nm1220: this morning namex and i will give a sort of joint session looking at 
how you formulate a manufacturing strategy we talked a lot yesterday but-, 
about how you need to integrate your operations strategy with all your other 
strategies we looked at s-, some tools and for doing that with namex we had a 
look at the effect of that on a small real company H-G Plastics last night now 
we're actually going forward to look at what goes into an operations strategy 
and how you then go through a process of putting it together we'll look a-, be 
looking at some academic models as i say that sounds very boring but they are 
ones we'll see later that real companies use in real life and basically do 
something different can we ask you all to shut your manuals please just manage 
without the slides for a while you'll see why in a minute 'cause we're going to 
ask you to do an exercise and the answer's on the slides so just to make it 
slightly more difficult for you if you could close your manuals er just for the 
first few minutes of the session and i'll now pass over to namex who's going to 
start this morning off 
nf1221: okay good morning 
ss: good morning 
nf1221: oh hurray [laugh] right we're looking at the development of 
manufacturing strategy then and we're taking it from the work that we did 
yesterday on strategy integration so you'll need to remember some of the things 
we did yesterday can you remember that far back yes just about good the 
objectives then of the session for this morning are to be able to understand 
what manufacturing strategy is and be able to define it so you should have a 
much better understanding of what it actually is today er 
operation strategy too and you should be able to discuss and give examples of 
how it can be formulated so we're looking at the actual process and the content 
of of making man-, of developing manufacturing strategy we're going to look at 
how you'd formulate manufacturing strategy and we're going to ask you the 
questions for that er hence why we don't want you to look in your manuals yet 
and then we're going to introduce three different frameworks for developing 
manufacturing strategy there are more than three we have preselected these 
three because we believe it gives you a variety of different frameworks to 
consider er there are many more for which at your leisure you're welcome to go 
to the library we've referenced more in our notes which are very comprehensive 
but we're only covering three today Terry Hill Platts and Gregory and John 
Miltenburg so they're the three that you'll be using and 
you may wish to use some of the material as well when you do your S-C-L case 
study which i believe you start this afternoon okay so do take some note of 
this we will remind you of some of the key strategic tools for formulating 
strategy we will link back to what we did yesterday er you will also cover more 
analytical tools in your S-C-L case study which you will do for the remainder 
of the week okay so we'll be bringing some of them in today because they do 
come i-, under the frameworks and at the end we'll be just reviewing 
summarizing if you like the key characteristics of the different frameworks 
obviously as i was saying to you yesterday about Master's level about 
understanding and application one of the key things that we'll be measuring is 
your ability for critical analysis okay and critical analysis is looking at 
things like what are the characteristics of all these frameworks what are the 
strengths what are the weaknesses what are 
m-, what is my view how can i compare the two so we'll be sharing that with you 
at the end okay as a general set of guidelines i've got some slides on the 
principles of strategy er and then i'll ask you to do an exercise er without 
hopefully the use of your manuals so again for the purposes of this lecture you 
are all directors of hypothetical companies okay and you're thinking about how 
you're going to develop a manufacturing strategy so what i'm putting up next is 
some information on just general principles for strategy formulation and this 
is applicable to any type of strategy formulation okay so it's not just true 
for manufacturing and i have to say that if i asked you to brainstorm these 
you'd probably come out with them all yourself so i'm not going to go through 
them in laborious detail okay just some prompts for common sense so strategy is 
long term okay we're looking at five ten fifteen years most companies that i 
work with 
in the food industry consider five years to be a long time we were talking the 
aeronautical group yesterday twenty years is probably the same vision for them 
so it depends on the company and the industry but y-, it's a long term view 
that you're taking you're dealing only with the major issues you're not dealing 
with tactical or operational issues you're dealing with the major long term 
issues you're looking at what differentiates the company from its competitors 
and we looked yesterday about that differentiation didn't we starting with the 
Porter grid about differentiation or cost focus et cetera er so you're actually 
stating there within the strategy the actual identity for the company what is 
it that's different about your company and you should see that throughout the 
strategy you're concentrating the effort then on those particular issues and we 
did look yesterday about 
focus with the Puttick grid and other things so that's where that would come in 
in terms of the strategy we're looking at a pattern of decision making over 
time you don't make all the decisions in one go you set down some policies in 
which you can make decisions in the future pervasive means that it affects the 
whole organization so the argument is that everybody in the organization should 
know about the strategy er that is easier said than done in my experience er 
