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.     

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.     

MANUFACTURING STRATEGY ON THE “S” CURVE

The concept and techniques of “manufacturing strategy” offer managers the opportunity to use their production function as a strategic weapon in competition, an apparently attractive objective. Yet after about 25 years, the use of manufacturing in corporate strategy (MCS) as a management practice is not widespread. In contrast, however, in academic literature it appears to be flourishing and rapidly growing in popularity. This paper seeks to answer this apparent paradox, beginning with the history of MCS as it was developed as a theory of design to enable a manufacturing system to be focused on a key competitive task. Common criticisms of MCS, such as “tradeoffs,” “focus” and “undynamic,” are examined and refuted as valid reasons for its only modest usage. Instead, three “new” problems in the MCS concept and its techniques are suggested as genuine needs for the completion of the theory and for its becoming more universally understood and used by industrial managers.     

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.     

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 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.     

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.     

COMPUTER INTEGRATION AND CATASTROPHIC PROCESS FAILURE IN FLEXIBLE PRODUCTION: AN EMPIRICAL INVESTIGATION

This paper empirically investigates the effect of advanced manufacturing technology on process stability during flexible production in a process industry. A sample of 61 North American fine paper plants is used to examine the relationship between the level of automation installed for controlling changes between paper grades and the incidence of paper web breaks. These web breaks are catastrophic failures; they require the entire plant to be stopped, reinitialized, and restarted. Because a large fraction of breaks occurs shortly after changeovers, they are an important determinant of the aspect of plant flexibility, called mobility, or the ability to move between products with only small penalties. In an attempt to ensure stable and mobile production, many plants have implemented changeover automation. We find, however, that higher levels of this automation are significantly associated with higher rates of catastrophic failure among the plants studied. We suggest that this finding becomes less paradoxical when considered in light of a recent stream of research on advanced manufacturing technologies, loosely called the usability perspective. According to this perspective, automation designed and implemented with the narrow, technical goal of replacing human operators or removing their discretion over a production process is misguided, especially in environments in which requirements are changing rapidly.     

Tradeoffs in Manufacturing? A Meta‐Analysis and Critique of the Literature

An ongoing, important question in the operations strategy literature pertains to tradeoffs: Can manufacturers focus on multiple priorities simultaneously or achieve strength on multiple capabilities without sacrificing performance of another? In this paper, we accumulate, integrate, and examine the wide spectrum of conclusions reached in the literature concerning tradeoffs using modified meta‐analysis methods. Based on two decades of empirical research in operations strategy, we find that the evidence in the literature indicates manufacturers, on average, do not report experiencing tradeoffs among the competitive dimensions of quality, delivery, flexibility, and cost as suggested by the classical tradeoffs model. Our meta‐analysis also reveals that the way variables are operationalized, whether initiatives are implemented, and the unit of analysis are all related to the degree and nature of the evidence a paper contains with respect to the tradeoffs issue. We interpret our meta‐analysis results in the context of the prevailing model of manufacturing strategy and the theory of performance frontiers. We also discuss how the research designs used in this literature, which are predominantly cross‐sectional, affect the nature of the evidence generated and the conclusions that can be drawn. We go on to suggest research designs that more directly assess the tradeoffs issue.     

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.     

The integrator’s new advantage – The reassessment of outsourcing and production competence in a global telecom firm

For a long time, the telecom equipment industry has been at the forefront of outsourcing and relocating production operations to contract manufacturing firms located in Asia and Eastern Europe. Recently, however, leading firms have begun to revise this strategy, based on their recognition of the continual importance of technological leadership and integration capabilities. Using a case study of a key company, this paper explores the dynamics of outsourcing and production strategies in the telecom equipment industry. One of the central aspects under study is the interaction of product development with industrialisation and production. The paper analyses issues such as component standardisation versus differentiation and technological integration, the value of deep integration capabilities for cost reductions, and why production competence and the rapid industrialisation of products incorporating new technologies have acquired renewed importance, despite the global trend towards lowest-cost locations.     

