BUS606: Operations and Supply Chain Management

Two articles by Skinner put manufacturing on the agenda of general managers by introducing such concepts as manufacturing strategy, manufacturing tasks, and focused factory. It was a serious attempt to argue that manufacturing has a contribution to make in the competitiveness of an industrial enterprise. The manufacturing task captures the specific requirements and demands on manufacturing and provides a basis for prioritizing goals. Different tasks lead to different focused factories. The role of manufacturing indicates the strategic contribution of manufacturing to the competitive strength of a company. Based on empirical findings, Hayes & Wheelwright identified four different roles of manufacturing: internally neutral, externally neutral, internally supportive, and externally supportive, which they saw as a maturity model of strategic manufacturing, proposing that manufacturing companies make a choice as to how they compete.

Coming from a different perspective, Senge supports this maturity model, as he identifies three learning waves within the quality movement. He argues that companies are highly concerned with improving tangible work processes, which he qualifies as the first wave. The second wave deals with improving how work is conducted, which opens up for an appreciation of the inherent systems dynamics. The third wave gradually emerges from the previous two with learning as a natural part of life in an organization. Applying maturity thinking to the distribution of manufacturing directs attention to the questions of strategic progression and learning within a manufacturing system, and firmly places the view and role of manufacturing in a corporate setting on the strategic agenda.

Positioning manufacturing in its wider environment has become a question of fit and focus. An important contribution was made by the identification of the concepts "Order-Winners" and "Order Qualifiers", which is concerned with matching competitive conditions to appropriate organizational structures. Within the perspective of fit and focus, the strategic role of manufacturing can also be described by its location and contribution to the value chain of a company.

Voss introduces three paradigms of manufacturing strategy, which have proved to be quite robust to the test of time: competing through manufacturing; strategic choices in manufacturing, and best practice. In the first paradigm, he includes Skinner, Hayes & Wheelwright, and Hill in the second paradigm. In his 2006 revisit to the paradigms, he stresses the need to look beyond the underlying stages/maturity assumption that characterizes each of the paradigms, but rather to see manufacturing development as an iterative process in which each of the three paradigms is revisited regularly. With the increased distributed manufacturing and increased complexity, there is a need for adding more dimensions to strategic roles of manufacturing.

Another way of characterizing the strategic role of manufacturing was proposed by Johansen & Riis based on the thesis that an industrial company can occupy a number of different positions in the supply chain. These positions influence the way in which a company develops products and seeks out knowledge, as well as the roles of its production function and the relationships with other companies in its networks. Three archetypal companies were proposed:

• The Focused Firm, which specializes in a particular sphere of knowledge and capability development.
  
• The Networking Firm, which puts other companies together and coordinates and develops their mutual activity.
  
• The Integrating Firm, which assembles other companies' components into products or solutions.
  

In view of the close interaction between the various functions of an industrial company, it is difficult to identify a strategic role that manufacturing plays alone. For example, manufacturing may make a significant contribution by supporting sales in fast ramp-ups of customized products, and product development through its ability to prototype. The discussion so far has seen manufacturing as one unit of operation, either as one single plant or the overall contribution of the company's plants. However, when a company has several plants spread throughout a region, individual plants may play different roles. Ferdows characterized plants according to their primary location driver and the level of competence in terms of various functional resources and management responsibilities. For example, a low-competence site established mainly for reasons related to low-cost production was defined as an offshore site. Such a site is established to produce specific items to be exported for further operations or sale. It would not be expected to be innovative, and its managers follow the instructions and plans handed down to them. At the other extreme, a lead factory spans a wide range of functional competencies and managerial responsibilities, and creates new processes, products, and technologies for the entire company, drawing on access to skills and knowledge. Other types of factories are source factories, server factories, contributors, and outposts.

Most of the contributions to manufacturing strategy take their outset in the focus and fit perspective with its emphasis on offering customers what they want. But manufacturing competencies and their development may also create competitive advantage for the company. In view of increased difficulties in predicting market developments and distributed production facilities, the dynamic capabilities dimension of strategic development will be an important issue in the future. This may change our paradigm of manufacturing based on resources of manufacturing based on knowledge, which explicates the need to look beyond fit, focus, and trade-offs, as they may not be sufficient for competitive success.

Another paradigm shift may take place from managing settled dyadic relationships to managing unsettled networks. He identifies the new manufacturing challenge as one of managing the extraprise, due to the increased reliance on activities outside the formal boundary of the company. Still, we know too little about managing activities outside the formal reign of control, especially when it comes to handling the dynamic effects of the relationship or analyzing the overall network structure and the company's position in it, so as to be able to engage effectively in the reconfiguration of the network.

In conclusion, the review of part of the literature on manufacturing strategy has presented a variety of different ways of positioning manufacturing as a means for identifying and defining the strategic roles of manufacturing in an industrial company.

The first group of contributions relates directly to the extent and selected objectives of the contribution of manufacturing to competitive advantage. The second group positions a company in a value chain or a supply chain. The third way of classifying strategic roles focuses on the mutual interplay between functions, leading to a primary role and four supporting roles. The fourth classification identifies different roles that a plant can play in a network of manufacturing plants of a company. To a large extent, the perspectives are mutually exclusive, which suggests that an industrial company may find it appropriate to use several cifications to find a iguration of strategic manufacturing roles that is in line with the environmental challenges and internal strength.