Page 110 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Unit 5: Procurement and Manufacturing Strategies

5.3.1 Manufacturing Objectives Notes

The changing nature of competitive pressure now requires companies to compete on several
aspects of performance simultaneously. This reality departs from the traditional idea that
organizations must find a specific area of competency and choose between objectives such as
low cost, quality, or flexibility. Hence, the degree to which companies resolve manufacturing
performance trade-offs, and the understanding of the processes whereby companies manage to
achieve this, emerge as a set of research questions. Let us discuss the concept of manufacturing
objectives.
Manufacturing objectives cover such things as cost, quality, delivery and flexibility and usually
there are trade-offs between them. Trade-off decisions are also required in a number of key
areas in order to support the manufacturing objectives. Skinner identified five decision areas:
(a) Plant and equipment;

(b) Production planning and control;
(c) Labour and staffing;
(d) Product design/engineering; and
(e) Organisation and management.
These basic ideas (trade-offs and consistency of objectives/policies) have formed a foundation
from which the current understanding of manufacturing strategy has developed. It can be formally
defined as follows:
“A manufacturing strategy is defined by a pattern of decisions, both structural and infrastructural,
which determine the capability of a manufacturing system and specify how it will operate to
meet a set of manufacturing objectives which are consistent with overall business objectives”.
The analysis of trade-offs between competitive priorities is one of the core issues in manufacturing
strategy. A critical decision that firms are facing across industries is the selection of a mix of
products to offer in the marketplace. The operational implications of product line decisions
have been largely ignored, even while the importance and complexity of interactions among
products in the manufacturing environment increase with broadening product lines. Furthermore,
consideration of manufacturing synergies among products, in product line design is increasingly
beneficial given efforts in many industries to improve co-ordination of manufacturing activities
across products.
5.3.2 Manufacturing Decisions

Manufacturing is characterised by tangible outputs (products), outputs that customers consume
overtime, jobs that use less labour and more equipment, little customer contact, no customer
participation in the conversion process (in production), and sophisticated methods for measuring
production activities and resource consumption as products are made. Every dollar in final sales
in manufacturing products supports $1.37 in other sectors of the economy. By contrast, the
financial services sector generates only about 50 cents for every dollar of activity.

Task Try to design various phases of technological aging/lifecycle by taking up the
example of Electricity and power generation. Give practical answers to support your
answer.

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