Manufacturing Strategy for Window Fabricators 1 - The essential part
Do any of these sound familiar?
- 'I can sell it but they can't make it'
- 'It's no use telling me you can make doors this week, we need windows.'
- 'Production output is down this week and orders are stacking up.'
- 'What do you mean we don't have the equipment to produce it?'
These statements show the need for a manufacturing strategy to direct window fabrication. The problem is that you cannot buy a manufacturing strategy off the shelf. You must create it, work on it, develop it and make it become part of the business. It is a vital part of the business but it can only come from within.
This series on developing the future of manufacturing is a combination of both asking questions and prompting some questions to ask. The answers will be different for every fabricator. There are no right or wrong answers, only appropriate answers to appropriate questions.
The market is changing, getting tougher, and the competition is getting better. In addition to existing local competitors there are new competitors and the rising national super-fabricators. The market demand has changed from a mainly retail one to a fragmented market with retail, specifier, new build and other high-growth and demanding sectors. Minor improvements will be enough to survive and excellence is only a ticket to the game.
Before trying to create a strategy for manufacturing we should define what it isn't:
- Manufacturing strategy is not another phrase for automation.
- Manufacturing strategy is not another phrase for buying new machines.
- Manufacturing strategy is not another phrase for computers.
- Manufacturing strategy is not another Japanese management fad.
- Manufacturing strategy is not about technological excellence.
- Manufacturing strategy can be about all of these things but only if they are appropriate to the business.
So what are strategy, tactics and operations and how do they relate to the real business? Strategy is about planning for a business. Tactics is the detailed direction and control of the efforts to achieve the plans and operations are what really happens in the market or factory.
The relationship between strategy and tactics.
The strategy sets the overall limits and directions for the achievement of the goal but does not specify the exact tactics to be used. Tactics may change with time but only those tactics that move towards the goal should be considered.
Many companies develop a 'sales strategy' or a 'marketing strategy' but few see the need to develop a parallel and integrated 'manufacturing strategy'. Yet without a manufacturing strategy, any investment in machinery or systems is probably a series of unrelated and 'ad-hoc' responses to current operational problems. Without a manufacturing strategy, what initially appears to be a routine manufacturing decision locks the company into specific equipment, personnel or systems. This can make it both difficult and costly to adapt the business to future changes in the market. Worse still, having invested in inappropriate equipment or systems there may not be enough time or money to re-invest in the right systems just when they are really needed.
Any manufacturing strategy must be integrated into the overall business strategy alongside the marketing, finance, sales and other strategies. The manufacturing area has often been thought of as a 'liability' in terms of the overall business strategy and this has led to comments like those at the start of this article. Integrating manufacturing into the overall business strategy can transform manufacturing into the asset that it deserves to be.
This approach requires that production managers are pro-active in the business rather than reactive. For too long production has been seen as responding to external demands - producing what the sales department sold without it. Production managers must begin to think of themselves as businessmen!
The full business strategy must take into account manufacturing capabilities as well as market needs and product design. Production management must become actively involved in the development of the overall business strategy. Improving manufacturing performance gives companies a competitive edge and production managers must begin to think and act in a strategic manner. They must learn to manage their activities strategically so that the manufacturing function gives the company a competitive edge in the market place.
Before developing a manufacturing strategy it is necessary to have an overall business strategy because this is the framework that manufacturing fits into.
The business goals give the essential limits, direction and motivation for the other strategies.
The goals may be:
- Market Share
There should always be actual targets to aim for in both the long and short term. It is not enough to say that you want to increase profit, you must state how much you want to increase it by and over what period, e.g. profit to increase from £10,000 to £20,000 in the next twelve months. The goals should be bold (to provide a challenge), measurable (to see if you get there), prioritised (to give focus) and timed.
These should be less than half a page in length and there should be less than five key goals.
These are the factors that determine growth and success in a specific market. The KFS may be product related or systems related. Typical KFS could be:
- Quality - Responsiveness
- Lead times (absolute)
- Lead times (reliability)
- Product choice
- Service (Technical/Sales/ Marketing)
Every company needs to find out what the KFS are for their market and to try to improve these. If there is nothing to distinguish you from the crowd then your future is limited.
Once the business goals and the KFS are established, it is possible to develop a manufacturing strategy to deliver these.
It used to be assumed that cost-efficiency based on high machine and labour utilisation was the way to be competitive. The market and battleground have changed and now total system effectiveness and customer responsiveness are the vital factors.
The new manufacturing strategy must deliver products faster, better and cheaper. Delivering the combinations of the diagram below makes manufacturing a truly potent weapon in the market place.
Focusing on what the strategy must deliver.
This is what the manufacturing strategy must deliver. The product and manufacturing should both provide a competitive advantage rather than simply competing on a price basis. A strategy to deliver all of the combinations of this diagram would be a truly potent weapon in the market place.
The new manufacturing strategy must also relate to factors such as:
- Minimal inventory.
- Minimal Work-in-Progress (WIP).
- Zero defects.
- Low but reliable lead times.
In developing manufacturing as a strategic tool it will be necessary to examine how production is controlled, how quality is controlled and how performance is measured. Some of the areas will require machinery investment but most of the gains can be achieved by improving the methods used. There is a lot to do and not much time to do it in.
It is important to set some overall goals for the manufacturing strategy. These could be:
- To reduce stock, work in progress and cash tied up in product by at least 50%.
- To reduce lead times from order to delivery by a factor of 10.
- To increase lead-time reliability by a factor of 3.
- To increase quality by a factor of 4.
- To increase overall profitability of the company by 20%.
These are achievable goals!
The 'Manufacturing Strategy' series is designed to give window fabricators a set of ideas for managing production. The series is being published in Fenestra on a monthly basis and published here after the Fenestra publication. The series is:
Part 1: The Essential Part
Part 2: The Systems
Part 3: Just-in-Time
Part 4: Optimised Production Technology
Part 5: Work Cells
Part 6: Machines
Part 7: Machines (2)
Part 8: Scheduling
Part 9: Waste (Methods)
Part 10: Waste (Materials)
Part 11: Supply Chain
Part 12: Measurement
Part 13: Things to do NOW!
Part 14: The Cost of Quality
Part 15: The Hidden costs of inventory
Part 16: Environmental management
Part 17: Continuous Improvement
Last edited: 11/03/10
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