Product Strategies

If we examine the array of products available to the public and to producers, it may seem unreasonable that the productive systems that manufacture them could have common characteristics – the materials   vary widely, the sizes, shapes and weights, are diverse; and the applications and uses are equally different. But if there were no common characteristics among systems for diverse products — if each system was entirely unique – we could learn nothing transferable by studying production management, and such is not the case. By examining the nature of the product demand in its growth from introduction to maturity and by relating it to the competitive criteria of cost, quality on time delivery, and flexibility discussed. We can develop logical types of manufacturing systems that match marketplace needs. Therefore, the place to start in defining types of manufacturing systems is with product strategies.

Though produce occur in great diversity, we seek to classify them in relation to the four competitive criteria. At one extreme, we might have products that are custom in nature; that is products especially designed to the specifications and needs of customers or clients. Examples are a prototype spacecraft, many producer goods, and construction. A custom product is not available from inventory because it is one of a kind. The emphasis in the custom product strategy is on the uniqueness, dependability of on-time delivery, quality and flexibility to change the production process in accordance with changing customer preferences. Cost or price is a lesser consideration. Part of the strategy is to obtain the high profit margins that typically are available for custom designs.

At the other extreme are highly standardized products. Products of this type are available from inventory. They are off the shelf products because each unit is identical and the nature of demand is such that availability and cost are important elements of competitive strategy. There is very little product differentiation between producers and there are limited options available in products. The most extreme examples are products that have virtually no variety, such as standard steel and aluminium shapes, and commodities like sugar or gasoline. Important managerial concerns for highly standardized products are dependability of delivery and low cost.

Between the extremes of custom designed product strategies and highly standardized product strategies we have mixed strategies that are sensitive to variety, some flexibility, moderate cost, and dependability of supply. In these situations, quality of product is important but it is the overwhelming criterion as with custom products. Multiple sizes and types of products are available, possibly from inventory or by order, depending on enterprise strategy. Some of these products are available in fairly low volume, but some such as automobiles are available in high volume. The great majority of products available today are in this middle category. Most consumer products are available from inventory. Most producer goods are available by order and may be subject to some special design, modifications to meet individual needs, though the basic designs are quite standard.

Productive system types:
The basic managerial strategies adopted for the productive system must be related to the product strategies. Obviously, it would be inappropriate to use a high volume process capable of producing millions of gallons to produce an experimental chemical. Again, we should think in terms of alternative strategies for the extremes as well as for the middle ground.

Process focused systems:
A productive system for custom products must be flexible. It must have the ability to produce according to customer or client specifications. For example, an aerospace manufacturer must fabricate special component part designs. The equipment and personnel must be capable of meeting the individual component specifications and of assembling the components in the special configurations of the custom product.

Physical facilities are organized around the nature of the processes, and personnel are specialized by generic process type. For example, in a machine shop we might expect to find milling machine departments drill departments, and so on. The flow of the item being processed in such productive systems is dictated by individual product requirements so the routes through the system are variable.

The nature of the demand on the productive system results in intermittent demand for the system’s facilities and each component flows from one process to the next intermittently Thus, the process focused system with intermittent demand on process types must be flexible as required by the custom product, and each generic department and its facilities are used intermittently as needed by the custom orders. An example of a process focused system in a machine shop. This physical arrangement of the departments by generic type is often called a “job shop” because it is designed to accommodate the needs of individual job orders.

Of course, a productive system of considerable significance in our society that is designed to deal with custom products is the project system.

Product focused systems:
By contrast, the nature of the demand on the productive system that produces high volume, standardized products results in continuous use of the facilities. Also, the material flow may be continuous as in petroleum refining, or approaching continuous flow as with automobile fabrication and assembly. Because of the high volume requirements, of such systems, special processing equipment and entire dedicated producing systems can be justified as a productive systems strategy.

Processing is adapted completely to the product. Individual processes are physically arranged in the sequence required and the entire system is integrated for a single purpose like one giant machine. Thus, continuous systems have a product focus. Under these extreme conditions of high demand for standardized products, the production process is integrated and makes use of mechanization and automation to achieve standardization and low cost. Inventories of standardized products may be an important element of production as well as marketing strategy.

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At its heart a capacity strategy suggests how the amount and timing of capacity changes
However, as with most strategic decisions, the issue is more complex than it first appears.