MANUFACTURING STRATEGY: AT THE INTERSECTION OF TWO PARADIGM SHIFTS

The concept of “manufacturing strategy” is still, in human terms, barely past adolescence. In years, it is younger than most of the MBAs who study it today. So it is not surprising that–like them–it has been undergoing almost continual growth and elaboration throughout its short life, as it tested itself against the real world and as that world evolved. Today it is facing perhaps the greatest challenge in its short history, as it finds itself in the crossfire of debates about core aspects of its two parent disciplines: manufacturing management and competitive strategy. This paper begins by briefly reviewing some of the key steps in the conceptual development of the manufacturing strategy paradigm, then describes the attacks now being directed at both the manufacturing management and the competitive strategy paradigms, and finally discusses the new perspectives that these two paradigm shifts are shedding on some familiar problems.     

INNOVATION STRATEGY AND FINANCIAL PERFORMANCE IN MANUFACTURING COMPANIES: AN EMPIRICAL STUDY

An innovation strategy for the manufacturing function covers four areas: a firm's desired innovation leadership orientation (i.e., being a leader versus being a follower), its level of emphasis on process and product innovation, its use of internal and external sources of innovations, and its intensity of investment in innovation. We examine two models of the association between manufacturing companies' innovation strategy and their financial performance. The first examines the variations in company financial performance as a function of the simultaneous effect of the dimensions of innovation strategy. The second is a sequential model that suggests a causal sequence among the dimensions of innovation strategy that may lead to higher performance. We used data from a sample of 149 manufacturing companies to test the models. The results (1) support the importance of innovation strategy as a determinant of company financial performance, (2) suggest that both models are appropriate for examining the associations between the dimensions of innovation strategy and company performance, and (3) show that the sequential model provides additional insights into the indirect contribution of the individual dimensions of innovation strategy to company performance. Finally, we discuss the implications of these results for managers.     

MEASURING FACTORY FOCUS: AN EMPIRICAL STUDY

Focus in the manufacturing plant is generally deemed to be an important element of success in manufacturing strategy. Yet, little work has been completed in the measurement of plant focus and a dearth of empirical evidence exists to support the broad popularity of this concept. This paper presents a plant focus measurement approach and reports the results of a field study that uses a site visit research design to apply the focus measure to a multi-industry sample of manufacturing plants. Regression analysis is used to study the relationships between the plant focus variable and the environmental variables of plant size, number of product lines, plant age, number of processes, and type of processes. Although highly intuitive, these relationships have undergone very little empirical study in the literature. Our study provides evidence of a strong logarithmic relationship between our plant focus measure and the number of product lines. Support is also demonstrated in that our measure of plant focus is linked to the number and type of manufacturing processes. However, the variables of plant age and plant size do not appear related to the plant focus measure. The literature-based multicriteria focus measure can be used by managers and researchers as an objective, formal, and generalizable approach for assessing plant focus, for identifying areas in the plant that detract from focus, and for tracking focus improvement efforts over time.     

CHANGING MANUFACTURING STRATEGY

This paper demonstrates an approach to successfully managing change of manufacturing strategy. It first introduces the issues and management guidelines, and then describes how one company used this approach to achieve dramatic benefits from changing its manufacturing strategy. A third part of the paper elaborates on how the company made the approach work.     

THE PLANT LOCATION DECISION IN MULTINATIONAL MANUFACTURING FIRMS: AN EMPIRICAL ANALYSIS OF INTERNATIONAL BUSINESS AND MANUFACTURING STRATEGY PERSPECTIVES

The paper combines perspectives from international business and manufacturing to examine multinational plant location decisions. The location choice in manufacturing is between integrated and independent plants, while the international choice is between a foreign and domestic plant relative to their headquarters' country. The study empirically investigates whether these choices have different plant location determinants using data from a survey of plant managers of large, multinational firms. We find more evidence that the manufacturing choices benefit from consideration of international business issues than vice versa. However, managers rank determinants associated with manufacturing strategy considerably higher than those associated with intemational business.     

