A framework for the design of
manufacturing strategy
processes
A contingency approach
Manufacturing
strategy
processes
17
John Mills, Ken Platts and Mike Gregory
University of Cambridge, UK
Introduction
What is a manufacturing strategy nowadays – is it world-class, lean
production, JIT, cells or TQM? Is it none of them, some of them or all of them?
How do these popular strategies align with Skinner’s notions of manufacturing
objectives and strategic decision areas? How can strategies that promote single
status, teamwork and empowerment be squared with the top-down, “planning”
strategy processes that develop and apply them?
These questions should concern manufacturing strategy researchers.
Manufacturing strategy researchers, with rare exceptions, have continued to
make their own way, drawing little from the closely related fields of business
strategy economics and organization behaviour[1]. In addition, again with rare
exceptions, researchers have addressed neither the incorporation of popular
strategies within their traditional frameworks nor the potentially necessary
extension of those frameworks. There is thus a need to review manufacturing
strategy and related research in order to identify useful knowledge that can be
used to build on existing manufacturing frameworks.
Such a review needs a focus and the design of manufacturing strategy
processes has been chosen as the focus for this article; the review has therefore
been structured to draw out those factors that have been observed to influence
the strategy process and, therefore, its design. In order to achieve this aim the
traditional manufacturing strategy “process and content” framework[2,3] has
been extended. The review then adds flesh to the framework and finally the
framework’s ability to assist in the design of a manufacturing strategy process
is tested. First, however, manufacturing strategy is set in the context of other
strategies and manufacturing’s potential strategic roles are described.
Manufacturing strategy in context
In business the word “strategy” is commonly used at three levels[4]:
(1) Corporate strategy – what set of businesses should we be in?
This paper was produced during the research project – Manufacturing Strategy and
Performance Measurement – sponsored by the ACME Directorate of SERC, Grant GR/H 21470.
International Journal of Operations
& Production Management, Vol. 15
No. 4, 1995, pp. 17-49. © MCB
University Press, 0144-3577
IJOPM
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18
(2) Business strategy – how should we compete in XYZ business?
(3) Functional strategy – how can this function contribute to the competitive
advantage of the business?
Within this hierarchy, manufacturing strategy can appear in two places, first at
the corporate level, taking a broad view over a set of related or separate
businesses. Second, it can appear as one of the functional strategies at the
business level and it is with this level that this article is predominantly
concerned.
Manufacturing strategy has been defined as “the effective use of
manufacturing strengths as a competitive weapon for the achievement of
business and corporate goals”[5]. Manufacturing’s strengths are developed and
sustained by a “pattern of decisions”[6] as originally proposed by Mintzberg[79]. These are taken in a set of decision areas (for example[10]) which encompass
manufacturing strategy and are aimed at achieving manufacturing goals that
align with business and corporate goals.
It has also been recognized that manufacturing can contribute to business
strategy in more than one way. Hayes and Wheelwright[6] suggested four
stages in the development of manufacturing’s strategic role:
(1) Internally neutral: the objective is to minimize the negative impact of the
manufacturing function.
(2) Externally neutral: the objective is to maintain parity with competitors,
usually by following industry practice.
(3) Internally supportive: manufacturing exists to support business strategy.
Manufacturing investments are checked for consistency at the business
level and the implications of business strategy changes for
manufacturing are considered.
(4) Externally supportive: manufacturing capabilities shape business
strategy in terms of the types of products developed and the ways in
which markets are addressed. Manufacturing leads rather than follows
and long range programmes are implemented to acquire capabilities in
advance of needs.
The most common target in the literature has been stage three[11-13]. However,
growing interest in the learning organization[14,15], “core competences”[16]
and capabilities competition[17] may provoke more interest in stage four.
Empirical studies on the strategic role of manufacturing have shown that up to
50 per cent of respondents believe their role is at stage three[18,19]; that there is
confusion surrounding the terminology of the subject[18-20] and that within
most firms manufacturing strategy was neither visible nor obvious[20]. Thus
the subject still has some way to go to prove its worth in many manufacturing
companies.
The manufacturing strategy process framework
This section proposes a framework for reviewing and analysing the factors
relevant to the design of a manufacturing strategy process. The most common
manufacturing strategy framework has consisted of “process”, or how strategy
is made, and “content” – the constituents of a manufacturing strategy[2,21].
Matthews and Foo[22] extended this framework to “process, content,
performance, consistency and implementation”. Other frameworks are
available from the business strategy literature, for example Pettigrew’s
framework[23] of “process, content and context”. Pettigrew’s use of “process
and content” was similar to that used by Leong et al.[2] and Anderson et al.[21].
His view of “context” included both external factors such as sectoral, economic,
social, political and competitive environments and internal factors covering the
enterprise’s structural, cultural and political facets.
The proposed amalgam of these frameworks is shown in Figure 1. The
central focus is the manufacturing strategy process, the design of which is
contingent on the content model(s) chosen and the required qualities of the
outcome of the process.
The latter element is taken from Matthews and Foo[22] whose “performance
and consistency” are examples of criteria used to assess the process output. For
a framework required to capture influences on the strategy process this
extension to the traditional “process and content” framework includes
important strategy process design criteria. The second extension is the internal
and external context described by Pettigrew[23] which can enable many of the
contingencies studied in the business strategy literature and rarely used in the
manufacturing literature[1,2] to be included. Attention will be drawn to these
effects as the detailed framework is built.
Manufacturing
strategy
processes
19
Manufacturing strategy content
This element of the framework describes the majority view found in the
manufacturing strategy literature plus potential extensions and modifications
to that view in the content areas of manufacturing’s objectives and decision
Manufacturing
strategy content
Manufacturing
strategy process
Internal context
External context
Qualities of the
process outcome
Figure 1.
The outline
manufacturing strategy
process framework
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20
areas. In this way the literature on competence, generic and “best practice”
strategies has been incorporated.
Manufacturing objectives: the majority view
Skinner[10] defined manufacturing’s objectives as cost, quality, delivery and
flexibility and indicated that there were trade-offs between them. These
essentially external objectives have survived the attention of numerous
researchers to this day. However, they have been refined to more detailed levels,
for example flexibility can be further defined and measured in many ways[2426] and the detailed dimensions of cost, quality, delivery and flexibility are
discussed in Neely and Wilson[27]. Both Hill[28] and Platts and Gregory[29]
have suggested that the basic four objectives can be tailored to the individual
organization. For example, a specific performance objective for one company
may be product flexibility – the speed with which new products are introduced
or existing products are modified. Measures and targets in this area become
part of such an organization’s manufacturing objectives.
The interaction between objectives in the form of trade-offs has, however,
become a contentious issue. In 1969 Skinner believed it impossible for
manufacturing to make a wide range of high quality and low cost products
quickly. Wheelwright[30] questioned this assumption, having noted that many
Japanese managers seek to improve quality and reduce costs simultaneously.
With the growth in knowledge of Japanese manufacturing techniques through
the 1980s, as detailed in Schonberger[31] and the empirical data collected by the
Manufacturing Futures survey, more questions were asked. Nakane
hypothesized that Japanese managers attack quality, time, cost and flexibility
sequentially[32].
Nakane’s theory may explain how trade-offs can be overcome and this view is
partly supported by Slack[25] who entered the time dimension into the debate.