when we teach these programmes to er participants who already work a lot of 
them are unaware or a little bit unclear about the actual strategy of the 
company that they work for that is not unusual it sounds amazing but it isn't 
actually unusual so er i think this one is very important so strategy should 
affect everything and just to ca-, a point at the bottom there just for you to 
note that this is what we believe distinguishes strategy from tactics and 
operational plans okay 
so it's a formal procedure one involving a multidisciplinary team different 
strategies should be formally evaluated before making decisions because you 
obviously can predict a set of different futures can't you yeah will we have a 
war in Iraq will we have an oil crisis et cetera er and you can predict 
different futures and set your strategies to suit them should strate-, 
strategies should be communicated as i mentioned you should look at the risks 
associated with the external factors and we spent half an hour yesterday 
looking at external drivers didn't we in the in the companies so you need to 
look at the risks and be able to have some contingency plans to meet most of 
those potential external events and monitoring events should be carried out 
continuously okay but we'll perhaps come back to that a little bit later on and 
the strategy should be reviewed regularly okay so they are the general points 
for strategy which hopefully you'll all have in your 
minds now when we ask you to do this task what we'd like you to do is to answer 
those four questions in the groups er are you going to organize it into S-C-L 
groups or just let them sit in their 
nm1220: er i think it'll probably be easier to do it geographically in the room 
rather than S-C-L groups 
nf1221: okay so the groups that we had yesterday when i did order winners and 
qualifiers and the external drivers okay and i'd like you on one sheet of flip 
chart paper one sheet per group okay so you have to fit the entire thing on one 
sheet of paper that we can read on the board so please no writing at ten points 
okay and we'd like you to answer these questions from your own general 
knowledge okay this is not a test this is for us to be able to pitch the 
lecture do you 
understand if if i know what you understand then i know what to teach you okay 
so i'm trying to understand what you know and this is in all this is about i 
will do it in groups and we will understand from these questions what you know 
i would be grateful if you don't look at your books it's not a test but all the 
answers are in the manual so you're likely to be bored if you just read it all 
out of there put it on there i think you know everything and leap off into a 
higher level of manufacturing strategy nobody's going to win there okay so 
please try not to use your manuals if you're stuck then look all right i don't 
want you to to have not do anything but in your groups you should be able to 
answer these questions pretend that you own a company or that you run a company 
even the in the sectors that you were doing yesterday the other example you 
could use is the business that you designed for your context of business module 
did you all 
develop your own company 
sf1222: mm 
nf1221: yeah well use that one then okay use that product okay so think of a 
product think how you would develop a manufacturing strategy okay that's that's 
that's what we'd like you to do so we want you to define it as if you were 
writing it for a dictionary we'd like you to just indicate who should be 
responsible er don't just say everybody i would like a little bit more detail 
than that how often should it be reviewed and then the major question is the 
last one which is what should be in it what decision areas do you need to make 
what goes into a manufacturing strategy what kind of decisions will you have to 
make when you're deciding what to make and what not to make okay does that make 
sense does everybody understand the questions yeah 
obviously namex and i will come round as often as you wish er we'll give you 
twenty minutes we'll give you till twenty to ten to do this please put your 
syndicate number on the top of the page it was one two three wasn't it four and 
five syndicate groups yeah group one group two group three group four and group 
five okay er because we will be putting your answers on the board and using 
them for the rest of the lecture okay good any questions please no right just 
glazed looks sorry i'm making you work so early in the morning [laughter] right 
nf1221: if you've finished if you'd like to come and put your er sheets on the 
board don't worry if you if you could stay sitting in your groups please so 
that i know who to talk to 
nm1220: or we could the second page 
nf1221: okay 
nf1221: oh hurray [laughter] the technology works [cough] okay what we're going 
to do now is we're going to ans-, answer look a-, read out your read your 
answers for each question and then we will show you our answer that we prepared 
earlier 
okay but we'll discuss what you've put first and see how similar it is to what 
we've already prepared please now open your manuals because we're we're 
following the notes so the first question is can you define manufacturing 
strategy or what is your definition for manufacturing strategy and i'm sure we 
have a variety there on the board because you're all obviously in different 
groups and had your own ideas so from group one we've got a long term guideline 
move towards where the company wants to be from where they are now so somebody 
was listening yesterday which is refreshing so it's about how companies move 
from where they currently are the current situation to where they want to be 
and it's long term and it's it's a set of guidelines which is one way of 
putting it so yes i agree with that definition we have group two said it's the 