REVISITING ALTERNATIVE THEORETICAL PARADIGMS IN MANUFACTURING STRATEGY

Testing and cross‐validation of theories and paradigms are necessary to advance the field of manufacturing strategy. When the findings of one study are also obtained in other studies, using entirely different databases, we become more confident in the results. Replication alleviates concerns about spurious results and is one motivation for this study. We examine aspects of the tradeoffs concept, production competence paradigm, and a manufacturing strategy taxonomy framework. In regard to the tradeoffs concept, we found evidence of tradeoffs between some, but certainly not all, manufacturing capabilities of quality, cost, delivery, and customization. The relationships get sharper when controlling for process choice. For example, the tradeoff between cost and customization is particularly strong between plants that have different process choices. We find that such tradeoffs can change, or even disappear, however, once the process choice is in place. With respect to the production competence paradigm, our analysis shows a statistically significant correlation between production competence and operations performance in batch shops, but not in plants with other process choices. Finally, using variables similar to those of Miller and Roth, our data produced three similar clusters even though their unit of analysis was much more macro than ours. Controlling for process choice is consistent with the current manufacturing strategy literature that emphasizes dynamic development of capabilities within the context of path dependencies. A major argument of this strand of research is that operations decisions not only affect current capabilities, but also set the framework for development of capabilities in the future. That being the case, controlling for process choice (or other factors such as industry or markets) should contribute to the understanding of capability‐development paths adopted by different manufacturing plants. In short, we found at least partial support for each of the theories examined here, even though the theories seem on the surface to be contradictory and mutually exclusive. Controlling for process choice or other measures of dependency goes a long way in uncovering consistency across different theories and empirical studies in operations management.     

QUALITY MANAGEMENT: UNIVERSAL OR CONTEXT DEPENDENT?

Quality management has often been advocated as being universally applicable to organizations. This is in contrast with the manufacturing strategy contingency approach of Operations Management that advocates internal and external consistency between manufacturing strategy choices. This article empirically investigates whether quality management practices are contingent on a plant's manufacturing strategy context, by examining the use of process quality management practices—a critical and distinctive subset of the whole set of quality management practices—across plants representative of different manufacturing strategy contexts. The study strongly suggests that process quality management practices are contingent on a plant's manufacturing strategy, and identifies mechanisms by which this takes place.     

COMPETITIVE PRIORITIES: INVESTIGATING THE NEED FOR TRADE‐OFFS IN OPERATIONS STRATEGY

A heated debate continues over the need for trade‐offs in operations strategy. Some researchers call for plants to focus on a single manufacturing capability and devote their limited resources accordingly, while others claim that advanced manufacturing technology (amt) enables concurrent improvements in quality, cost, flexibility, and delivery. Yet there is little empirical evidence for or against the trade‐off model. In response, this study addresses the question: “To what extent do manufacturing plants view competitive priorities as trade‐offs?” We employ survey data collected from managers and operators in 110 plants that have recently implemented AMT. Our findings suggest that trade‐offs remain. However, perceived differences in competitive priorities are subtle and may vary across levels of the plant hierarchy.     

INCLUDING ENGINEERING IN OPERATIONS STRATEGY

Today's markets are characterized by time and product quality-based competition. Companies must compete through their ability to manage the whole cycle of product realization and delivery, from the initial concept through to delivery and support at the customer. They must do this through managing an integrated company, not a set of separate functions. This paper addresses the issue of how companies should develop operations strategies for engineering and manufacturing combined. It uses field research into 15 engineering companies to develop the concept of the manufacturing system mission, and proposes strategic choices for manufacturing, engineering and linked functions.     

THE CHALLENGE OF MANUFACTURING ADVANTAGE

In spite of the significant progress made by a wide range of manufacturing companies over the past decade, few senior executives in U.S. firms would point to manufacturing as a significant source of competitive advantage. This paper seeks to explore some of the basic reasons for this. It begins by providing a framework for manufacturing competitiveness. It then outlines a handful of characteristics that seem to have been pervasive in a wide range of manufacturing competitiveness programs over the past decade. In contrast to those characteristics, it uses three quite different organizations to illustrate a very different mode for pursuing manufacturing competitiveness. Finally, the paper concludes by outlining three elements that appear to be essential in the successful pursuit of manufacturing advantage.     

