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Among the characteristics of a company that shape corporate and therefore manufacturing strategy are its dominant orientation market or product , pattern of diversification product, market, or process , attitude toward growth acceptance of low growth rate , and choice between competitive strategies high profit margins versus high output volumes.
Once the basic attitudes or priorities are established, […]. Once the basic attitudes or priorities are established, the manufacturing arm of a company must arrange its structure and management so as to reinforce these corporate aims. When they are operating smoothly, they are almost invisible.
But manufacturing is getting increasing attention from business managers who, only a few years ago, were preoccupied with marketing or financial matters. The fact is that in most companies the great bulk of the assets used—the capital invested, the people employed, and management time—are in the operations side of the business. This is true of both manufacturing and service organizations, in both the private and public sectors of our economy.
The problems and pressures facing manufacturing companies ultimately find their way to the factory floor, where managers have to deal with them through some sort of organizational structure. Unfortunately, this structure often is itself part of the problem. For example:. And to what extent were these problems the outgrowth of poorly designed organizational structures? Finally, we will discuss the various kinds of growth that companies can experience and how these expectations should affect the organization of the manufacturing function.
The concept of manufacturing strategy is a natural extension of the concept of corporate strategy, although the latter need not be as rational and explicit as management theorists usually require. We use the term company to refer to a business unit that has a relatively homogeneous product line, considerable autonomy, and enough of a history to establish the kind of track record we refer to here. Dominant orientation —Some companies are clearly market oriented.
They consider their primary expertise to be the ability to understand and respond effectively to the needs of a particular market or consumer group. In exploiting this market knowledge, they use a variety of products, materials, and technologies. Gillette and Head Ski are examples of such companies. Other companies are clearly oriented to materials or products; they are so-called steel companies, rubber companies, or oil companies or, more recently, energy companies.
They develop multiple uses for their product or material and follow these uses into a variety of markets. Still other companies are technology-oriented—most electronics companies fall into this class—and they follow the lead of their technology into various materials and markets. A common characteristic of a company with such a dominant orientation is that it seldom ventures outside that orientation, is uncomfortable when doing so, often does not appreciate the differences and complexities associated with operating the new business, and then often fails because it hesitates to commit the resources necessary to succeed.
Every company continually confronts a variety of growth opportunities. Its decisions about which to accept and which to reject signal, in a profound way, the kind of company it prefers to be. Some companies, in their concentration on a particular market, geographic area, or material, essentially accept the growth permitted by that market or area or material consumption.
Other companies, however, are so structured and managed that a certain rate of growth is required in order for the organization to function properly. Choice of competitive priorities —In its simplest form this choice is between seeking high profit margins or high output volumes. Some companies consistently prefer high margin products, even when this limits them to relatively low market shares. Others feel more comfortable with a high-volume business, despite the fact that this commits them to severe cost-reduction pressure and often implies low margins.
This concept can be expanded and enriched, however, since companies can compete in ways other than simply through the prices of their products. Some compete on the basis of superior quality—either by providing higher quality in a standard product for example, Mercedes-Benz or by providing a product that has features or performance characteristics unavailable in competing products. We intend here to differentiate between an actual quality differential and a perceived difference, which is much more a function of selling and advertising strategy.
It will, however, work as specified, is delivered on time, and any failures are immediately corrected. Still others compete on the basis of product flexibility, their ability to handle difficult, nonstandard orders and to lead in new product introduction. This is a competitive strategy that smaller companies in many industries often adopt. And, finally, others compete through volume flexibility, being able to accelerate or decelerate production quickly.
Successful companies in cyclical industries like housing or furniture often exhibit this trait. In summary, within most industries different companies emphasize one of these five competitive dimensions—price, quality, dependability, product flexibility, and volume flexibility. It is both difficult and potentially dangerous for a company to try to compete by offering superior performance along several competitive dimensions.
Instead, a company must attach definite priorities to each that describe how it chooses to position itself relative to its competitors. Practically every decision a senior manager makes will have a different impact on each of these dimensions, and the organization will thus have to make trade-offs between them. Unless these trade-offs are made consistently over time, the company will slowly lose its competitive distinctiveness. One test of whether a company has a strategy is that it is clear not only about what it wants to do but also about what it does not want to do—what proposals it will consistently say no to.
Once such attitudes and competitive priorities are identified, the task for manufacturing is to arrange its structure and management so as to mesh with and reinforce this strategy. Manufacturing should be capable of helping the company do what it wants to do without wasting resources in lesser pursuits.
