1. Manufacturing Strategy Ken Homa

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

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

4. Aggregate Capacity Demand Variation

5. 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)

6. Centralization / Decentralization

7. Manufacturing Plant Supplier DC

8. Mfg Plant Supplier DC Mfg Plant

9. 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

10. Vertical Integration

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

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

13. Vertical Integration Drivers Availablity Scale economies Learning curve Control

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

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

16. Manufacturing Strategy Capacity Centralization Vertical integration Scope / focus

17. Manufacturing Strategy