1. Manufacturing Strategy & Operations Saad Ahmed Javed National College of Business Administration & Economics

2. Manufacturing Strategy & Competativeness Ch 3 (Part-II)

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

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

5. Aggregate Capacity Demand Variation

6. 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)

7. Centralization / Decentralization

8. Manufacturing Plant Supplier DC

9. Mfg Plant Supplier DC Mfg Plant

10. 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

11. Vertical Integration

12. Assembly Only Vertically Integrated Where on The Continuum ? Vertical Integration

13. Raw Material Parts Sub-assemblies Components Final Assemblies Modules

14. Vertical Integration Drivers Availablity Scale economies Learning curve Control

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

16. Focused Factories 1 2 3 4 A B C D E F PRODUCTS PLANTSPLANTS X XX X XX X

17. Manufacturing Strategy Capacity Centralization Vertical integration Scope / focus