A clear check-list to built manufacturing strategy based on A. Hax methodology

1. Manufacturing Strategy
Ref. “The Strategy Concept & Process” by Arnoldo C. Hax
Version 4, April 29 2015
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2. Manufacturing Strategy
 Manufacturing Intelligence
 Facilities
 Capacities
 Vertical Integration
 Process Technologies
 Product Scope & New Product Introduction
 Supplier Relation
 Quality Management
 Manufacturing Organisation and Managerial Infrastructure
 Human Ressources Denis Bourbonneux2

3. Manufacturing Gap Analysis
H
M
L
L M H
BusinessImportance
Functionnal Capability (how good we
are)
Facilitie
s
Capacitie
s
Vertical
Integratio
n
Process
Technolog
y
Supplier
relation
Product
Scope
Manuf.
Intelligenc
e
Manuf.
Org.
Qualit
y
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4. Strategy : Matrix of Responsabilities
Topic Mr A Mr B Mrs C Mr D Mrs E
Manufacturing
Intelligence
X
Facilities X
Capacities X
Vertical Integration X
Process
Technologies
X
Product Scope
Intro New Product
X
Supplier relation X X
Quality
Management
X
Manuf.
Organization &
X X
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5. Manufact. Intelligence : Definition
A manufacturing strategy must be comprehensive and based on corporate and
business objectives. Normally, manufacturing objectives are expressed in term of
the three major dimensions : Cost / Quality / Delivery. EH&S is considered as a
fourth dimension in some industries such as Chemicals and Nuclear.
Implementation of manufacturing startegy can be difficult because changes in
short-term operating policies often have uncertain long-term effects.
Manufacturing intelligence allows a clear approach of
o the industrial activities of the company (Manufacturing Units)
o the manufacturing development of competitors
Manufacturing Intelligence also gives a comprehensive statement of internal
procedure to conduct manufacturing deployment in the company.
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6. Facilities : Definition
Facitities decisions are long-term, « cast-in-concrete » manufacturing decisions.
A key step in devising policies for a multifacility organization is choosing how to
specialize or focus each facility. Facilities may be focused by geography, product
group, process type, volume or stage in the product life cycle.
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7. Capacities : Definition
Important decisions include how to deal with cyclical demand, add capacity in
anticipation of future demand or in response to existing demand :
“Reactive” Incrementation to “ProActive” Incrementation
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8. Vertical Integration : Definition
A larger system affects operations as coordination by managers becomes more
complex.
Such decision involve replacing a market mechanism (with limited control) by an
internal mechanism. Before making such decision, a firm must be sure that it can
design and control an internal mechanism that will be more effective than the
market mechanism it replaces.
Market mechanism : operation made by supplier or contractor
Internal mechanism : operation made by the company
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9. Process Technologies : Definition
The traditionnal approach has been to choose among the principal generic
process type by matching product characteristics with process characteristics.
Robotics have made decisions more complex.
Highly automated factories can be extremely expensive. In many cases, such
advanced technology can drastically change manufacturing cost structure,
capital intensity, unskilled labour usage.
Process technologies can also impact plant organization and employees
management
 Operator driving several machines
 Operator dedicated to only 1 task
Process Technologies must be adapt to the product life cycle time (see next
slide).
For products in the last step of life cycle time, a continuous flow process is
prefered.
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10. Product-Process Life-Cycle Matrix
Continuous
flow
Connected
line flow
(assembly line)
Disonnected
line flow
(batch)
Jumbled Flow
(job shop)
Low Volume –
Low
standardization
One of a kind
Multiple product –
Low volume
Few major
products, higher
volume
Commodity
products – high
standardization
ProcessStructure
Product structure – Product life-cycle stage
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11. Product Scope & New Products
Iintroduction : Definition
Manufacturing management is strongly influenced by the range of products and
processes, and the rate of new product introduction.
Manufacturing management has significant input into decisions about product
scope and new products.
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12. Supplier Relation : Definition
There are 2 popular but opposed views on purchasing and supplier-relations
strategy : the competitive approach and the cooperative approach :
 Competitive approach recommends multiple sources.
 Cooperative approach recommends long-term relationshipss based on
mutual
trust.
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13. Quality Management : Definition
A strategy in quality requires zealous support from top management, a well-
articulated philosophy and concrete objectives.
It must specify how responsabilities are allocated and measurement system.
To be sucessfull, a quality program must be a permanent and on-going process
applied troughout the organization.
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14. Manufacturing Organization &
Managerial Infrastructure : Definition
A solid organizational infrastructure is essential to support decision making and
implementation and requires :
 Planning and control system,
 Operating policies and
 Well-understood lines of authority and responsability.
An organization can decide if centralization or decentralization of authority is
more valuable for the business.
In managing materials, firms should consider MRP and Just-in-Time (JIT)
system.
In aggregate planning, the firm must decide how to match productive capacity to
variable demand on a medium-term horizon (12 to 18 months).
The firm should decide what is make-To-Stock and Make-To-Order products.
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15. Human Ressources: Definition
A strategy in HR requires zealous support from top management, a well-
articulated philosophy and concrete objectives.
Human ressources strategy must evaluate if the organization want to develop
highly educated or low-skills employees. It can depend from the region where the
company operates. It can be influenced by the type of process used and
requirement from the market.
A HR strategy also clarifies how the organization strutures compensation
program and bonus program.
HR also create training/development program for each key function in the
organization.
HR startegy for manufacturing is often defined in the global HR strategy for the
company.
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16. Exemple of KPI
 Manufactured Quantities Tons
 Sales Turnover €
 Direct Labor / Working Hours Hrs
 Variables Costs €
 Margin on Variable Costs %
 Destruction Costs €
 Gross Profit %
 Productivity Kg/Hrs
 Net Inventory €
 COGS Days Days
 Maintenance Capex €
 On Time In Full %
 Customer Claims #
 Right First Time %
 Accident #
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