He argued that while no manufacturer can double its product range tomorrow
without increasing cost this may well be possible over a longer period. This
connects with the continuous improvement philosophy espoused by many,
including Schonberger[33], who stated in 1990:
World class strategies require chucking the(trade-off) notion. The right strategy has no
optimum, only continual improvement in all things (p. 21).
The debate has continued to run; however, as Slack[34] pointed out Schonberger
has challenged the conservatism inherent in the trade-off assumption.
Managing and marketing directors may now be less likely to be persuaded by
manufacturing directors that they cannot have high quality and low cost at the
same time.
Manufacturing objectives: potential additions
The manufacturing objectives described above can apply to any of the Hayes
and Wheelwright four stages of manufacturing’s strategic role. The fourth
stage, externally supportive, may require additional types of objective since
this stage is aimed at providing new capabilities which may shape business
strategy in terms of the types of products developed and the ways in which
markets are addressed. Such objectives might cover the acquisition of
knowledge and application leadership of a particular technology or technology
combination[16]. However the competence need not be technologically based
and could be the integration of a set of managerial skills in a business
process[17,35]. While the future implementation of new capabilities may be
supported by the traditional externally oriented manufacturing objectives, the
development of new capabilities is likely to require internally oriented
objectives.
Manufacturing
strategy
processes
21
Manufacturing strategy decision areas: the majority view
Manufacturing objectives are achieved through a pattern of actions in a set
of decision areas and Skinner’s[10] original list of decision areas is shown in
Table I.
Though many writers in the field have developed their own set of
manufacturing decision areas, agreement is generally high[3]. Table II
compares Skinner’s listing and Wheelwright’s[36] framework for manufacturing strategy with the decision areas chosen by several researchers[28, 29,
37-39].
The balance of research in these decision areas has moved from a
concentration during the 1970s and early 1980s on the so-called structural or
hard aspects of strategy, e.g. plant location, size and manufacturing process
choice, towards the infrastructural or soft aspects e.g. organization,
performance measurement, management style. The realization of the
importance of these “soft” aspects of strategy was first documented by
Skinner[40]:
In a nutshell, our methods of decision-making, communicating, scheduling and supervising
make up the infrastructure of our plants; and these internal elements are proving more
Decision area
Explanation
Plant and equipment
Plant size and location, degree of vertical integration and
choice of manufacturing process
Planning, inventory and quality control
Wage systems, incentive schemes, degree of
specialization, supervision style and size of
manufacturing engineering staff
Product variety, design stability, process technology,
development policy
Management style, organization form, size of staff group
Production planning and controls
Labour and staffing
Product design/engineering
Organization and management
Source: [10]
Table I.
Manufacturing’s
strategic decision areas
Production and
inventory control
just-in-time
New product
introduction
Management of
people
Control policies
Suppliers
Human resources
New products
Quality assurance
Quality
Infrastructural
Information
systems
Suppliers
Manufacturing
organization
Plant capacity
Plant location
Process
technology
Make or buy
Production
planning
Quality
Performance
measurement
Organizational
Organization
structure
Manufacturing
systems
Engineering function
support
New product
development
Work structuring
Workforce,
Payment systems
performance
Clerical procedures measurement and
reward
Quality assurance
and control
Manufacturing
planning control
systems inventory
Capacity
Facilities
Technology
Vendor relations
Scope new
products
Human resources
Quality
management
Manufacturing
infrastructure
Capacity
Facilities
Process
Technology and
processes
Process positioning Vertical integration Vertical integration
Capacity
Organization and
management
Product design
engineering
Labour and staffing
Production planning
and control
Production planning
and control
Plant and equipment
Plant and equipment
Plant and equipment
Plant and equipment
Capacity
Facilities
Process and
technology
Span of process
Fine and Hax[39]
Structural
Hayes et al.[38]
Skinner[10]
Hill[28]
Platts[29]
Table II.
Manufacturing
decision areas
Schroeder[37]
22
Decision areas
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resistant to change than the purely technological ingredients on which factory managers and
engineers tend to focus[40].
In addition, most writers during the 1970s and early 1980s concentrated on
individual areas of content, losing the holistic perspective Skinner had
encouraged. Schmenner[41] investigated economies of scale; Hayes and
Schmenner[42] looked at factory organization, product or process based. Hayes
and Wheelwright[43,44] wrote on the important links between process and
product life cycles and the literature on quality policy was particularly rich[4548]. Hill[13] invented the important notions of order-winning and orderqualifying criteria and connected them with manufacturing process choice.
There were, however, exceptions; Voss[49] recognized that the successful
introduction of advanced manufacturing technology was not just an
engineering task. After identifying the system’s operational and business
objectives it was necessary to amend organizational controls to support the
system’s performance objectives and specify the organizational integration
required to enable the manufacturing control systems to support the new
system’s objectives.
More recently interactions between decision areas have been studied, for
example manufacturing processes and manufacturing control systems[50] and
the impact of human resource policies on the implementation of manufacturing
control systems[51]. Writers on vertical integration[52,53] have taken a multidimensional view covering the firm’s manufacturing technologies and
processes (current and future), supplier evaluation, impact on new product
introduction, capacity and facility decisions. Indeed the vertical integration
decision area may be fundamental to other decision areas since it should
identify what the firm has to manufacture itself and why[54].
Nevertheless, the gap identified in the literature by Voss[55] and Adam and
Swamidass[1] concerning the interaction between different decision areas is
still large and much remains to be done.
Manufacturing strategy decision areas: potential additions and alternatives
There are, perhaps, three potential additions to the majority view on
manufacturing strategy decision areas. The first is the integration of popular,
best practice strategies like JIT and TQM with traditional decision areas – a
gap noted by Adam and Swamidass[1]. The second is the generic approach to
manufacturing strategy and the third is the inclusion of recent work on
competence and capability. One potential alternative to the majority view is also
discussed in this section – a business process framework for manufacturing
strategy.
Best practice strategies. In a survey of UK SMEs[19] when respondents
commented on the content of their strategies, it was uni-dimensional strategies
that were most in evidence. MRP II, empowerment, JIT and total quality were
the most regular descriptions of manufacturing strategy . Each of these
strategy descriptions (and at least two multi-dimensional strategies, lean
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manufacturing and world-class could be added) can be gathered under the
heading “best practice” strategies[56]. Most of these strategies may be
appropriate for most manufacturers at particular times and for a length of time
and their accessibility via conferences, publications and consultancy may
explain their popularity. However, there may be two disadvantages for the
business in the application of such strategies.
First, the implementation of best practice strategies alone is unlikely to
develop manufacturing’s ability to create and understand its own strategy and
this may be especially so if external consultants deliver packaged solutions. As
conditions change over time, manufacturing is likely to continue to be reliant on
external help to adapt its manufacturing policies to new situations. Second, best
practice strategies do not cover all the strategic areas within manufacturing
and if this is not realized and an overall strategic context is absent best practice
strategies may fail. Past best practice strategies, like MRPI or advanced
manufacturing technology, often did not live up to expectations.
In essence, these strategies can be considered as bundles of actions in certain
majority view decision areas, which tend to work well together. For example,
the implementation of cells normally involves decisions and actions to invest in
more equipment and to update manufacturing control systems, organization
and certain cultural factors if full benefits are to be obtained. This strategy is
not simply a re-layout of the manufacturing process. Therefore successful
implementation partly relies on developing an integrated and consistent set of
actions from the majority view decision areas that are appropriate to the best
practice theme(s) chosen and the existing policies in manufacturing.
