2.6.5.1 Manufacturing strategy contribution to competitiveness
From the seminal paper of Skinner (1969), it was claimed as pivotal the direct bi-directional relationship between the corporate/business strategy with the manufacturing strategy and the importance of the manufacturing strategy contribution to the firm’s competitive edge. According to Skinner (1969, p.136), the manufacturing function must not become a ‘corporate millstone’, due to a non-competitive production system, but must become a ‘competitive weapon’ with a top-down management approach, based on a continuous decision-making commitment to implement the right trade-offs to derive the relevant manufacturing policies, which are to be linked to the competitive and strategic facts. Such a stance needs to ensure that the top management gives due importance to the manufacturing strategy since it adds to the firm’s ‘arsenal of competitive weapons’ (Skinner 1969, p.145). Furthermore, Hayes and Wheelwright (1984) developed a set of six (6) World Class Manufacturing practices, based on empirical research on Japanese, German and US firms, which enables firms to achieve outstanding performance and to build competitive strength. These six best practices are: Workforce skills and capabilities; Management technical competence; Competing through quality; Workforce participation; Rebuilding manufacturing engineering; and Incremental improvement approaches (Hayes & Wheelwright, 1984). Such a best practice approach within the manufacturing practices needs to be extended from an internal productivity perspective to both suppliers and customers’ requirements. As defined by Garetti and Taisch (2012, p.84) ‘manufacturing includes all industrial activities from the customer to the factory and back to the customer, thus including all the different kinds of services that are connected to the manufacturing chain’. Such an era led to concurrent engineering (Winner, et al., 1988), lean management (Womack et al., 1990), agile manufacturing (Youssef, 1994), JIT (Flynn et al., 1999), mass customisation (Duray et al., 2000) and efficient consumer response (Hoffman & Mehra, 2000).
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The manufacturing strategy role in the contribution to competitive performance is also function of the product/process matrix position due to the nature of production method used (job, batch, line and continuous) and the nature of the product (i.e. type and volume) (Hayes & Wheelwright, 1979a, 1979b). Such a stance is used since the production method determines the competitive approach due to the lower costs, associated with say continuous production methods. Similarly a higher value-added product manufactured type, when it incorporates increased attractive features (e.g. dedicated product design, higher quality, lower price and high dependability), so as to create a competitive edge over others. Such Skinner’s and Hayes and Wheelwright’s theories both outline that the manufacturing strategy is a direct antecedent to a competitive strategy.
2.6.5.2 The manufacturing strategy and manufacturing leadership practices
The implementation of the manufacturing strategy is based on the operations strategy key categories classified under the structure and infrastructure decisions (Hayes & Wheelwright, 1984; Hayes et al., 2005), which built on Skinner (1969) work, by giving more importance to the manufacturing
leadership practices to pursue the operations strategy, through the business’s manufacturing policies
and people, to promote a competitive edge. Such two decision areas promote an improved leadership approach by configuring and aligning these key operational strategic areas with the relevant priority assigned by the business to promote competitive edge.
Another organisation alignment approach related to the Hayes and Wheelwright (1984) operations strategic stance is the McKinsey 7-S model (Waterman et al., 1980). The 7-S model has seven internal factors that need to be considered for an effective strategic implementation process to achieve a competitive edge. These factors are classified as three hard elements and four soft elements, where strategy is one of the main elements since without a clear strategy, the organisation will lack direction and impetus. The seven elements are strategy, structure and systems which are referred as the hard elements and the shared values, skills, style and staff which are referred as the soft elements. The model focuses on the ‘shared values’ element, since it makes all the other elements aligned together, since the cultural values of all people reinforces unity and teamwork which are two recipes required for effective and efficient performance. Furthermore, such people shared values importance, shows the key role of the human element, within the strategic implementation process, meaning that people are a key and invaluable asset (Rothwell, 2002; Tarique & Schuler, 2010; Xu & Thomas, 2011). Such a shared value can be seen from both manufacturing, by the processes coordination and also from a SCI perspective, by the intra- and inter-organisational practices.
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2.6.5.3 The manufacturing strategy and SCI
The manufacturing strategy is directly linked to the SCI strategy, as advocated by the (Frohlich & Westbrook, 2001) seminal paper, when they asserted that the ‘new millennium upstream and downstream integration with suppliers and customers has emerged as an important element of manufacturing strategy’. This perspective was also referred by Flynn et al. (1999), where they extended the work of Hayes and Wheelwright in 1980s, by advocating that SCI within and outside the focal firm is a crucial approach to face all world class manufacturing problems associated with the key operational objectives of cost (i.e. quality and features), dependability (i.e. specifications, time and service), quality (i.e. process quality) and flexibility (i.e. product and volume).
