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.     

Measuring Dynamic Capabilities: Practices and Performance in Semiconductor Manufacturing

Research on dynamic capabilities emphasizes the importance and role of organizational routines in explaining interfirm differences in performance. While performance differences are well documented, few empirical analyses explore the processes inside organizations that lead to dynamic capabilities or attempt to define and measure their performance effects. This paper examines one type of dynamic capability – the development and introduction of new process technologies in semiconductor manufacturing. This dynamic capability is an important source of competitiveness in the semiconductor industry, given the short product lifecycles, rapid price declines, and rapid technological advances that define the industry. Because much of the knowledge that underpins semiconductor manufacturing is idiosyncratic, firm-level R&D organization and information technology practices that facilitate problem solving and learning-based improvement provide important and enduring advantages. We derive models of the rate of improvement in manufacturing yield (i.e. the quality of production) and cycle time (i.e. the speed of production) following the development and introduction of new process technologies in manufacturing facilities, and test the empirical specifications of these models. The ways in which semiconductor manufacturers accumulate experience and articulate and codify knowledge within the manufacturing environment build new process development and introduction dynamic capabilities that improve performance.     

Redistributing food manufacturing: models for the creation and operation of responsive and agile production networks

Abstract

The food industry is a mature industry where its profit margins are thin and its R&D failure rate for new products is substantial. Both facts indicate that decent return on development investment cannot be provided and that the food industry cannot still rely on its traditional way of thinking and innovating. New product development cycles should involve not only the product itself but also the entire manufacturing and distribution network. Hence, collaborative manufacturing and servitization models are key elements for the rapid transformation of the new food industry. Moreover, recent developments in technology have the potential to shift manufacturing production away from large scale manufacturing plants to a network of distributed, smaller scale localized and customizable manufacturing facilities. Such a network is the crucial enabler for the on-demand manufacture of new or even, existing food products to rapidly respond to the consumers´ demands.     

Critical capabilities for widening international new ventures’ geographical scope.

Current findings are still inconclusive with regard to the role played by the characteristics of social networks in INVs’ early geographical scope. This study analyses how entrepreneurial-oriented networks affect new ventures’ early geographical scope through critical capabilities. We have adopted a behavioural perspective to investigate the effect of social networks both on international new ventures’ geographical scope and on their critical capabilities such as absorptive and adaptive capabilities. Results from a sample of 183 Spanish international ventures confirm the importance of entrepreneurial orientation as a network characteristic for early geographical scope. Additionally, the positive effect of adaptive capability on new ventures’ early geographical dispersion has been confirmed but not so in the case of absorptive capabilities. Our results suggest that future research must be careful to assume international new ventures’ absorptive capability as a prerequisite to their cross-border expansion.     

EXPLAINING PLANT-LEVEL DIFFERENCES IN MANUFACTURING OVERHEAD: STRUCTURAL AND EXECUTIONAL COST DRIVERS IN THE WORLD AUTO INDUSTRY

Using data from 62 automobile assembly plants worldwide, we examine the extent to which various structural cost drivers (plant scale, automation, and product mix complexity) and exe-cutionalcost drivers (product manufacturability, management policies, and production practices) account for plant-level differences in manufacturing overhead. Our analysis of structural drivers finds that overhead hours per vehicle are negatively associated with production volumes, consistent with economies of scale in overhead functions. However, automation appears to have little influence on overhead levels. Product mix complexity's effect on overhead requirements varies with the complexity's form and the plant's manufacturing capabilities. Option and parts complexity (measures of peripheral and intermediate product variety) both exhibit adverse effects on overhead, reflecting the considerable logistical, coordination, and supervisory challenges that accompany an increased number of parts and more complex manufacturing tasks. In contrast, model mix complexity (a measure of fundamental variety) appears to have little impact on direct or overhead labor requirements in auto assembly plants. Our analysis of executional drivers provides empirical support for the claim that advanced manufacturing practices such as the reduction of buffers, multiskilled production workers, and the use of teams can lower overhead costs. We also find preliminary evidence that the lower overhead costs in Japanese auto assembly plants are due primarily to the use of multiskilled work teams and the shifting of traditional overhead activities to production workers. Overall, our results indicate that manufacturing overhead is a function not only of the structural cost drivers that have dominated the academic literature but also of executional cost drivers that are harder to duplicate and therefore potentially more valuable for achieving competitive advantage.     

