Emerging Manufacturing Strategies

The revitalization of manufacturing has resulted in management attention being directed toward the implementation of one of two significantly different, or polar, strategies: (1) flexible and (2) focused. Each of these strategies requires a different type of channel management support. Few firms fully commit manufacturing resources to either extreme. The manufacturing strategy of most firms reflects a synthesis of the two concepts, as firms seek to align manufacturing capacity utilization with basic business objectives.

Flexible Manufacturing: With flexible manufacturing, sometimes called market paced on being able to respond as rapidly as possible to market demand. The ideal flexible manufacturing vision is to postpone all manufacturing and purchasing until a customer or replenishment order is received. What flexible manufacturing is trying to accomplish is the elimination of producing to stock by the development of an overall system, one that is sufficiently responsive so that products can be built during normal order cycle lead time. The result is a job shop environment for products that have traditionally been produced in large batches into inventory. If such ideal responsiveness could be realized, the anticipatory nature of manufacturing could be reduced or even eliminated in what have traditionally been build to stock situations. While ideal flexibility is difficult to realize, firms committed to flexible manufacturing have made significant advances in reducing manufacturing lead time while maintaining essential economies of scale.

Significant advancements have been made in techniques of production or assembly line changeover. Technologies and procedures have been perfected that reduce set up times for machines to minutes as contrasted to previous requirements for hours. In many situations, modular assembly or painting units can be rapidly installed in the manufacturing line to replace units scheduled for cleaning, retooling or preventive maintenance. These essential tasks are performed off line, thereby significantly reducing downtime.

A second aspect of flexible manufacturing is reduced production run length. Short runs or small for sizes mean that manufacturing processes need to achieve lowest cost per unit status more quickly and on less volume than traditional manufacturing. In some situations, the absolute lowest cost per unit of potential manufacturing must be sacrificed so that the desired flexibility can be achieved. In such situations that support higher cost manufacturers, the trade off is between the cost per unit of production and the expenses and risk associated with maintaining large inventories. A basic concept of flexible manufacturing is that the benefits of responsiveness and reduced inventory risk gained from small production lot sizes increase operational agility.

In summary, the goal of flexible manufacturing is to increase responsiveness. Having the capability to manufacture what is needed reduces the amount of inventory that must be omitted in anticipation of future demand increase the likelihood of having the exact items requested by customers, and can significantly reduce obsolescence. Carried to its extreme, flexible manufacturing has the potential to transform a traditional built to stock situation into a made to order one. The operational trick is to develop flexible capabilities without losing critical economy of scale while maintaining total quality control.

Focused Manufacturing:
Contrasted with the flexible vision is the concept of focused manufacturing. Whereas flexible manufacturing tends to favor small scale decentralized or market positioned manufacturing and assembly focused manufacturing has as its goal the highest possible level of capacity utilization. So that a focused factory can be fully implemented, manufacturing is typically concentrated into a limited umber of production facilities or even a single one. For example, all feminine products produced by Kimberly Clark are concentrated in one multiple line state of the manufacturing facility. While such concentration increase risk of damage from natural disasters and requires significant support to service an entire market area from a single location, the compensating benefits are twofold. First, focused manufacturing allows adoption of the most advanced manufacturing technology. Because of concentration of volume into a limited number of manufacturing plants, the most advanced technology can be opted continuously updated. The benefits of concentration extend to having the critical mass to adopt the most sophisticated support equipment such as automated process control technology. The vision of the focused factory is to create the potential factory for a firm to be a low cost producer in its industry.

The second benefit of focused manufacturing is capacity utilization. With concentration of all requirements into limited facilities, the goal of the maximum level of rated output can be achieved. The typical focused factory operates seven days per week around the clock. Prior to development of the focused manufacturing concept, such high intensity capacity utilization was only considered feasible in continuous process industries such as chemical and paper manufacturing and metal processing. Traditional continuous processing required long setup times and substantial volume throughout for the realization of lowest nit production cost. Newer concepts of focused manufacturing seek to achieve absolute low cost per unit and zero defect quality of output in situations that have not traditionally been continuous process.

In summary, the goal of focused manufacturing is lowest possible per unit cost and fail-safe quality. The basic idea is to adopt leading edge manufacturing technology and utilize it to maximum capacity. In the situation of focused manufacturing the trade off efficiency is to build inventory as necessary in order to achieve maximum manufacturing efficiency. In situations where demand for a product varies seasonally or for some other reason, focused manufacturing will require building significant inventories in anticipation of future sales. The operational trick is to plan manufacturing schedules to keep anticipatory inventories balanced to market demand.