EXPLORING LINKAGES BETWEEN MANUFACTURING STRATEGY,BUSINESS STRATEGY,AND ORGANIZATIONAL STRATEGY

In recent years there has been an increased emphasis on the development of manufacturing and business strategies. In spite of that high level of emphasis, limited empirical research has been published on the linkage between manufacturing strategy, business strategy, and organizational performance. Our study examines that linkage. Our main contribution lies in (i) building constructs for some important elements of manufacturing strategy and business strategy and (ii) testing the impact of linkage between manufacturing strategy and business strategy on organizational performance. The study is based on 175 responses from senior executives in manufacturing organizations.     

BUSINESS STRATEGY,MANUFACTURING FLEXIBILITY,AND ORGANIZATIONAL PERFORMANCE RELATIONSHIPS: A PATH ANALYSIS APPROACH

It has been argued in the literature that business strategy and manufacturing flexibility independently affect the performance of an organization. However, no empirical examination of the interrelationship among these three constructs has been performed. In this paper, based on a field study of 269 firms in the manufacturing industry, the identified constructs have been used to test a theoretical model using path analysis techniques. Our results indicate that business strategy contributes both directly and indirectly to organizational performance. The findings provide evidence of direct effects of (i) business strategy on manufacturing flexibility and (ii) manufacturing flexibility on organizational performance.     

SERVICE-BASED MANUFACTURING: THE SERVICE FACTORY

Evidence suggests that factory-based service will become the next form of competition among manufacturers. If this is true, then manufacturing executives will have to obtain a clear understanding of the service capabilities of their plants and adjust their strategies accordingly. We define a set of factory-based services, information, problem solving, sales, and support, and suggest that they be considered in developing manufacturing strategy. Several propositions provide a framework for future research by linking service performance variables to conventionally accepted manufacturing performance variables.     

MANUFACTURING STRATEGY AND BUSINESS ORIGIN OF NEW VENTURE FIRMS IN THE COMPUTER AND COMMUNICATIONS EQUIPMENT INDUSTRIES

With the use of questionnaire data from owners, presidents, CEOs, and chairmen of boards and a logistic regression approach, we analyzed the manufacturing strategies of 64 new-venture firms in the computer and communications equipment manufacturing industries. We found statistically significant differences in manufacturing posture as a function of whether the new venture was corporate-sponsored or independent (i.e., new venture origin). The findings suggest that independent firms attack the market with superior product quality with the use of technology in the public domain. They offer a narrow range of products directed to a few large customers and do not make developing new products a primary issue. In contrast, corporate-sponsored tirms are less concerned with superior product quality but emphasize patented technology and new product development. They provide a broader range of products and service smaller customer orders.     

PLANT‐LEVEL ENVIRONMENTAL MANAGEMENT ORIENTATION: THE INFLUENCE OF MANAGEMENT VIEWS AND PLANT CHARACTERISTICS

As customers, the public and other stakeholders are increasingly demanding that manufacturing firms improve their approach to environmental management, some plants have moved to develop an orientation that is increasingly proactive. Synthesizing earlier research, environmental management orientation is defined here to include system analysis and planning, organizational responsibility, and management controls. The relationship between a proactive orientation and two sets of internal factors, specifically the personal views of plant managers and plant‐specific characteristics, was tested using survey data from the furniture industry. The production outlook for the plant was critical, with a favorable outlook fostering a more proactive environmental management orientation. After controlling for plant‐specific factors, personal views also were influential; an increasing emphasis on short‐term economic value was related to a more reactive plant‐level orientation. Thus senior corporate management can foster strong plant‐level environmental management through a more balanced emphasis on economic and ethical values and continued investment in a plant's long‐term viability.     