Managing international manufacturing at plant and plant network levels – insights from five case studies

Abstract

In this study, we develop understanding of management of international manufacturing by a combined analysis of manufacturing firms’ plant networks and roles of individual plants within them. We elaborate the framework of Ferdows (1989 Ferdows, K. 1989. “Mapping International Factory Networks.” In Managing international manufacturing, edited by K. Ferdows, 3–21. Amsterdam, The Netherlands: Elsevier Publishers. [Google Scholar]) at plant and network levels by analyzing data collected from five plant networks of global manufacturing companies and propose an enhanced framework consisting of four main role types with eleven plant roles, which have implications on the network level. The findings give interesting and novel insights into management of international manufacturing; we conclude that plant roles are more complex than conventionally considered and understanding of international manufacturing requires elaborated analysis at both plant and network levels.     

How organizational cognitive frames affect organizational capabilities: The context of corporate sustainability

We draw on the emerging literature on the micro-foundation of capability development to investigate the effects of the relative importance of corporate sustainability in a firm's organizational cognitive frame on the development of distinct organizational capabilities. Based on survey data from 124 Danish manufacturing firms and seven interviews, we find that the relative importance of corporate sustainability in a firm's organizational cognitive frame positively encourages the development of three organizational capabilities, namely, stakeholder integration, market sensing, and organizational learning. However, contrary to our expectation and reasoning, we find that the development of the strategic planning capability is negatively affected. Our findings provide novel empirical evidence and contribute to an improved understanding of the effect of a firm's organizational cognitive frame on the development of organizational capabilities.     

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.     

The Roles of Supply Chain Intelligence and Adaptability in New Product Launch Success

Many new product introductions continue to be unsuccessful, and while researchers have studied product development processes, relatively few studies directly address new product launch. We do so in the present research and posit that supply chain intelligence, defined as technological and competitive knowledge sourced and integrated from suppliers, customers, and competitors, plays an important role in explaining new product launch success. We further employ the knowledge‐based view to theorize that both supply chain adaptability and product innovation capability act as important mediators of the effects of supply chain intelligence on new product launch success and firm financial performance. While the former capability refers to a firm's ability to quickly adjust its supply chain to react to market and product design changes, the latter refers to the firm's proficiency in developing innovative new products. We test hypothesized relationships among these factors utilizing data collected in a survey of 229 U.S. manufacturing firms. Results point to the central role of supply chain adaptability in capturing the benefits of supplier technological intelligence for enhanced product innovation capability, new product launch success, and firm financial performance. In contrast, product innovation capability serves as the generative means by which customer and competitor intelligence is translated into more successful new product launches, which, in turn, produce superior firm financial performance. Overall, these findings contribute to a better understanding of factors that can explain why certain product launches are more successful than others, and offer practical insights for appropriate investments in the development of related knowledge resources.     

Risk management in plant investment decisions: risk typology,dimensions and process

Abstract

Managing risk associated with plant location decisions is a growing concern as companies seek to reassure investors about the robustness of their strategies. However, little attention has been paid to the systematic evaluation of risk associated with new plants. This paper investigates risk management practices in plant investment decisions through detailed case investigations in a cross section of industrial businesses at different levels of maturity in order to observe current practices, identify common principles and to synthesis systematic approaches to risk management. It identifies key risk categories and dimensions of risk management, building on three key bodies of literature – global manufacturing, investment and risk management     

Product architecture,global operations networks,and operational performance: an exploratory study

Abstract

This paper investigates the relationships between product architectures and global operations networks and their impact on operational performance, based on survey data from 82 Swedish manufacturers. We find that modular and integral product architectures are associated with different characteristics of the global operations network, and that global operations network designs are characterised by three dimensions: network, plant and supply chain. The key aspects are network structure (configuration as well as coordination), plant focus (scale or scope) and the locus of supply chain capabilities (internal or external).     

