Manufacturing Objectives and Strategy

Aspiring to become a World-Class manufacturing (WCM) organisation is a common aim of many manufacturers. However, recent research by authors, such as, Hanson et al. (1994) and Schonberger’s (1996), reveals that few manufacturers are achieving this status and many are failing to even start the race to improving their manufacturing practices and performance. For some manufacturers, this may be due to inertia or, more seriously, it may be due to lack of relevance and advice available on the means and the steps required to attain WCM status.

Chandra and Sastry (1998) conducted a survey of the top executives of 56 manufacturing firms using the manufacturing futures survey questionnaire (Miller et al. 1992) to assess the strategies being planned by Indian manufacturing firms to improve their competitiveness and the extent of performance improvements that have taken place. Today, Indian firms are facing a very different competitive scenario as compared to the past. They are facing competition from imports and

MNCs in the domestic market. Several firms also have to compete with new entrants in global markets. The new competition is in terms of World-Class quality products, with higher performance, reduced cost and a wide range of products, all delivered simultaneously.

It appears that the manufacturing strategy of most firms is focused on improving product and process quality, after-sales service and on delivering products on-time. However, firms are currently giving low priority to improvements that require fundamental changes in manufacturing-changing processes, capability to rapidly change product mix, new process and product developments, etc.

In terms of manufacturing performance, the survey revealed that over the last two years, there has been a marked improvement in the performance of firms on a variety of factors, such as productivity, reduction in customer returns, improvement in first-pass yields and in the overall perception of quality by customers. Other performance indicators that have improved are on-time delivery, shop floor response to design changes and reduction in manufacturing cycle times. The real challenge for Indian companies, therefore, is to improve manufacturing processes, quality and technology for excellence.

Manufacturing strategy is concerned with setting broad policies and plans for using the production resources of the firm to best support its long-term business strategy (Skinner 1985).

Respondents to the survey were asked to rate the strategic objectives of manufacturing listed in the questionnaire on a five-point scale, with a score of 1 indicating ‘not important’ and a score of

5 indicating ‘very important’. Quality, delivery, inventory reduction and capacity utilization were identified as the important objectives by the participants. Manufacturing lead-time reduction and linking manufacturing and corporate strategy were considered slightly less important (Figure 6.4).

Volume, mix .and design flexibility (necessary for faster product development) should be considered important objectives in a competitive environment. Instead, flexibility was considered relatively less important by the participants. In contrast, according to the International

Manufacturing Futures Survey (Miller et al. 1992), linking manufacturing

Figure 6.4: Manufacturing Objectives in Indian Industry

(Mean scores on a five-point scale) strategy to business strategy was the top priority in Western countries while faster product development was top priority in Japan in the early 90s.

Again, the high rating given to capacity utilization should be a cause of worry for Indian managers with a global mindset. Under the concept of World. Class manufacturing, capacity utilization is viewed as a function of the current demand of company’s products and not as a strategic objective.