It is surprising that general managers sometimes tend to lose sight of this concept, since the need for priorities permeates all other arenas of management.
For example, marketing managers segment markets and focus product design, promotional, and pricing effects around the needs of particular segments, often at the expense of the needs of other segments. And management information systems must be designed to emphasize particular kinds of information at the expense of others. While it is possible to chalk up to inexperience the belief of many general managers that manufacturing should be capable of doing everything well, it is harder to explain why many manufacturing managers themselves either try to be good at everything at once or focus on the wrong thing.
They know that all-purpose tools generally are used only when a specific tool is not available. Perhaps they fall into this trap because of pride, or too little time, or because they are reluctant to say no to their superiors. All these factors enter into the following scenario. Under duress, and without sufficient time to examine the trade-offs involved, he attempts to shore up performance along these dimensions.
Then he is confronted with pressure from finance to reduce costs or investment or both. Falling into such a trap can be devastating, however, because a manufacturing mission that is inconsistent with corporate strategy is just as dangerous as not having any manufacturing mission at all. They will reflect engineering priorities, or operating simplicity often the goal of someone who has worked his way up from the bottom of the organization —not the needs of the business.
Translating a set of manufacturing priorities into an appropriate collection of plant, people, and policies requires resources, time, and management perseverance. Moreover, these assets tend to be massive, highly interrelated, and long lived—in comparison with marketing and most financial assets.
Once a change is made, its impact is felt throughout the system and cannot be undone easily. The decisions that implement a set of manufacturing priorities are structural; for a given company or business they are made infrequently and at various intervals.
They fall into two broad categories: facilities decisions and infrastructure decisions. The total amount of manufacturing and logistics capacity to provide for each product line over time.
How this capacity is broken up into operating units plants, warehouses, and so on , their size and form a few large plants versus many small ones , their location, and the degree or manner of their specialization for example, according to product, process, and so on. The span of the process—that is, the direction of vertical integration toward control either of markets or of suppliers , its extent as reflected roughly by value added as a percentage of sales , and the degree of balance among the capacities of the production stages.
Policies that control the loading of the factory or factories—raw material purchasing, inventory, and logistics policies. Policies that control the movement of goods through the factory or factories—process design, work-force policies and practices, production scheduling, quality control, logistics policies, inventory control.
These two sets of decisions are closely intertwined, of course. Similarly, work-force policies interact with location and process choices, and purchasing policies interact with vertical integration choices. Each of these structural decisions places before the manager a variety of choices, and each choice puts somewhat different weights on the five competitive dimensions. For example, an assembly line is highly interdependent and inflexible but generally promises lower costs and higher predictability than a loosely coupled line or batch-flow operation or a job shop.
Similarly, a company that attempts to adjust production rates so as to chase demand will generally have higher costs and lower quality than a company that tries to maintain more level production and absorb demand fluctuations through inventories.
Even more subtly, plant may be consistent with policies, but the manufacturing organization that attempts to coordinate them all no longer does its job effectively.
For, in a sense, the organization is the glue that keeps manufacturing priorities in place and welds the manufacturing function into a competitive weapon. It also must embody the corporate attitudes and biases already discussed.
In addition, the way manufacturing chooses to organize itself has direct implications for the relative emphasis placed on the five competitive dimensions. Certain types of organizational structures are characterized by high flexibility; others encourage efficiency and tight control, and still others promote dependable promises.
How are the appropriate corporate priorities to be maintained in a manufacturing organization that is characterized by a broad mix of products, specifications, process technologies, production volumes, skill levels, and customer demand patterns?
To answer this question, we must begin by differentiating between the administrative burden on the managements of individual plants and that on the central manufacturing staff. Each alternative approach for organizing a total manufacturing system will place different demands on each of these groups. At one extreme, one could lump all production for all products into a single plant. This makes the job of the central staff relatively easy in some respects it becomes almost nonexistent , but the job of the plant management becomes horrendous.
At the other extreme, one could simplify the job of each plant or operating unit within a given plant , so that each concentrates on a more restricted set of activities products, processes, volume levels, and so on , in which case the coordinating job of the central organization becomes much more difficult. Although many companies adopt the first approach, by either design or default, in our experience it becomes increasingly unworkable as more and more complexity is put under one roof.
At some point a single large plant, or a contiguous plant complex, breaks down as more products, processes, skill levels, and market demands are added to it. Skinner has argued against this approach and for the other extreme in an article in which he advocates dividing up the total manufacturing job into a number of focused units, each of which is responsible for a limited set of activities and objectives:.