On Decisions for Integration Implementation: An Examination of Complementarities Between Product‐Process Technology Integration and Supply Chain Integration

Research has shown that both product‐process technology (PPT) integration and supply chain integration efforts produce operational benefits, yet synergies between these types of integration are not well understood. This article empirically examines strategic customer integration and supplier integration as complementary activities for PPT integration, with the aim of helping manufacturing plant managers to intelligently implement mutually supportive types of integration. We set two conditions for establishing complementarity: (i) one type of strategic integration must positively influence the adoption of another and (ii) the two types of strategic integration must exhibit a synergistic fit with respect to manufacturing plant capabilities. We test these conditions using survey results representing 224 manufacturing plants. The findings show positive complementarities between PPT integration and supplier integration with respect to quality, delivery, and process flexibility. Also, positive complementarities exist between PPT integration and customer integration with respect to quality and new product flexibility. The results extend the emerging theory of strategic value chain integration and provide guidance to manufacturing managers who wish to assemble strategic integration policies.     

新产品开发网络资源与技术资源匹配关系:基于中国制造业企业的实证研究

新技术革命背景下新产品开发所需资源的广度和深度与日俱增,不同资源的匹配组合对于新产品开发成功具有直接决定性作用。本文结合资源基础理论与社会网络理论,深入研究了新产品开发中不同程度网络-技术资源组合对新产品开发市场绩效与风险的作用机理,并探究了产品多元化对网络-技术资源组合与新产品开发市场绩效、风险之间关系的调节效应。基于143家中国制造业企业实地调研数据,运用结构方程模型与分层回归分析方法进行实证,结果发现:网络资源广度-技术资源深度组合以及网络资源深度-技术资源广度组合对新产品开发市场绩效有正向影响,对新产品开发风险有负向作用;网络资源广度-技术资源广度组合以及网络资源深度-技术资源深度组合对新产品开发市场绩效有负向影响,对新产品开发风险有正向作用;产品多元化正向调节网络资源广度-技术资源深度组合与新产品开发风险之间的关系,以及网络资源广度-技术资源广度组合与新产品开发市场绩效、风险之间的关系。本文的研究为企业提高新产品开发资源配置效率、降低开发风险提供了决策支持与理论依据。     

Measuring management quality in the factory

The last decade has seen a growing consensus that manufacturing matters. The factory as the producing unit is the core of the firm's manufacturing activities. However, even now, it is not agreed on or even fully understood what constitutes a well-managed factory. This article attempts to create a causal model of management quality in the plant, identifying key managerial levers for improving plant performance. The model is based on an integrated view of three core processes: supply chain, product and process development, and strategy deployment. We postulate that the joint performance of the three processes is determined by the quality with which they are managed. Management quality is operationalized as consisting of six types of action: delegation (or decentralization), integration (or coordination), measurement, employee participation, communication, and employee development.This management quality model has been applied to the design of the Top Usine 1995 Best Factory Award administered in cooperation with the French weekly L'Usine Nouvelle. Data collected from participating plants do substantiate our view that plant performance is substantially driven by management quality: the six management quality dimensions are shown to be statistically linked to performance improvement rates in the plant, and we provide further evidence of this link by detailing the case example of the award winner. Our survey also shows that supply management appears to be a common problem area for the factories participating in the Top Usine award, including the best ones.     

Customization: Impact on Product and Process Performance

Manufacturing capability has often been viewed to be a major obstacle in achieving higher levels of customization. Companies follow various strategies ranging from equipment selection to order process management to cope with the challenges of increased customization. We examined how the customization process affects product performance and conformance in the context of a design‐to‐order (DTO) manufacturer of industrial components. Our competing risk hazard function model incorporates two thresholds, which we define as mismatch and manufacturing thresholds. Product performance was adversely affected when the degree of customization exceeded the mismatch threshold. Likewise, product conformance eroded when the degree of customization exceeded the manufacturing threshold. Relative sizes of the two thresholds have management implications for the subsequent investments to improve customization capabilities. Our research developed a rigorous framework to address two key questions relevant to the implementation of product customization: (1) what degrees of customization to offer, and (2) how to customize the product design process.     