Best practice strategies may also be compared to ready-to-wear suits,
modifications to improve the fit may be preferable to a potentially more timeconsuming process to create a bespoke strategy. However, unlike strategies, noone expects managers to know how to make their own suits and if a firm’s
managers do not consciously develop their own strategy, perhaps by
incorporating best practice strategies within a more comprehensive framework
then they are likely to follow rather than lead. Such a following role may,
however, be entirely natural if manufacturing’s strategic role is at Hayes and
Wheelwright’s stage one or two.
Generic manufacturing strategies. There have been two streams of research
on generic manufacturing strategies. The first is predominantly survey or case
based, in which results are analysed by cluster techniques to identify sets of
companies following similar or generic strategies. From such an analysis
performance differences between the clusters may lead to new perspectives on
manufacturing strategy, for example, whether manufacturing strategies are
shaped by markets or other forces.
The main studies include:
● An examination of 100 case studies, carried out by Stobaugh and
Telesio[12], identified three groups of international manufacturing
strategy – cost based, technology based and market driven.
Roth and Miller[57] examined the strategic management practices of 188
North American companies and identified three groups of generic
manufacturing strategy – caretaker, innovator and marketeer.
● de Meyer[58] used results from the European Manufacturing Futures
survey to identify three groups – high performance product groups,
manufacturing innovators and marketing oriented.
There are differences between the groupings identified by these researchers. For
example, the high performance product group[58] was different to the
groupings identified in the USA by Stobaugh and Telesio[12] or Roth and
Miller[57]. This group emphasized top performing products, the need to make
fast production plan changes and achieve fast delivery.
The second stream of research emphasizes the development of frameworks
that should assist in the strategic management of manufacturing. One
framework, proposed by Kotha and Orne[59] uses three dimensions: process
structure complexity, product line complexity and organization scope. The
extremes of these dimensions are used to define a set of theoretical generic
strategies that match Porter’s[60] model of generic business strategy. Empirical
support has not been published for this framework.
Another framework[61] proposed four generic strategies which are based on
blending the empirical studies described earlier with other studies and his own
case-based research. He also aligned these four generic strategies: caretaker,
reorganizer, marketeer and innovator with Hayes and Wheelwright’s[6] four
stages of the development of manufacturing’s strategic role. Sweeney, however,
notes that each of these roles could be used by manufacturing companies that
were implementing any of the four generic manufacturing strategies proposed.
Table III summarizes work on generic manufacturing strategies[6, 12, 57, 58, 61,
62].
Like those using the experience curve approach to product families[63], those
adopting a generic strategy may create conditions which enable competitors to
predict some of their actions. Another note of warning on the use of generic
strategies has been sounded by Miller and Roth[64]:
●
Finally an important line of future research is to test the stability of this taxonomy globally,
and over time. The “laws” of business that seem to define the strategic positioning and
competitive behaviour in this and other taxonomies have all been based on observations of the
business environment during a short 20 year span. If we suppose that intelligent competitors
will use their knowledge of the “normal” rules of battle to better develop new principles of
competitive warfare, then we may anticipate that new manufacturing strategic groups will be
formed over time, and in different parts of the world (p. 27).
Competence and capability. Ideas on competence and capability emerged before
the second world war in the writings of the “Austrian School” of economics[65].
This school believed that the source of a firm’s competitive advantage was in
unobservable factors (viewed from outside the firm) rather than observable
strategic factors. Teece et al.[66] described these factors as “upstream,
idiosyncratic and difficult to imitate resources” and “sticky, hard to change
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Blended
generic
Stobaugh
strategies, and
Sweeney[61] Telesio[12]
Caretaker
Cost-driven Caretaker
strategy
Marketer
Marketdriven
strategy
Reorganizer
Table III.
Generic strategies by
researcher name
Roth and
Miller[57] de Meyer[58]
Marketer Marketing
orientated
group
High
performance
product
group
Edmondson
and
Wheelwright Sweeney
[62]
[61]
The quick
Quick fix
relief mode of
response to
manufacturing
challenges
(1st mode)
Stretch
The use of
Catch up
organizational
tools mode of
response
(2nd mode)
Innovator Technology- Innovator Manufacturing To develop a Break
driven
innovators
competitive through
strategy
edge through
manufacturing
(3rd mode)
(Adapted from [61])
Hayes and
Wheelwright
[6]
Internally
neutral
Externally
neutral
Internally
supportive
Externally
supportive
resource bundles”. It is such “capabilities” that provide superior product
offerings on which competition is based[66].
In the business strategy literature the notion of “distinctive competence” was
first described by Selznick[67]. It has appeared regularly since then, for
example Peters[68] and Porter[60,69]. In this context a distinctive competence is
an ability which sets a business apart from its competitors and provides
tangible benefits for customers and thus competitive advantage to the business.
One recent theme addresses the identification and leverage of competences for
the business benefit; Prahalad and Hamel[16] defined “core competences” as:
…the collective learning in the organization especially how to co-ordinate diverse production
skills and integrate multiple streams of technologies[16].
Their examples included Canon where core competences in precision
mechanics, fine optics and microelectronics were said to be used to enter new
markets. Stalk et al.[17] also pursued this theme but distinguished between
capabilities and Prahalad and Hamel’s core competences. In their view
capabilities are superior business processes like dealer handling, or product
realization rather than technologically-related competences. Their examples are
from the logistics processes of supermarket chains as well as manufacturers
like Honda, who are said to have superior ways of handling dealers.
Teece et al.[66] came to the conclusion that the most critical competence
differences are to do with the organizational capabilities of the firm. The
confusion in terminology continues but the two strands of what a competence
or capability is or is not can be seen in the manufacturing literature. Cleveland
et al.[70] proposed that “production competence” is “a manufacturer’s overall
ability to support and prosecute the firm’s business strategy”. Furthermore,
they contended that “production competence” is a function of the production
process and the firm’s business strategy. In other words, a technology view of
competence reminiscent of Prahalad and Hamel[16] was taken. In a critique of
Cleveland et al.[70], Vickery[35] proposed that production competence is to do
with the efficiency and effectiveness of the manufacturing strategy formulation
and implementation process whose aim is to support business strategy
requirements with appropriate manufacturing performance. In other words a
view of competence nearer to the Stalk et al.[17] view of capability as a superior
business process.
The most interesting new theme in this area is the notion of how competences
or capabilities are actually built over time[66]. Porter[69] stated that this area of
research was one important, potential component of a dynamic theory of
strategy. This is a developing area which may provide additional decision areas
for manufacturing strategy which are appropriate for a firm pursuing a
manufacturing-based competitive advantage. Hayes and Pisano[71] have begun
to address this potentially important area and have clearly addressed
manufacturing companies at stage four:
Manufacturing strategy is about creating operating capabilities a company needs in the
future[71].
The business process framework. This framework of manufacturing strategy
content was described by Rhodes[72] and is illustrated in Figure 2.
Instead of a list of decision areas which focus on manufacturing and which
have few interaction guidelines a set of nine business processes is proposed.
Rhodes argued that these processes covered all manufacturing industries and
were understandable to all functions in the business. The notion of dealing with
manufacturing strategy in the context of business processes may also have
advantages for the process of formulating manufacturing strategy and this will
be described later. This framework may be a genuine alternative view of
manufacturing strategy decision areas despite the likelihood that all
manufacturing decisions in each process are likely to find a home in the
majority view framework. As yet, however, published material on this
framework is rare and it is included as an area with potential for further
research.
