Manufacturing myopia

In recent decades many industrial companies have attempted to achieve manufacturing excellence. They have tried various methodologies and theories, quality initiatives and cost-reducing concepts. But few have made any headway. Manufacturing strategies are often the same as they were 20 years ago and plants often look and feel the same as then. Often it seems that such programmes as total quality management, lean production and Six Sigma have had no effect at all.

by Strategy & Business, Spring 2006
Last Updated: 23 Jul 2013

Executives try everything to improve operations, but get outperformed on cost, quality or delivery. When companies try to respond by outsourcing production things get worse because they are diluting their competence in it. Gradually, manufacturing is treated more and more as an outcast and plant communities become disenfranchised.

This condition is termed "manufacturing myopia" Akin to the "marketing myopia" identified in the 1960s by Harvard Business School’s Theodore Levitt as a description of how brands were defining themselves too narrowly, manufacturing myopia is more prevalent and dangerous than its predecessor was.

Like the problems in marketing, manufacturing myopia is caused by isolation. It is the inevitable result of keeping manufacturing strategies contained to the functional or even plant level with little or no link with company-wide strategies. As the manufacturing focus narrows, companies are compelled to cut costs even more blindly and irresponsibly, often by setting company-wide targets by financial fiat rather than by competitive or customer insights.

The cure for manufacturing myopia is 20/20 vision – in other words, the cultivation of awareness of manufacturing costs and means. Companies can sharpen their ability to see their operations more clearly and redesign them more flexibly. Those that achieve this kind of prowess find that the manufacturing function is no longer seen primarily as a cost centre that needs to be cut back or outsourced. Instead, the ability to produce higher-quality goods at lower prices in a more flexible manner is a key component of their long-term competitive strategy and a central, dependable part of their identity.

This involves two major commitments. The first is a dedication of resources to building awareness of what the manufacturing side does and how. The second is patience, demonstrated by investing the time and resources to address manufacturing productivity as a long-term, organisation-wide strategic imperative and not as an isolated operational or functional issue.

A company seeking to overcome its manufacturing myopia may find the task daunting at first, but it should become easier over time. The goal is not to “fix” manufacturing, but to build the capacity for long-term and medium-term manufacturing management among engineers, suppliers and staff, and to redesign the technology to take advantage of these capabilities and augment them.

There are no universal rules for doing this because each manufacturer has a unique combination of capabilities, labour histories, supply chain relationships and the rest. But it is worth working at because in a confrontational competitive environment the choice is engaging in manufacturing competence as the core of your corporate identity or continuing to pay the price of myopia.

Source: Manufacturing myopia
Kaj Grichnik, Conrad Winkler and Peter von Hochberg
Strategy & Business, Spring 2006

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