能力与资源双重约束下的启发式组合生产计划研究

企业面向市场的产品交付能力,一般受约束于各制造环节的生产能力,而各制造环节的生产能力又受约束于其可得的制造资源。研究了在局部生产能力具有上限,且总体制造资源受约束的情况下,如何制定生产计划,以使总体利润最大的问题。建立了基于能力和资源双重约束下的生产计划组合优化模型,设计了一种"双线退火"的模拟退火算法,来启发式求解此类连续变量组合优化问题,并以大量算例计算验证了双线模拟退火算法的效率和正确性。最后结合某耐火材料企业进行了应用分析研究,展示了模型的应用原理和算法的求解效果。     

Innovation strategies of Asian firms in the United States

This paper examines the relationship between Asian firms’ technological and non-technological strategies and innovation capability. Particular attention is focused on subsidiaries in the United States (US) with headquarter units in South Korea, Singapore, and Taiwan. Empirical evidence from a sample of 151 subsidiary plants and establishments suggests that Asian firms invest in the US to upgrade their their knowledge base with a view to supporting new product and market-based innovations. The results of an ordered probit regression model of innovation performance suggests that new product development and marketing capability make a significant contribution to increased US patents among Asian firms while applied research is only marginally significant in explaining firms’ innovation capability. The major sources of innovation capability are revolved around a tacit understanding of technology and products than more explicit forms of knowledge. Our empirical findings also suggest that stronger business performance is associated with new product development and marketing capability.     

The Evolving Firm: How Dynamic and Operating Capabilities Interact to Enable Entrepreneurship

In this study, we expand our understanding of firm evolution by focusing on how operating and dynamic capabilities interact through endogenously led changes. The focus on endogenous change complements the current emphasis in the literature on how dynamic capabilities help firms cope with the risk of core rigidities following an exogenous shock. Our comparison of two collaborating firms shows that, at the operating capability level, firms build absorptive capacity in value networks during their product development experiences and this learning needs to be captured at the product portfolio planning level. When this learning is captured and transformed, product portfolio planning acts as a dynamic capability reconfiguring operating capabilities based on beliefs about follow-on entrepreneurial opportunities. Under conditions of endogenous change, dynamic capabilities are guided by a proactive entrepreneurial logic, complementing the need for reactive adaptive responses in circumstances of exogenous change. A key implication is that dynamic capabilities have a more expansive and critical role in the adaptation of firms than previously considered. Our theorizing shows how interactions between dynamic and operating capabilities build the adaptive capacity of the organization.     

An analysis of vendor innovation capability in the contract electronics manufacturing industry

Limited academic research has been given to analysing the innovation capabilities of vendors in outsourcing contracts. This paper seeks to address this gap in the literature by enhancing our understanding of how the innovation capability of vendors is deployed to win, run and renew outsourcing contracts with their customers. Employing the resource-based view as a theoretical basis and undertaking in-depth case study analysis of three vendors in the electronic manufacturing services industry, the research shows that to achieve the outsourcing objectives of winning, running and renewing the contract, vendors can use different configurations of the competitive priorities of cost, quality, delivery and flexibility. The research aggregates the capabilities that influence the innovative capability of a vendor into the innovation-related capabilities (IRCs) of design, new product introduction and manufacturing. Three strategies are identified for vendors on how to deploy these IRCs, and a number of propositions are developed to indicate the suitability of the three deployment strategies for different operational contexts.     

More (new) products,more problems? A systems perspective on increased capability deployment and organizational errors

The capabilities-based view postulates that organizational capabilities are a key driver of competitive advantage. However, while increasing the pace of deploying organizational capabilities, such as new product development (NPD), may enable alignment with changing environments, it may also have unintended consequences. In this study, we advance theory on these unintended consequences by investigating how the increased deployment of NPD capability leads to organizational errors. Borrowing from organizational research employing systems theory, we argue that an increase in NPD deployment may increase the likelihood of routine discoordination and, thus, the incidence of intra-firm and interfirm errors. However, we also proffer that firms can mitigate errors from increases in NPD capability deployment by engaging in distinct internal and external activities that enable the accumulation of knowledge on how to coordinate systemic change. We distinguish between internal and external errors, demonstrating that in the context of increased NPD deployments, internal voluntary investigations ameliorate internal manufacturing errors, while supplier alliances mitigate outsourced component errors. We find support for our predictions using data from new product introductions and recalls in the U.S. automotive industry. This study sheds light on the tension inherent to accelerating the deployment of patterned organizational activities and suggests that the outcomes of deploying an organizational capability are best viewed holistically within the milieu of organizational systems the capability spans.