Manufacturing strategy formulation process
The structure of this section uses and develops Platts four aspects of process –
point of entry, participation, procedure and project management’[73]. Platts
argued that a process was not mere procedure – a set of steps. To be useful a
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Figure 2.
Functional
departments and
business processes
(a)
Customer order progress
(b)
Supply chain
(c)
Production processes
(d)
Product definition and
development
(e)
Process and
plant development
(f)
Motivation and culture
(g)
Finance and accounts
(h)
Organization
(i)
Information and IT
Financing
Designing
Producing
Assembling
Purchasing
Selling
Business
processes
(a) to (e) achieving
(f) to (i) enabling
Marketing
28
Functions department
process should specify how an organization might be attracted to implement
the process; who should participate in the process and how the project of
implementing the process should be managed.
Point of entry
It is necessary for the strategy process to provide a method of entry into the company or
business unit and provide a platform to develop the understanding and agreement of the
managing group[74].
Platts[74] used “competitive profiling”[75] to provide a quick, easily completed
task which would demonstrate to a company that there was a need to proceed
with the full process. The intention was that a marketer would identify a
product family and then sketch the profile to represent the market requirements
in terms of cost, delivery, quality, etc. A manufacturer would be asked
independently to sketch how manufacturing actually performed on this
product family. Mismatches could be easily demonstrated by overlaying acetate
films. It was hoped that such mismatches would be startling enough to
encourage the whole process to be pursued.
Gunn[76] and Hayes and Wheelwright[6] made the point that one of the
platforms needed to embark on the strategy process is knowledge. The process
often requires training and management development to embed the principles
and concepts necessary. On the same theme Sweeney[77] proposed a “tactical to
strategic management development programme”. This programme raised the
issues of management style and team membership roles and contained a two-
day workshop on how to manage strategically. It continued by “work
shadowing” managers to record how they spent their time and visits to other
factories to see how others had overcome change management problems. At
another level Voss[78] asserted that an important responsibility of a company
board is to ensure that a process for developing manufacturing strategy exists.
He also noted[79] that in the four cases observed the manufacturing strategy
process was initiated by either the manufacturing or managing director.
Leonard-Barton[80] pointed out that many opportunities to question current
strategy assumptions were available at the earliest stages of new product
introduction; thus the strategy process might be usefully initiated at such a
time.
Participation
There are, perhaps, three dimensions of participation within the literature –
width across the business involving contributions from other functions; depth
of participation within the manufacturing function; and the participation of
others from outside the business unit. Anderson et al.[21] showed empirically
that the function most consistently involved in the process was marketing; their
role was important in providing much of the data on customer and business
strategy requirements. Marketing was central to Hill’s process[28] since it
began by identifying order-winning and order-qualifying criteria. Slack[25]
viewed the key links being between manufacturing, marketing and product
development. In general other functions have been involved in the strategy
process for two main reasons: first for specific activities, such as finance
assessing the costs and financial benefits of manufacturing strategy options;
second, for knowledge that can be brought to the strategic debate, such as
personnel’s knowledge of the organization. Leong et al.[2], Platts and
Gregory[29], Schroeder and Lahr[37] and Fine and Hax[39] all recommend the
involvement of all functions. Others like Hill[28] and MacBeth[81] have at least
the marketing function involved; Slack[25] involves marketing and product
development.
Gunn[76] detailed a number of aspects to be considered when selecting a
team to carry out the process. The best must be involved; a balance of skill and
experience with “get up and go” should be planned for. The team also needed to
contain “political heavyweights” and potential future executives. Hayes and
Wheelwright[6] pointed out that implementors should be involved to help avoid
implementation difficulties and noted how rarely this had occurred in their
experience. Garvin[82] described a process whose objective was to increase the
depth of participation in the strategy process in order to derive credible,
implementable strategy using the best appropriate knowledge in the
organization. Participants from outside the business unit are typically
corporate specialists or external consultants in facilitation or project modes.
There are potential advantages in using external participants – they generally
arrive without the assumptions that members of the business unit carry and
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typically understand and are experienced in the process. In each of four
strategy process cases studied, Voss[79] found a facilitator present.
Procedure
Once point of entry and participation issues have been covered, the major
stages in the strategy process are generally threefold. The first is typically an
audit of current strategy against a set of manufacturing objectives; the second
stage is the formulation of a set of action plans – the strategy – which is
designed to close any gaps identified in the first stage. These two stages are not
universally separated. The final stage is implementation of the action plans.
The output of the audit or data gathering and analysis stage is a comparison of
manufacturing performance and current action plans with the requirements of
business strategy. This comparison may be across all areas of a decision
content model as in Platts[74] and Fine and Hax[39] or it may be more narrowly
based, for example Hill[13] focused initially on the match of business
requirements with manufacturing processes.
The formulation stage is documented in much less detail than the audit stage.
Slack[25] proposed that the decisions on how to close gaps are specific to the
organization and its environment and that it is the responsibility of the
organization’s personnel to generate an imaginative and practical set of action
plans. Hill[28] provided a more structured approach, stating that the
manufacturing process choice should be made before decisions in
manufacturing infrastructure but gave, at that time, no details on how these
infrastructural areas might be tackled. Other writers[37,39,83] offer limited
input on this stage, with suggestions including tackling the highest priority
issues first and iterating between strategies in each decision area. Research in
an aerospace company[54] indicated that the vertical integration area should be
dealt with early in the process since deciding what a firm will manufacture is
fundamental to most other decision areas. However, Sweeney[77] proposed an
order of attack that left vertical integration decisions late and devoted early
effort to capacity, facilities and human resource management.
The business process framework[72] may have some advantages over the
majority view decision areas in the formulation stage. The “achieving”
business processes (see Figure 2) are dynamic and relate to the work people do
and the overall tasks the organization must accomplish. For this reason the
framework may be more understandable than the traditional content model, it
also places manufacturing strategy in a wide context and can show that
improvements in process performance require co-operative efforts from all
functions. For the same reasons this perspective may also assist strategy
implementation[72].
The implementation stage is usually based on the management of a number
of projects, sometimes seen within an overall improvement plan[82]. Hayes et
al.[38] observed that strategy implementation projects developed through three
stages as manufacturing attempted to move through Hayes and
Wheelwright’s[6] four strategic roles. The stages were operating projects,
manufacturing system changes and organization-wide changes and reflected
the increasing influence of manufacturing’s strategic role.
Implementation is a key issue since strategy is what is implemented not what
is speculated, written down or presented[6,7,84]. However, decisions not to do
things can be valuable strategic (in)actions since they set boundaries on the
enterprise’s manufacturing and/or business strategy.
Project and process management
Platts[74] identified two project management issues from interviews with
practitioners on strategy formulation and audit processes. Adequate resourcing
for managing, supporting and operating groups should be identified. In
addition, a time scale should be agreed. Time scales evident in the literature are
highly variable; for example Schroeder and Lahr[37] propose two full days to
execute their process ; others[29,79] have found the process takes rather longer
– typically four months. Gunn[76] claims six-to-18 months is a more likely time
scale given that the group not only have to learn to work as a team, but have to
learn new methods, concepts and even new technologies. Hayes and
Wheelwright[6] view the manufacturing strategy formulation process as
continually ongoing over time. Their view appears to be based on the adaptive
view of strategy formation observed and described by several writers on
business strategy.