In today’s industry, manufacturing is being based on lean manufacturing, as an enhancement of mass production, when it focuses on cost and efficiencies, and deploys agile manufacturing, for a more responsive approach at the downstream side of the SC (Yusuf & Adeleyei, 2002; Gunasekaran et al., 2008; MacBryde et al., 2013). The manufacturing process needs to implement JIT practices and the overall SC is using a pull-based system (Kros et al., 2006), to align the production and business processes throughout the supply chain to meet the changing demands of the chain’s ultimate customers (Cox et al., 2003; Green & Inman, 2005). Pull strategies are customer focused and by adopting a JIT- II-selling strategy, employ tactics that integrates fully empowered sales representatives within the customer’s purchasing process (Green & Inman, 2007). As already referred in the a priori literature review, Section 2.5.1, Yusuf & Adeleyei (2002), based on an academic study focused on lean and agile manufacturing, contended that integration can deliver concurrently on multiple competitive capabilities.
Such agile techniques importance focused on the time of SC response to the customers’ request has also been substantiated by Cox et al. (2003). Furthermore, agility within the manufacturing SC context, is also considered as a pivotal characteristic of HVM, since the manufacturing firm needs to build on their capabilities, innovative and environmental sustainability approaches (Martinez et al., 2008) for the success of the SC within the dynamic and competitive environment (Agarwal et al., 2007; Braunscheidel & Suresh, 2009; MacBryde et al., 2013). The new innovative way of manufacturing is to deploy a paradigm shift, for a service led competitive manufacturing strategy (Neely, 2009; Baines et al., 2009), which is based on a shift from product selling to an integrated product and service offering (Baines et al., 2007). Such an approach is referred as the servitization of
manufacturing (Lightfoot et al., 2013) or the integrated solutions of manufacturing (Davies et al.,
2006). MacBryde et al. (2013) supports this perspective by asserting that manufacturers are engaging in activities which are complementary to the core production process, by adopting an approach that
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involve the customers in both the design and service activities to enhance the overall service value proposition through enhanced servitization.
From a SC perspective, the internal SCI focuses on the focal firm manufacturing processes and strategies to fulfil the customers’ requirements and efficiently interact with all upstream and downstream SC members to achieve competitive advantage (Ragatz et al. 1997; Flynn et al., 1999; Frohlich & Westbrook 2001; Paulraj et al., 2008; Flynn et al., 2010). The external linkages with all SC members, are not after a functional organisational structure, as it happens in the internal processes of the focal firm, but needs all the functional areas to work together in a synchronous and unified
process approach (Flynn et al., 2010; Richey et al., 2010). It cannot be excluded that the
manufacturing processes, to be in line with all lean and agile processes need the enabling processes of
IT/IS (Bayraktar et al., 2009; Cheung et al., 2012; Abdullah & Musa, 2014). The IT infrastructure is
facilitating and creating more effective IT based information sharing capabilities (e.g. sales and purchasing information) and flexibility within all manufacturing processes, both within and outside the focal firm, with all of its SC actors, such as in JIT inventory tracking, and in flexibility for product development, production, logistics, suppliers and supply base respectively (Gunasekaran et al., 2008; Jin et al., 2014) and also helps to build competitive performance of the overall manufacturing SC (Gosling et al., 2010).
2.6.5.4 The manufacturing ‘make’ or ‘buy’ strategic decision
The manufacturing strategy, as already referred, is interlinked with the SCI strategy, since the manufacturing process may be made inter-dependent on other firms forming up the SC. In fact various scholarly work have focused on the strategic decision whether a manufacturing process is kept in-house or is preferably outsourced (i.e. make or buy) to achieve or sustain its competitive advantage (Harrigan, 1985; Klein, 1988; Bajec & Jakomin, 2010). This strategic decision may either be based on the core competency of the focal firm (Cox, 1999), where the core activities are performed in-house and peripheral activities are outsourced, in line with the RBV (Barney, 1991) and extended RBV (Matthews, 2003) respectively. Such an approach exploits the resources of the focal firm and of its suppliers to improve on the overall competitiveness (Cox, 1999; Baloh et al., 2008). The other perspective may be based from a cost efficient rationale by the focal firm, in line with the transaction cost analysis (Williamson, 1985), to exploit the cost of operations of the focal firm and of its suppliers to improve on the overall competitiveness (Williams, 1985; McIvor, 2010). In reality the decision is multifaceted since it is function of a complex set of other contextual conditions such as suppliers’ availability, focal firm’s products portfolio and/or capacity of production, sector type and proximity of suppliers.
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