COMPANIES NEED TO FOCUS MORE ON MANUFACTURING, EXPERTS SAY

COLUMBUS, Ohio -- If U.S. industry is to succeed in the global marketplace, corporate leaders need to give more attention to manufacturing strategy, according to researchers at Ohio State University.

"It seems that many corporate managers are more interested in the intricacies of finance than the details of making good products," said G. Keong Leong, associate professor of operations management at Ohio State's Max M. Fisher College of Business.

"Manufacturing has to become a bigger priority in the minds of managers," Leong said.

But one problem has been the lack of a clear definition of what manufacturing strategy should include. To remedy this, Leong and Peter Ward, also an associate professor of operations management at Ohio State, developed what they call "The six Ps of Manufacturing Strategy." Their list was published recently in the International Journal of Operations and Production Management. Here are their six Ps:

1. Planning. Many companies develop plans to help guide what they hope to achieve in their manufacturing process. The problem, Leong says, is that many companies believe having a plan is the same as having a strategy. "Just having a business plan is not enough to ensure success," he says. That leads to the remaining Ps.
2. Proactiveness. "One of the reasons U.S. companies have fallen behind foreign competitors is that manufacturing has taken a subordinate role to marketing and finance functions," Leong said. "This means manufacturing is always reacting to decisions by other units of the company and is always concerned with short-term issues." To be proactive, companies must anticipate the potential of new manufacturing practices and technologies and make sure that manufacturing is involved in major engineering and marketing decisions.
3. Pattern of actions. While it's important to have a manufacturing plan, what counts is the real-life actions and decisions made by management. These actions will determine whether a manufacturing strategy is successful or not. "The pattern of actions of a company reveals the real strategy of the firm," Leong said.
4. Portfolio of manufacturing capabilities. These are the special abilities that a company has in manufacturing. Some examples of manufacturing capabilities include cost, quality, delivery, and performance. Managers should emphasize those capabilities at which the company excels. For example, if a company has the ability to make products more cheaply than competitors, that ability should be exploited, he said.
5. Programs of improvement. These are the programs companies develop to improve manufacturing capabilities needed to succeed in the marketplace. For example, a company may need to find ways to cut costs in manufacturing if competitors can offer less expensive products in the marketplace.
6. Performance measurement. Managers need to find ways to evaluate how their company is doing at meeting its strategic goals. For example, a business that stresses rapid delivery of products needs to find ways to measure and reward delivery performance within the company.

"The value of the six Ps is that they allow manufacturing strategy to be viewed from a broad perspective," Leong says. "Companies that develop such a perspective will be more successful in the global marketplace."

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Contact: G. Keong Leong, (614) 292-5250

Written by Jeff Grabmeier, (614) 292-8457

Jeff Grabmeier, Managing Editor (jgrabmei@magnus.acs.ohio-state.edu)

Earle Holland, Director, Science Communications (holland.8@osu.edu)