There seems to be a continuum between what could be called the big bang
approach of Schroeder and Lahr[37] and the continuous creation view of Hayes
and Wheelwright[6]. If it is believed that manufacturing strategy is the pattern
of actions implemented in manufacturing’s strategic decision areas then since
actions may be required at any time then strategy making is an ongoing
process. This has great significance for the strategy process and the tools it
might use, they may have to be suitable for use at any time as part of the normal
management process rather than as a separate strategic process carried out at
particular times.
The need to incorporate time into the “manufacturing policy framework”
was recognized by Voss[55]; however little work has been published on this
issue. The need has also been recognized by Porter[69] who separated the
theory of strategy into the causes of superior performance at a given period in
time and the dynamic process by which competitive positions are created. The
latter perspective is the one practitioners face and researchers have largely
ignored; however, Van de Ven[85] has proposed longitudinal studies over long
periods to better understand the ongoing strategy process.
Qualities of the process outcome
Published processes either explicitly state or implicitly assume that the purpose
of the manufacturing strategy process is to develop a strategy which will
enhance the firm’s competitive situation. Indeed Voss[79] observed that in two
of four cases studied the manufacturing strategy process was begun because of
competitive pressures. From this perspective the outcome of the process is a
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strategy. However in Voss’s two other cases, internal perceptions of lack of
focus and consistency led to the initiation of the process and in our research
other motivations and purposes have emerged. For example, at an automotive
parts manufacturer the first purpose of implementing the process was to check
the appropriateness of current manufacturing strategy to business
requirements and the second to help build a newly formed business team. In an
aerospace company[54] the purpose of their manufacturing strategy process
was:
to produce a widely understandable framework for analysing the effect of internal and
external changes of requirements and environment on Manufacturing and generate
consistent, appropriate responses. This objective should not be confused with the outcome of
the process e.g. a strategy to reduce the cost of adding value by…[54].
Both examples indicate a requirement for the process to deliver organizational
learning[15,38] as well as a strategy. Yet the most well-documented and tangible
outcome remains a strategy or a strategy modification and two fundamental
questions must be posed:
(1) How can a manufacturing strategy be assessed?
(2) What proof exists that having a manufacturing strategy and/or an
explicit manufacturing strategy process improves the performance of
the firm?
Manufacturing strategy assessment
Both Hayes and Wheelwright[6] and Slack[25] have proposed criteria for
evaluating a manufacturing strategy and a description of an effective
manufacturing strategy. Hayes and Wheelwright emphasized that
manufacturing strategy should:
● support the firm’s competitive success factors;
● be consistent with business and other functional strategies;
● show internal consistency between manufacturing decision areas.
Slack added the tests of consistency over time and credibility to Hayes and
Wheelwright’s criteria.
The importance of consistency between manufacturing strategy and
business strategy[10], marketing strategy[28], all functional strategies[21] and
the consistency of the individual components of manufacturing strategy with
one another[10,36] has been well supported.
There is one caveat from the business literature. Mintzberg[7] warned that a
highly consistent strategy could be very difficult to change and this was
particularly true if the strategy was also unique, placing the business in a
particular market niche. He cited Volkswagen’s difficulties in breaking out of
the “people’s car” Beetle mould. The eventual break was achieved after ten
years during which profits reduced markedly. In manufacturing, the time scales
of implementing some strategies can be long and therefore strategy consistency
over time is desirable; however, as Slack[25] pointed out, businesses do not
generally benefit from an overly rigid strategy. Wrapp[86], with respect to
organizational objectives and strategy, pointed out that policy strait-jackets are
to be avoided and, although a manager should give the organization a sense of
direction, a certain open-endedness should be retained for flexibility purposes.
A paradox has emerged here, consistency versus future adaptability or precise
strategy communication (to assist implementation) versus imprecision in order
to retain flexibility. A manufacturing strategy development process must take
account of the criteria and cannot ignore the paradox.
The value of a manufacturing strategy
In 1992 Tunälv[87] reported a study on 184 Swedish manufacturing businesses
which gave empirical support to the hypothesis “companies with a formulated
manufacturing strategy, aligned with the business strategy, will achieve higher
business performance than companies without a strategy”. Swamidass and
Newell[5] in an empirical study of 35 firms found a positive relationship
between the performance of the firm (growth) and the higher the role of
manufacturing managers in the firm’s strategic decision-making process. The
proof of the value of having a formulated, manufacturing strategy is building,
but the case is yet to be proven.
Internal context
It has been suggested by reviewers of the manufacturing strategy process
literature[1,2] that further insight into the strategy process may be gained by
using methods and ideas from other fields. The main field explored in this
section is the business strategy literature and its links with the field of
organization behaviour. Of particular interest are the ways in which the
(business) strategy process is perceived and the cultural and political contexts
within which a manufacturing strategy process resides.
Alternative strategy processes
The most common strategy process modes in the literature are entrepreneurial,
planning, adaptive, ideological and grass roots. The particular titles used here
are those used by Mintzberg alone and with various collaborators[7,9,84]. They
are the result of considerable historical, empirical research on how business
strategy is actually formed. This area has been studied by several other
authors, each generally inventing new terms to describe similar modes[88-95].
Note also that the process modes described here rarely, if ever, exist alone in
their pure form[7,9,84,96,97].
Entrepreneurial. This strategy process mode depends on the ability of one
individual or a small group to impose their vision of the firm’s role in the world
on the organization by direct orders[9]. It is also known as the command
mode[97] where it is clear that the role of top management is to provide
direction and the role of organization members is, like soldiers, to obey.
Strategy making in this mode is deliberate, alternatives are analysed and an
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appropriate course of strategic action is determined. This mode seems to occur
most frequently in young and small organizations which are able to find safe
niches in their environments[9]. Therefore this may be an important mode for
SMEs though it can also occur in larger organizations, particularly in crisis
conditions in which all actors are willing to follow one leader[9]. The notion of
the entrepreneurial chief executive is an attractive one and many large
companies have grown through such entrepreneurs (IBM-Watson, SonyMorita, Apple-Jobs then Sculley).
No specific manufacturing strategy process research has been found to
illustrate this process. However, manufacturing managers have found
themselves constrained from above in particular areas of manufacturing
strategy – particularly facilities, vertical integration, capacity and
organization[98]. Hayes and Wheelwright’s[6] stages one and two could be
associated with this mode operated at the business level.
Planning. The planning process mode has been the traditional view of
strategy development described by, among others, Ansoff[99], Ackoff[100] and
Andrews[101]. This rational view depended on an analysis of the
environmental opportunities and threats, and the internal strengths and
weaknesses of the organization. The process sought to identify action plans
which would use the organization’s strengths to exploit opportunities while
minimizing its vulnerability to threats.
The approach assumed implementation did not occur without systematic,
comprehensive analysis and comparison of alternatives mainly judged by
financial measures. Mintzberg[84] pointed out that this mode “assumes that
formal analysis can provide an understanding of the environment sufficient to
influence it”. Implementation then took place and consisted of a series of
integrated decisions taken across all strategic areas. As Hart[97] described –
the role of top management is to be “boss”, evaluating and controlling, while
organization members act as “subordinates”, following the system.
This mode has been mostly associated with large companies operating in
relatively stable environments and with the teaching methods and consulting
style of the Harvard Business School or the “Design School” as Mintzberg[96]
described it.
