimal operations strategy, effectiveness will ensue with efficiency being one of the automatic deliverables through cross-functional CIM. The degree to which a companys functions are aligned to the needs of the markets will significantly affect its overall revenue growth and profit. The appropriate investment in processes and infrastructure in manufacturing in fundamental to this success. According to (Skinner, Missing Link in Corporate Strategy, 1969), Many executives are still unaware that what appears to be routine manufacturing decisions frequently come to limit the corporations strategic options, binding it with facilities, equipment, personnel, basic controls and policies to a non-competitive posture, which may take years to turn round The question should arise why do Operations Managers often take a Reactive Role in Corporate Strategy formulation? One possible reason is that Operations Managers often define their role as requiring them to react as well as possible to all that is asked of the operations system. Rarely will they see as an integral part of their role the need to contribute appropriately to corporate decisions that will impact the demands on manufacturing and the ability to provide the necessary market support. There can be a failure to delegate responsibility to chargehands or to effectively implement CIM. They can neglect to see the relevance in maintaining minimum inventory while ensuring that suppliers are fully aware of the operations of the company. They see manufacturings role as solely involving day to day operations. Lack of training and
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leadership can be significant factors as would be the stratagem of promotion due to longevity rather than performance and potential. Scant regard can exist for the change in emphasis that needs to take place. So when the manufacturing executives contribution tends to be confined to the day to day operation, the reactive role in strategy decision making continues to be the reality.

A company cannot excel on all dimensions and must select the ones most important to its operations and organizational strategy. However, a company should strive to satisfy all criteria to be best in its class (World Class Manufacturing)

There are a number of key performance objectives which are used to satisfy the market requirements. These performance objectives will be referred to throughout the text of this report and it is through these performance objectives that operations can contribute to competitiveness. The relative importance of these performance objectives `will be shaped by a combination of customers needs and competitors actions. cost and/or price
y

the production and distribution of a product or service with a minimum of expenses or wasted resources

y y

low cost production and distribution low price product or service

quality and dependability

y y

producing a product which meets (or exceeds) customer expectations for quality providing consistent quality ("dependability")

performance
y y

product features high-performance design allows product to do things that other products cannot

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Developing a Management Strategy Dr. Austin Coffey 2009

delivery
y y y y

the ability to meet requested and promised delivery schedules short lead time or fast delivery ("speed") on-time delivery ("reliability") speed in developing and introducing new products or services

flexibility the ability to respond to rapid changes in customer demand and requirements for existing
y y

products or services product flexibility - quickly introduce new products or ability to make rapid design changes to existing products

process flexibility ("volume flexibility")

innovativeness ability to introduce and incorporate new ideas into products and processes A company must have aspirations to compete on a global scale, even if it is serving the local area. The world is now a global economy and there are always threats on our doorstep from Ballincollig to Beijing or from Mallow to Mexico. An interesting quote from Mr. Konosu Matsushita of the Matsushita Electric Industrial Company (Japan) as far back as 1985 puts this into context: Why the West will Lose We are going to win and the industrial West is going to lose: there is nothing much you can do about it, because the reasons for your failure are within yourselves. Yours firms are built on the Taylor model; even worse, so are your heads. With your bosses doing the thinking, while the workers wield the screwdrivers, you are convinced deep down that this is the right way to run a business. For you, the essence of management is getting ideas out of the heads of the bosses into the hands of labour. We are beyond the Taylor model: business, we know is now so complex and difficult, the survival of firms so hazardous in an environment increasingly unpredictable, competitive,
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and fraught with danger that their continued existence depends on the day-to-day mobilisation of every ounce of intelligence. For us, the core of management is precisely this art of mobilising and pulling together the intellectual resources of all employees in the service of the firm. Because we have measured better than you the scope of the new technological and economic challenges, we know that the intelligence of a handful of technocrats, however brilliant and smart they may be, is no longer enough for a real chance of success. Only by drawing on the combined brain power of all its employees can a firm face up to the turbulence and constraints of todays environment.]This is why our large companies give their employees three to four times more training than yours; this is why they foster within the firm such intensive exchange and communication; this is why they seek constantly everybodys suggestions and why they demand from thte educational system increasing numbers of graduates as well as bright and well-educated generalists, because these people are the lifeblood of industry. Your socially-minded bosses, often full of good intentions, believe their duty is to protect the people in their firms. We, on the other hand, are realists and consider it our duty to get our own people to defend their firms, which will pay them back a hundred-fold for their dedication. By doing this, we will end up being more social than you. (Matsushita, 1985)

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Bibliography

Matsushita, K. (1985). "Why the West will Lose": Extracts from Remarks Made by Mr. Konosu Matsushita of the Matsushita Electric Industrial Company (Japan) to a Group of Western Managers". Industrial Participation, Spring, (p. 8). Skinner, W. (1969, May-June). Missing Link in Corporate Strategy. Harvard Business Review , p. 13. Skinner, W. (1983). Operations Technology: Blind Spot in Strategic Management. Harvard Business School working paper 83-5 , p. 11.

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