Manufacturing Strategy Ken Homa. Manufacturing Strategy Capacity –Level –Deployment Centralization Vertical integration Scope / focus.

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Presentation transcript:

Manufacturing Strategy Ken Homa

Manufacturing Strategy Capacity –Level –Deployment Centralization Vertical integration Scope / focus

Capacity Aggregate level Deployment –By product & part –By process –By geography

Aggregate Capacity Demand Variation

Capacity Utilization Target 85-90% utilization Long-run : …Prudently add anticipatory capacity : within existing facitliies, then new …Avoid adding costly “last chunk” Short-run : …Use excess capacity to build inventory for high demand periods …Add overtiime to boost capacity when req’d Can run > 100% for brief periods …Focus on bottlenecks (CCRs)

Centralization / Decentralization

Manufacturing Plant Supplier DC

Mfg Plant Supplier DC Mfg Plant

Manufacturing Strategy Centralized …Leverages fixed costs & investment …Consistent quality contol …Simplified supply chain Decentralized …Closer to market …More manageable Scale determines range of affordable options

Vertical Integration

Assembly Only Vertically Integrated Where on The Continuum ? Vertical Integration

Raw Material Parts Sub-assemblies Components Final Assemblies Modules

Vertical Integration Drivers Availablity Scale economies Learning curve Control

Factory Orientation Broad line factories …Scale & scope economies …Flexible capacity Focused factories …Narrow product scope …Common parts & processes …Often “full products” “Plants within plants”

Focused Factories A B C D E F PRODUCTS PLANTSPLANTS X XX X XX X

Manufacturing Strategy Capacity Centralization Vertical integration Scope / focus

Manufacturing Strategy