From the manufacturing strategy literature, Skinner[10] emphasized the
interdependency of the decision areas within manufacturing strategy. He
criticized senior managers for allowing so-called experts to develop strategy
and stressed the need for a top-down overview. Indeed Skinner’s 1969
paper[10] included the first diagram showing the systematic, rational steps
required to develop a manufacturing strategy. Since then the majority of
manufacturing strategy design processes have taken an analytic, systematic
approach recognizable as a planning process (see [29,39,81,83,87,102]). This
may be because the first stage of a manufacturing strategy process, usually an
audit, is the stage most documented and is an analytic stage, distinct from
formulation and implementation.
Ideological
When members of an organization share a vision and identify so strongly with it that they
pursue it as an ideology, then they are bound to exhibit patterns in their behaviour, so that
clear realised strategies can be identified. These may be called ideological strategies[9].
This process mode, also called “symbolic” by Hart[97], involves the creation by
top management of a compelling, long-term vision and a clear corporate
mission. The corporate vision gives meaning to the organization’s activities and
provides a sense of identity for employees; it defines the basic philosophy and
values of the firm[103]. The use of symbols, metaphors and emotion are central
to this process mode. Hart[97] described the role of top management as that of a
“coach”, motivating and inspiring organizational members to act like “players”
and respond to the challenge.
In 1985 Mintzberg had not studied such an organization but he was confident
that such a mode existed in certain charitable institutions and Israeli kibbutzim.
More concretely it is in the nature of most religious organizations. Recently,
however, Hamel and Prahalad[104] have discerned this mode in industrial
organizations, for example:
● Komatsu’s vision of “Maru-C” – to encircle Caterpillar, its primary rival.
● Coca-Cola’s vision of putting a coke within “arm’s reach” of every
consumer in the world.
Hamel and Prahalad[104] coined the phrase “strategic intent” for the long-term
mission of an organization and have further developed this mode to encourage
the setting of ambitious “stretch” targets to obtain spectacular growth[105].
This has been a fashionable mode which may not always have been well
implemented. In a survey by Digital, reported in the Financial Times 10 May
1993, 80 per cent of UK firms had a mission statement, but only 39 per cent of
these mission statements affected daily work behaviour. In practice,
manufacturing plants within companies like Philips Electronics, Lucas
Industries and Rolls-Royce Aerospace have declared manufacturing vision or
mission statements but, as yet, little research material has emerged.
Adaptive. Lindblom[106] first described this process mode as “the science of
‘muddling through’”; later he described it as “disjointed incrementalism”.
Mintzberg in 1973[84] described it as “adaptive”, in 1978 Quinn[107] described
it as “logical incrementalism” and in 1987 Ansoff[92] labelled it “ad hoc
reactive”. The approach assumed that the strategy development task was so
complex in time, opportunity and human cognition that the whole could not be
grasped. Thus interaction with the environment, through experimentation, was
essential to learn and build frameworks that could aid decision making. Unlike
the planning mode where a bold plan was executed, the incremental approach
consciously worked in small, disjointed steps learning and adapting strategy
over time.
Hart in 1992[97] titled this mode “transactive”, since it required continual
dialogue with key stakeholders, employees, suppliers, customers, etc., and cross
functionally within the organization. He described top management’s role as a
“facilitator”, empowering and enabling the process of transacting between all
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members of the organization whose role is to “learn and improve” and who were
viewed as “participants”.
Both the Deming prize and the Malcolm Baldrige Award have been granted
partly based on an organization’s demonstration of a strong organizational
learning capability fostered by transactive relationships among suppliers,
customers and employees. Examples of such transactive processes are full JIT
implementations including the involvement of suppliers and customers and the
use of quality function deployment where most functions of the organization
and customers are involved in new product specification.
Grass roots. This process mode was the antithesis of the planning and
entrepreneurial modes; here top management’s role was as a “sponsor” exercising
little strategic control over the organization[97]. Strategy initiatives emerged from
individuals who, acting as “entrepreneurs”, experimented and took risks.
Mintzberg[108] referred to this mode as “grass roots” strategy making, other
descriptions are “organic”[92], “generative”[97] and “bottom-up”[93].
At its most extreme this mode produced unconnected initiatives from
independent entrepreneurs – an example of such an organization could be a
university. Less extreme and captured in Mintzberg and Water’s[9] descriptor
“umbrella strategy” – was a mode where top management set out broad
guidelines within which new product strategies were permissible. Across the
range of such strategy-making it was assumed that those closest to customers,
product and process technologies would produce the best strategies. Hence the
importance of identifying, developing and rewarding product champions and
encouraging team based innovation, for example “Skunk works”[109]. In
addition, this mode assumed that top management could recognize high
potential projects from those that were not and then shepherd them through the
organization, filtering out less promising ideas. The grass roots mode has been
found in organizations that require great expertise and/or creativity[108] and
business level examples of this mode in action have been the “post-it”
development in 3M and Data General’s 32-bit mini computer development[110].
Within the manufacturing strategy literature Blenkinsop and Duberley[111]
described a case in which the development of one aspect of manufacturing
strategy could be argued to have arisen via the grass roots mode. However,
Skinner[10] criticized this mode, calling for a more planned, holistic, integrated
approach to manufacturing strategy. This mode may, however, be appropriate
at the creative, second stage of the manufacturing strategy process –
formulation.
Strategy process mode summary and issues
Table IV summarizes the modes discussed earlier. In the business strategy
literature the main issue is not whether these modes exist – that is accepted.
The issue is whether particular combinations or configurations of modes are
superior to others in particular circumstances[97]. Mintzberg regarded the
entrepreneurial, planning and adaptive modes combined and/or alternated by
managers to suit differing conditions as a realistic description of strategy-
Entrepreneurial
Planning
Ideological
Adaptive
Grass roots
Role of top Commander
Boss
management
Provide direction Evaluate and
control
Coach
Facilitator
Sponsor
Motivate and
inspire
Empower and Endorse and
enable
support
Role of
Soldier
organization
members
To obey
Subordinate
Player
Participant
Entrepreneur
Follow the
system
Respond to
the challenge
Learn and
improve
Experiment
and take risks
(Adapted from [97] to use Mintzberg’s descriptors)
making[84]. Nonaka[93] described a strategy-making process that combined
the ideological mode – top management creates a vision – with the grass roots
mode – middle management invent concrete means of closing the gap between
what exists and what top management hopes to create. Nonaka called this
process “middle-up-down”. Kawai[94] with examples from Asahi Beer, Nissan
and Matsushita identified the use of the same two modes as Nonaka but
associated the ideological with faster moving industries and the grass roots
with more mature industries. However, he asserted that both modes need to be
activated as conditions, principally environmental uncertainty, dictated. Hoshin
Kanri, a strategy-making process adopted by Bridgestone, Toyota, and HewlettPackard[112] seems to be a combination of the ideological and grass roots
modes as above but with an imposed structure that could only be associated
with the planning mode.
There has been much recent debate[96,113,114] on the validity of the
planning mode in comparison with more adaptive approaches. However, if it is
accepted that one process mode cannot be optimal for all situations and a
contingency approach is feasible[115, p. 481] such debates could cease.
Quinn[116], based on research in large multinational companies has taken a
contingent view:
because of differences in organizational form, management style or the content of individual
decisions no single (strategy) paradigm can hold for all strategy decisions[116].