MANUFACTURING PROCESS TECHNOLOGY and SUPPORT STAFF COMPOSITION: AN EMPIRICAL VIEW OF INDUSTRY EVIDENCE

Despite the attention given to restructuring and trimming down manufacturing firms during the 198Os, little attention has been paid to the mix of skills they needed under different circumstances. We examined the patterns of employment by occupation in manufacturing industries utilizing different production technologies and the effect of establishment size on nonproduction employment. We found that a relationship exists between production technology and nonproduction employment per 100 production workers. Establishment size is found to be a moderator between nonproduction employment and production technology. Our findings imply two clear messages for managers. First, when considering major changes in production technology, managers should be aware that the supporting skills they will need from their nonproduction work force are likely to change greatly. Further, these changes involve technical and managerial workers as well as clerical and production support people. Second, they should restructure the functional or occupational mix of an organization in the context of the process technologies in place. Different process technologies require different structures.     

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.     

DEVELOPMENT AND R&D CAPABILITY AT MANUFACTURING SITES: ELECTRONICS MULTINATIONALS IN SINGAPORE AND TAIWAN

In this paper we present the results of an empirical study of the manufacturing sites of foreign electronics companies in Singapore and Taiwan. The manufacturing and R&D capabilities at the sites are assessed. The way in which host government policies interact with R&D development at the sites and the speed of the R&D development are also considered. The results suggest that Singapore and Taiwan are now host to some advanced manufacturing and R&D operations. We show, however, that the product design work at the sites visited is never leading edge for the companies concerned. The speed at which product design responsibilities were designated to the sites is shown to be rapid when compared to an earlier study of foreign sites in the United Kingdom. We indicate areas in which national strategies in Singapore and Taiwan may have contributed to this faster development. In Singapore, we identify tax holidays and R&D grants as contributing to the pace of development.     

THE USE OF INDUSTRIAL SOFTWARE TO CREATE EXPERIENTIAL LEARNING ACTIVITIES IN OPERATIONS MANAGEMENT COURSES

Computer-based manufacturing planning and control (MPC) systems are widely used in industry to gain competitive advantage through integration and coordination of managerial activities. In collegiate business schools, important operations management activities are taught and studied, often by sequential examination of discrete topics such as aggregate production planning, master production scheduling, capacity planning, material planning, and production activity control. This paper explores the potential use of industrial MPC software in the classroom to create experiential learning activities that address the dynamic and integrative nature of operations management. Experiences with this pedagogical approach over the past decade are reported.     

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.     

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.     

产品平台在基于大规模定制范式的生产系统中的作用建模

本文围绕一致的质量、合理的成本、快速、灵活、可靠地大规模交付定制化产品或服务的运营战略,概要讨论了面向大规模定制的三种主要的生产系统(交付定制型、装配定制型、制造定制型)的运营特征,详细分析了产品平台的体系结构,首次提出了基于产品平台实施大规模定制的整合策略,对产品平台在面向大规模定制的生产系统的作用进行了建模。本文的研究工作已经在企业应用实践中得到了验证。     

The new production theory for health care through clinical reengineering: a study of clinical guidelines--Part I

Drucker writes that the emerging theory of manufacturing includes four principles and practices: statistical quality control, manufacturing accounting, modular organization, and systems approach. SQC is a rigorous, scientific method of identifying variation in the quality and productivity of a given production process, with an emphasis on improvement. The new manufacturing economics intends to integrate the production strategy with the business strategy in order to account for the biggest portions of costs that the old methods did not assess: time and automation. Production operations that are both standardized and flexible will allow the organization to keep up with changes in design, technology, and the market. The return on innovation in this environment is predicated on a modular arrangement of flexible steps in the process. Finally, the systems approach sees the entire process as being integrated in converting goods or services into economic satisfaction. There is now a major restructuring of the U.S. health care industry, and the incorporation of these four theories into health care reform would appear to be essential. This two-part article will address two problems: Will Drucker's theories relate to health care (Part I)? Will the "new manufacturing" in health care (practice guidelines) demonstrate cost, quality, and access changes that reform demands (Part II)?