Page 112 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Unit 5: Procurement and Manufacturing Strategies

corporate strategy. Competitive advantage can be gained by having a superior mix of people, Notes
technology, focus and direction. A manufacturing strategy explores all these issues.

Notes The time scale of completing a radical manufacturing change dictates that a long-
term view is essential to permit planned investment and implementation.

Formulation of Strategy

Following are the process of formulation of manufacturing strategy which includes quality,
technology, skills requirements, and training and make-or-buy decisions.
Appoint a Project Team

The full-time attention of a number of knowledgeable people from the management team is
required for planning a strategy. Team members need to have a detailed understanding of the
aims of the organisation, its products and markets, skills in competitor analysis and manufacturing
technology.

Gain an Understanding of the Existing Market Position

A thorough understanding of your existing products is essential to the strategy formulation
process. Following questions must be answered:
What strategy does your organisation compete?
The three generic strategies are competing on cost (cost leadership), on superior features or
service (differentiation), or on a subset of the market (niche market focus).
What family products do you have?
 Use product life cycles as a framework to think about the manufacturing requirements of
different products.
 Plotting product life cycles for existing key products and future projects can build a picture
of the size and shape of the business in the future.

 In addition, measure the performance of each product.
 Focus upon the contribution, market share, and market growth.
 Identify the competitive edge produced by each family product. Competitive features
might include quality, delivery lead time, delivery flexibility, design flexibility or price.

 Determine the criterion which gives you the greatest competitive advantage.
Identify the Drivers of Change

In identifying the drivers of change consider the business criteria i.e. product performance,
market demands, the evolution of manufacturing philosophies and management structures. We
should also consider the change in technological developments and financial pressures. After
that we should analyse the external influence on the organisation, internal resources and
capabilities, and the skills and competencies of the staff by undertaking a SWOT analysis.
Analyse Your Current Performance

Assessment of the performance against competitive edge criteria can be difficult. Some factors
are not easy to measure directly, while comparative data may be hard to obtain. Thus, we can

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