Quinn also appeared to believe that a formal planning system institutionalized
the adaptive, incremental reality of the strategy process and he reconciled the
adaptive and planning modes by acknowledging a role for formal planning
techniques since they:
●
●
●
●
●
●
provide a discipline forcing managers to look ahead periodically;
require rigorous communications about goals, strategic issues and resource allocations;
stimulate longer term analyses than would otherwise be made;
generate a basis for evaluating and integrating short-term plans;
lengthen time horizons;
create an information framework[107].
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Table IV.
Strategy modes versus
organizational roles
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In the manufacturing strategy literature the mode assumptions of writers is
generally clear. Skinner[10,11,117] relied on a top down planning view. Hayes
et al.[38] took a much more adaptive stance, based on the importance they saw
in the learning process and their apparent reluctance to advance a step-bystep process. Gunn[76] proposed a long process of strategy-making which
emphasized learning and therefore leaned towards the adaptive mode. There
is again little empirical work on this aspect of manufacturing strategy with
Maruchek et al.[98] being the exception. In a study of “leading edge” firms
from various industries they found the manufacturing strategy process to be
top down, reactive to corporate strategy and generally limited to choice of
manufacturing technology, planning and control systems and human
resources aspects. Thus though the modes of the manufacturing strategy
process may be chosen by manufacturing, they will exist in a business which
may use different strategy-making modes to develop its business strategy.
The modes followed outside manufacturing might significantly influence
manufacturing’s choice.
Cultural factors
Combining the views of Schwartz and Davis[118] and Johnson[119] culture
can be defined as a set of shared beliefs, values and expectations about an
organization and the ways of doing things in that organization. These beliefs
evolve slowly and are very difficult to change dramatically. This reluctance to
change is caused partly by the fact that those most powerful in the
organization are likely to benefit most from the existing culture[119]. Both
Schwartz and Davis and Johnson recommend a form of culture audit in order
to choose strategy implementation paths which avoid conflict with a firm’s
culture. One consultancy explicitly diagnoses organizational culture within
their business strategy analysis process in order to recognize potential
barriers to implementation[120]. Such paths, however, may not exist and
techniques to surface managers’ strategic and cultural assumptions[121,122],
provoke crisis or use outsiders as change agents[119] to implement
“necessary” strategic change.
Selznick[67] believed a major role of the leader was to embody the purpose
of the organization within the organization’s social structure and to define the
standards and values of the organization. He was not prescriptive about the
values themselves, but there are many writers who recommend a set of values
that enable “The Learning Organization”[14,15,38,123].
Empirical data on the relevance of culture in the manufacturing strategy
context is rare but an exception is Misterek et al.[124], who found that a
significant contribution from manufacturing to the firm’s competitive
position was associated with:
● “low power distance”[125] managers are regularly seen on the shop
floor, engineers are located close to the shop floor and face to face
communication is more common than written memoranda;
“high collectivism”[125] supervisors encourage team work, team
problem solving and group performance rewards are in evidence;
● “high congruity”, the existence of a credible plant wide philosophy and a
high degree loyalty to the company from employees.
This implied that efforts to change culture in order to improve the position of
the firm was a viable part of long-term strategy. Schonberger’s[126] “worldclass” message contained cultural recommendations, especially on employee
involvement and democratic leadership, which would tend to reduce power
distance and on team work which would tend to increase collectivism.
Finally Hayes and Wheelwright’s[6] four stages in the development of
manufacturing’s strategic role hints at a cultural dimension. If manufacturing
were regarded as having a negative impact on the firm it is likely this would be
evident in cultural factors – manufacturing might not be regarded as the place
to be seen, transfer to manufacturing might be interpreted as a punishment and
manufacturing’s responses might tend to the defensive.
●
External context
The most widely quoted structuring of external context is Porter’s[60] model of
industry structure where five factors shaped business strategy: threat of entry
to the market from other organizations; supplier power; buyer power;
availability of substitute products and existing competitors. Later Porter[127]
extended these factors to include the geographical location of the firm to
explain successes in, for example, Silicon Valley and Japan. Hayes and
Wheelwright[6] stated that manufacturing strategy should be consistent with
the business environment since it was of little use to propose manufacturing
strategies that could not be afforded or ignore regulatory imperatives. It has
also been indicated that fast moving markets may require businesses to use a
different balance of strategy modes than slower moving markets[94 and
Hart[98] summarized four contingent factors (based on[128]) that predict likely
strategy process modes which are shown in Table V.
The framework – summary
The framework has now been built and Figure 3 summarizes the main subelements that have been covered in the review.
The review set out to suggest ways of incorporating strategies like TQM
within traditional manufacturing models and it was also hoped that potential
extensions to traditional frameworks might be identified by reviewing related
literature. We have shown that popular, best practice strategies can be linked to
the traditional decision area framework and that capability and competence
may provide potential extensions to manufacturing’s traditional objectives and
decision areas. The alternative strategy modes introduced from business
strategy have extended the usual planning only mode so common in the
manufacturing strategy literature and may be of particular interest to firms
pursuing human resource strategies that value empowerment and team work.
The idea of strategy creation being an ongoing process has extended the
traditional project or big bang approach to the manufacturing strategy process
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Table V.
Strategy mode versus
Miller’s[128]
contingencies
Entrepreneurial
Ideological
Adaptive
Environment Simple; low level Stable; low
of complexity
degree of
change
Dynamic;
high velocity
or radical
change
Complex;
Turbulent;
many
dynamic and
stakeholders complex
Firm size
Medium-large
Large
Small
Planning
Medium-large
Stage of firm No relation
development
Steady growth Rapid growth; Mature
re-orientation
Strategic
orientation
Solidify
position
(defender)
No relation
Proactive
change
(prospector/
analyser)
Grass roots
No relation
No relation
Continuous Innovation
improvement (prospector)
(analyser)
(Adapted from [97] to use Mintzberg’s mode descriptors)
mostly found in the literature and has highlighted the need for accessible tools
to support ongoing strategy processes.
Discussion – using the framework
In this section interactions between sub-elements in the framework are
described. The discussion revolves around the use of the framework to help
Manufacturing
strategy content
Manufacturing
strategy process
Qualities of the
process outcome
Objectives
quality, time cost and flexibility
capability and competence
Point of entry:
education and gaining
commitment
Decision areas:
facilities, capacity, vertical
integration, manufacturing
processes and control,
organization, human resources,
quality policy, NPI and
performance measurement
Participation:
within the business, within
manufacturing and externals
Consistency:
with business and
other functional
strategies, between
the decision areas,
with the business
environment
over time
Procedure:
audit, formulation and
implementation
Comprehensive
Credible
Appropriate
best practice strategies
business processes
capability and competence
Process management:
big-bang–continuous creation
Internal context
Alternative strategy modes
Entrepreneurial, planning, adaptive, ideological, grass roots
Culture, stage of firm development
Figure 3.
The manufacturing
strategy process
framework
External context
Supplier power, buyer power, availability of substitutes, threat of entry, existing competitors
Regulation, political and economic context, geographic position
design a manufacturing strategy process to achieve a set of process outcomes.
The fact that many interactions are at work can lead to a complex picture and
two steps have been taken to simplify the framework while retaining its vital
elements. First, the external context is omitted, as mentioned earlier the main
impact of sectoral, national and market factors enters the manufacturing
strategy process from business strategy and objectives – a key start point for
all published processes. Second, a subset of potential interactions is shown; no
attempt has been made to create a picture where every aspect of the framework
can be seen to interact with every other, albeit in particular circumstances. This
was too ambitious a picture to create given the number of interactions; however,
after partially designing a manufacturing strategy process a set of further
interactions are used to illustrate sub elements which have been previously
ignored or assumed.