THE TIMING OF LABOR TRANSFERS IN DUAL RESOURCE-CONSTRAINED SYSTEMS: “PUSH” VS. “PULL” RULES*

Altough the dual resource-constrained (DRC) system has been studied, the decision rule used to determine when workers are eligible for transfer largely has been ignored. Some earlier studies examined the impact of this rule [5] [12] [15] but did not include labor-transfer times in their models. Gunther [6] incorporated labour-transfer times into his model, but the model involved only one worker and two machines. No previous study has examined decision rules that initiate labor transfers based on labor needs (“pull” rules). Labor transfers always have been initiated based on lack of need (“push” rules). This study examines three “pull” variations of the “When” labor-assignment decision rule. It compares their performances to the performances of two “push” rules and a comparable machine-limited system. A nonparametric statistical test, Jonckheere's S statistic, is used to test for significance of the rankings of the rules: a robust parametric multiple-comparison statistical test, Tukey's B statistic, is used to test the differences. One “pull” and one “push” decision rule provide similar performances and top the rankings consistently. Decision rules for determining when labor should be transferred from one work area to another are valuable aids for managers. This especially is true for the ever-increasing number of managers operating in organizations that recognize the benefits of a cross-trained work force. Recently there has been much interest in cross-training workers, perhaps because one of the mechanisms used in just-in-time systems to handle unbalanced work loads is to have cross-trained workers who can be shifted as demand dictates [8]. If management is to take full advantage of a cross-trained work force, it need to know when to transfer workers.     

The Global Food Industry and “Creative Capitalism”: The Partners in Food Solutions Sustainable Business Model

Rising global food prices have driven 44 million additional people into extreme poverty—and malnutrition—in developing countries since June 2010. Partners in Food Solutions (PFS), a nonprofit social enterprise affiliated with General Mills, is proposed as the conduit for food industry managers, engineers, and scientists to initially advise small‐ and medium‐sized African mills and food processors—and later other developing countries—on improving supply chain management by addressing manufacturing problems, developing products, improving packaging, extending product shelf, and finding new product markets. In this article, the “creative capitalism” model of sustainability and social and environmental responsibility is applied to the food manufacturing industry's efforts supporting PFS. Furthermore, the evolution of the sustainable business model developed by PFS is thoroughly described, explained, and analyzed as a generic model of social enterprise to be “scaled up” by the global food manufacturing industry. A summary of salient points conclude the article.     

BUILDING THE POM CURRICULUM FOR A PRIVATIZING ECONOMY: AN EVALUATION FROM MANUFACTURERS‘ PERSPECTIVES

Manufacturing in Eastern European countries is in transition to open-market competition. One transitional issue is university education for operations managers from the perspective of business practitioners. Survey responses by 203 manufacturing professionals from 83 companies provide recommendations for operations management education at the University of Sibiu in Romania. The recommendations substantially reorient curricula that traditionally prepared students for professions in centrally controlled economies rather than for open-market competition. The redesigned curriculum has an educational advantage in its integration of production, marketing, and engineering, all under one college of engineering. However, the curriculum is inconsistent with some tenets of quality management and just-in-time production. Also, survey data imply a need for coverage of competitive manufacturing strategy that, currently, is underrepresented in the curriculum.     

Manufacturing Practices and Strategy Integration: Effects on Cost Efficiency,Flexibility, and Market‐Based Performance

Manufacturing plant managers have sought performance improvements through implementing best practices discussed in World Class Manufacturing literature. However, our collective understanding of linkages between practices and performance remains incomplete. This study seeks a more complete theory, advancing the idea that strategy integration and enhanced manufacturing capabilities such as cost efficiency and flexibility serve as intermediaries by which practices affect performance. Hypotheses related to this thesis are tested using data from 57 North American manufacturing plants that are past winners and finalists in Industry Week's“America's Best” competition ( Drickhamer, 2001 ). The results suggest that strategy integration plays a strong, central role in the creation of manufacturing cost efficiency and new product flexibility capabilities. Furthermore, strategy integration moderates the influences of product‐process development, supplier relationship management, workforce development, just‐in‐time flow, and process quality management practices on certain manufacturing capabilities. In turn, manufacturing cost efficiency and new product flexibility capabilities mediate the influence of strategy integration on market‐based performance. These findings have implications for practice and for future research.