Quality and volume levels are not mixed; worker training and incentives have a clear focus; and engineering of processes, equipment, and materials handling are specialized as needed. Each [unit] gains experience readily by focusing and concentrating every element of its work on those limited essential objectives which constitute its manufacturing task.
If we adopt this sensible but radical approach, we are left with the problem of organizing the central manufacturing staff in such a way that it can effectively manage the resulting diversity of units and tasks. It carries out this responsibility both directly, by establishing and monitoring the structural policies we mentioned earlier for example, process design, capacity planning, work-force management, inventory control, logistics, purchasing, and the like , and indirectly, by measuring, evaluating, and rewarding individual plants and managers, and through the recruitment and systematic development of those managers.
These basic duties can be performed in a variety of ways, however, and each will communicate a slightly different sense of mission. The corporate staff clearly must play a much more active role in making the second organization work. Logistics movements have to be carefully coordinated, and a change in any of the plants or the market can have repercussions throughout the system. Only at the last stage Process C can the plant manager be measured on a profitability basis, and even that measure depends greatly on negotiated transfer prices and the smooth functioning of the rest of the system.
He will not have much opportunity to exercise independent decision making, since most variables under his control capacity, output, specifications, and so on will affect everybody else. The distinction between such product-focused and process-focused manufacturing organizations should not be confused with the distinction between traditional functional and divisional corporate organizations.
In fact, it is entirely possible that two divisions within a divisionally organized company would choose to organize their manufacturing groups differently. The important distinction has less to do with the organization chart than with the role and responsibilities of the central manufacturing staff and how far authority is pushed down the organization.
In a sense, the distinction is more between centralized control and decentralized control. Basically, the product-focused organization resembles a traditional plant-with-staff organization, which then replicates itself at higher levels to handle groups of plants and then groups of products and product lines.
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Process technologies, equipment, plants, and systems
Utility Manager Joost Oosterbroek is almost bursting of pride as he takes his Glamox visitors for a tour around the factory. No wonder, since the 8. The tour around the premises also reveals state of the art production technology, energy efficient and low emission solutions and last, but not least a strong focus on hygiene and cleanlinessIf you think that baby-food is a generic product, you should think again. The raw materials used for the baby-milk formula, by-products from cheese production, vegetable oils and a range of different micro ingredients can be used to make an almost endless variation of recipes.
Without water, many companies and the products they provide would fail to exist. Water use is a fundamental commodity for nearly every step of the manufacturing and production processes around the world. Whether it's deionised water for electronics and pharmaceutical sectors, or softened water for boiler feed applications, water is necessary and comes embedded in the footprint of virtually item created on the planet. Yet, at the same time, many global companies have manufacturing facilities operating in water scarce parts of the world, with over two thirds of companies now reporting exposure to water risks. This article is designed to provide an essential guide to everything you need to know about industrial water and wastewater. Manufacturing and other industries use water during the production process for either creating their products or cooling equipment used in creating their products. According to the United States Geological Survey USGS , industrial water is used for fabricating, processing, washing, diluting, cooling, or transporting a product. Industrial water and wastewater is a by-product of industrial or commercial activities.
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Feed manufacturing refers to the process of producing animal feed from raw agricultural products. Fodder produced by manufacturing is formulated to meet specific animal nutrition requirements for different species of animals at different life stages. The Washington State Department of Agriculture defines feed as a mix of whole or processed grains , concentrates, and commercial feeds for all species of animals to include customer formula and labeled feeds, and pet feed. The commercial production of feed is governed by state and national laws. For example, in Texas , whole or processed grains, concentrates, and commercial feeds with the purpose of feeding wildlife and pets should be duly described in words or animation for distribution by sellers. The quality of the prepared feed ultimately depends on the quality of the material such as the grain or grass used; the raw material should be of very good quality. Commercial feed manufacturing is an industrial process, and therefore should follow HACCP procedures.
The food industry is a complex, global collective of diverse businesses that supplies most of the food consumed by the world's population. It is challenging to find an inclusive way to cover all aspects of food production and sale. Most food produced for the food industry comes from commodity crops using conventional agricultural practices. Agriculture is the process of producing food, feeding products, fiber and other desired products by the cultivation of certain plants and the raising of domesticated animals livestock. The practice of agriculture is also known as " farming ". Scientists, inventors, and others devoted to improving farming methods and implements are also said to be engaged in agriculture. Agronomy is the science and technology of producing and using plants for food, fuel, fibre, and land reclamation. Agronomy encompasses work in the areas of plant genetics , plant physiology , meteorology , and soil science. Agronomy is the application of a combination of sciences.
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