Table VI summarizes how the framework could be used to design the audit,
formulation and implementation stages of a manufacturing strategy process to
achieve a set of desired process outcomes and its elements are now discussed.
Audit
The audit stage is the most documented stage in the manufacturing strategy
process and generally concentrates on defining the manufacturing task and
assessing the ability of current strategy to achieve that task. To achieve
consistency with business and other functional strategies and credibility of
manufacturing strategy the involvement of the CEO and senior representatives
from all functions is essential. Credibility within manufacturing and widely
within other functions would be assisted by creating an awareness of the
process across the firm and especially within manufacturing at an early stage.
The procedure should include education (a point of entry issue) on the strategy
principles being used in the process (for example which strategy content
framework is to be used) and the means of gathering and comparing audit data.
Comprehensiveness of the manufacturing strategy is not a major issue in this
stage but any deficiencies will be identified in the content model chosen by the
end of the stage. Most published processes observe these points to a greater or
lesser extent; however in no case yet seen has the audit stage included a
systematic means of looking at past manufacturing strategy. Such a
perspective would be necessary to enable manufacturing to construct a
strategy that displayed consistency over time[25].
The planning mode is the most supportive since this is a structured, dataintensive stage aimed at identifying the strengths and weaknesses of current
strategy.
Formulation
In this stage the aim is to generate an action plan which addresses issues that
prevent the manufacturing task being achieved. Procedures which enable
iterations with business and other functional strategies by the involvement of
the CEO and functional managers will tend to assist the consistency and
credibility of manufacturing strategy, even when this means business strategy
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Qualities of the
process outcome
Consistency with
business and other
functional strategies
42
Table VI.
The design of a
strategy process
Audit
Formulation
Implementation
Participation:
involvement of CEO
and function heads
and wide awareness
within the business that
the process is active
Procedure: the
possibility of iterations
with business and
functional strategies
Participation: regular
feedback on progress
to CEO and function
heads
Participation: regular
feedback on progress
to CEO and function
heads
Credibility within
Procedure: methods
Participation:
Participation: wide and
the business
for deriving the
appropriate
deep dissemination of
manufacturing tasks
involvement of other
the strategy
from business strategy functions
Credibility within
Participation:
Participation: deep
Procedure: means of
manufacturing
awareness of the
involvement in the
achieving widespread
strategy process at an creation and checking understanding of the
early stage
of strategic options
strategy
Comprehensiveness Point of entry: wide
Procedure: tests for
education of the
comprehensiveness
strategy principles
being used
Consistency over
Procedure: methods of Procedure: methods for
time
capturing past
recognizing the scale and
strategies
longevity of options
Consistency between
Procedure: methods of
different parts of the
predicting the effect of
manufacturing
options in terms of
strategy
interactions between
decision areas
is adjusted to match manufacturing capabilities. Credibility within
manufacturing will be considerably improved by wide involvement in the
creation and evaluation of strategy alternatives and it is likely that the quality
of strategy proposals and the ease of subsequent implementation will also be
improved by such participation. The achievement of consistency over time
implies that methods are required that can recognize the scale of change from
the past that the implementation of potential strategic options requires and the
potential longevity of these options. The achievement of consistency within
manufacturing strategy requires methods of predicting interactions between
options in different decision areas over time. Procedures that adequately
address the latter two requirements have yet to enter the manufacturing
strategy literature.
The supportive strategy process modes are entrepreneurial, adaptive and
grass roots and Table V identifies the external context that favours these
modes.
Implementation
In the implementation stage consistency of the manufacturing strategy with
other functional strategies and its credibility are still assisted by regular
feedback of progress and wide and deep dissemination of the content and logic
of new strategy. Logic and content are likely to be necessary since new
manufacturing strategies often require implementation assistance from other
functions and individuals who have not been directly involved in the strategy
process. Methods for achieving a wide understanding of the logic of strategies
are, however, rarely discussed.
The supportive process modes are likely to be planning and adaptive
depending on the degree of uncertainty of the strategy’s interactions with for
example, the market. If uncertainty is high then trials rather than global
changes are likely to be attempted.
At least three assumptions have been made in this example:
(1) It has been assumed that all manufacturing strategy decisions are alike
in the sense that they can be addressed by similar, generally wide
participation. However if the closure of a manufacturing site forms the
crux of reducing manufacturing costs then wide involvement in the
creation of that strategy is unlikely to be possible or desirable. If the
subject of debate is the improvement of quality policies then wide
involvement is wholly appropriate and desirable. Thus participation can
be sensitive to decision area and type and may have to be limited even if
this does not assist the widespread credibility of the strategy.
(2) The example was oriented to the big bang or project approach to the
development of manufacturing strategy; that is strategy is assumed to
be made when people sit down to make strategy. This is a valid
assumption for the first implementation of a strategy process in
manufacturing where strategic principles and language are explained
and a fresh look is taken. However, strategy, as observed in the business
strategy literature, can emerge in unplanned ways at any time, not
necessarily when people decide to make strategy. No techniques are
mentioned in the example nor have any been found in the strategy
literature in general that assist strategy development as part of the
normal management process. Such tools would support the continuous
creation view of strategy formulation adopted by Hayes and
Wheelwright[6] with its echoes in the empirical work of Mintzberg and
others.
(3) There was an implicit assumption that manufacturing was at Hayes and
Wheelwright’s[6] stage-three strategic role. A company with
manufacturing at stage one is unlikely to have the patience for this
participation and heightened focus on manufacturing and might well
prefer to adopt best practice strategies. Meanwhile, a company at stage
four is likely to criticize the absence of an explicit reference to
organization learning and may be very interested in a resource-based
view which makes operational the ideas of competence and capability
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development. This suggests that manufacturing’s strategic role is a
potentially powerful determinant of strategy content, the outcomes
required from the process and therefore the strategy process required to
create those outcomes.
From this application of the framework the multi-dimensionality of the strategy
process and its design becomes evident, lending support to Mintzberg’s
contention that:
There is perhaps no process in organizations that is more demanding of human cognition than
strategy formation[7, p. 948].
Conclusion
The proposed framework appears to be capable of assisting the design of
manufacturing strategy processes and in its current form it has proved useful
in identifying gaps in the manufacturing strategy toolkit in areas such as past
strategy analysis and the ongoing formation of strategy. It may also prove
helpful as a tool to aid the diagnosis of manufacturing strategy process
problems.
The main conclusion from the article may be of the scale of potential
interactions in the framework and the difficulty, therefore, of designing realistic
processes whose aspects seem to depend on the particular firm and its
particular situation. However, this suggestion of the individuality of strategy
processes might satisfy a number of the criteria for a potentially important
competence or capability – they are “unobservable”[65], they are “upstream,
idiosyncratic and difficult to imitate”[66]. Vickery[35] has already suggested
that “production competence” may be to do with the efficiency and effectiveness
of the manufacturing strategy formulation and implementation process. Yet
whether or not a firm’s manufacturing strategy process is an important
competence or capability, there is little doubt that improvements in the
contribution of implemented manufacturing strategies to business
competitiveness will continue to be sought. Thus the improvement of the
processes that create and implement these strategies will remain a challenge for
practitioners and researchers for the foreseeable future.
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Further reading
Wheelwright, S.C., “Manufacturing strategy: defining the missing link”, Strategic Management
Journal, Vol. 5, 1984, pp. 77-91.
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