An exploratory study of the manufacturing strategy process in practice

Abstract This work presents an exploratory empirical study of the process of formulating and implementing manufacturing strategy within the framework of overall corporate strategy, as practiced by a cross‐sectional representation of leading‐edge firms. A conference was held where executives representing six firms in the following industries—computer equipment, pharmaceuticals, valves, telecommunications, furniture, and electrical submersible pumps—described the process of manufacturing strategy formulation and implementation as practiced within their firms. Although the firms represented a diversity in terms of sales volume, longevity, and geographic location, they shared several commonalities including Class A use of MRP, excellent customer service records, and maintenance of accurate manufacturing data bases. In addition, despite increasingly competitive conditions within their respective industries, none of the firms considered itself to be the low cost producer in the industry. Competitive strength was sustained through innovation, quality, and service. The process of strategy formulation varied among the firms in terms of participants, complexity, and degree of formalization. Several findings emerged from the conference. First, all firms followed a traditional hierarchical top‐down approach in formulating manufacturing strategy under the umbrella of corporate strategy. In general, the process was reactive to corporate strategy although the executives reported greater involvement on the part of manufacturing in corporate strategic planning through the identification of competitive strengths and weaknesses. Manufacturing strategy was also viewed as reactive to marketing strategy with marketing playing the role of boundary spanner in assessing competitors and customers to support the manufacturing strategy effort. Finally, some of the executives stated that several of the traditional manufacturing resource decision categories were constrained by corporate philosophy. Examples of constraining policies included facilities, capacity, vertical integration, and organization. On the other hand, all the firms were able to develop strategies for process choice/technology, quality, manufacturing planning and control, and people. The executives described the implementation process as one of gaining employee acceptance of the strategy through lower level involvement and teamwork. Although communication was a major concern in implementing the strategy, the executives all stated that the most difficult task was changing corporate culture, which was often entrenched in obsolete cost accounting systems, to make it supportive of the new strategy. Other problems confronted by the firms included maintaining consistency among managers across all levels in the organization, gaining top management support, and developing appropriate styles of leadership. The study shows that these firms' processes of formulating manufacturing strategy seem to follow the general conceptual models developed in the academic literature. However, the executives indicated that the real benefits of strategy come from implementation, which is a less structured and behaviorally oriented process. Future research must address infrastructural issues including culture, performance measurement, and managerial style.