utilization of manufacturing techniques tools and methods so good we've got the 
word manufacturing 
in there which is er refreshing because we are trying to reflect manufacturing 
strategy and we're looking at the tools techniques and methods excellent used 
in an organization so i guess that's like the resources that we were talking 
about yesterday and we've got to gain competitive advantage so again very good 
because you're now thinking about how you get that distinctive er element to 
your business all right what distinguishes you from the competition okay so you 
need to p-, have that in place so very good to that one three 
nm1220: group three yes 
nf1221: the long term guideline for a company to achieve its goals and 
objectives by considering the productivity and profitability so on the one hand 
we're looking at making lots of money and on the other hand we're looking at 
doing it very efficiently i assume that's where we're looking at here er alo-, 
achieving the goals and objectives which is 
excellent because you're aligning that back to corporate strategy which is 
something else we talked about yesterday and again long term guidelines 
excellent group four then are saying choosing the right drivers to make the 
decision about what to produce how to produce and who to produce it for within 
the capacity constraints of the company considering the uncertainty of wow 
[laughter] very [laughter] er i've d-, thinking of a descriptor for that but i 
can't [laugh] er ha-, choosing the right drivers so i guess that's linking back 
to what we were talking about yesterday in terms of external drivers or perhaps 
other things within the business like what the sis-, d-, directors want 
sm1223: strategic drivers 
nf1221: yeah 
sm1223: depends on the business 
nf1221: absolutely so it's not just what's happening outside it's what 
the actual people within the organization want to do so those 
sf1224: another thing from question four as well that all the stuff that all 
the areas that the decision kind of all of that stuff 
nf1221: yes yes good which is refreshing because normally they take no notice 
of that at all so looking about what to produce yes it's about what you produce 
but that's also the job of marketing too so there's there's two elements to 
that it's the manufacturing's definitely about how to produce it okay and who 
to produce it for again that's where the link with marketing would come in and 
sales i guess er looking at the constraints that you have but you may not let 
them be constraints any more but you you're looking at current situation and 
considering the uncertainty in the marketplace which is something we did look 
at yesterday 
sf1225: mm 
nf1221: with the Puttick grid didn't we 
sf1225: yep 
nf1221: okay so well done very good er group five a 
long term planning and operation guideline to achieve the goals of the 
organization yes that's group five here isn't it well done so we're looking 
again at long term er specifically at planning an operation because you have to 
plan in order to have your operations and to achieve the goals of the 
organization so you've got that alignment there okay 
nm1220: right let's have a look at who's responsible for it group one the boss 
yes along with er the manufacturing manager along with talks with sales and 
purchase manager involving representatives from separate units on the shop 
floor interesting so we've got someone responsible manufacturing manager 
responsible but talking to other people including the shop floor that may well 
happen but the involvement there most definitely has to come when you are 
implementing the strategy realistically you've got ten-thousand people in the 
company you 
can't actually talk to every single one of them about your strategy but 
certainly once you get to implement it every single one of them's got to know 
and understand it group two manufacturing director R and D department yes new 
products coming through what's that going to do to us finance director chairman 
sales director so one group all very much at the top of the company there group 
three top manager production manager C-E-O finance manager et cetera again a 
grouping at the top of the company but a grouping taking in various views group 
four we've got a primary responsibility we've got it split down primary 
responsibility we've put on the production management yes in the end someone's 
got to be responsible someone's got to tie it together but yes we've got input 
drivers from just about everybody else so we've got primary responsibility 
there but again taking information and advice and comment from lots of other 
people group five simple 
top management i think perhaps a little bit vague term er but yes seen 
generally its strategy is a senior responsibility that's what they're paid for 
that's what they get their large salaries for 
nf1221: okay let's look what er we prepared er before our definition we put up 
was this that the primary function of a manufacturing strategy is to guide the 
business in putting together the set of capabilities that will help it to 
pursue its chosen strategy competitive strategy over the long term so lots of 
words there that have been reflected in what you've put in your definitions so 
it's really looking at how it can deliver the competitive strategy of the 
business so how manufacturing can harness its resources to deliver that 
competitive strategy over the long term to supplement that we have this at the 
bottom which says it's a framework for planning it should adapt successfully to 
environmental changes and some 
of you put i-, uncertainty of the marketplace et cetera and it's a focus 
sometimes on what's needed for survival now that's not always true but in 
certain companies i'm sure you can think of examples at the moment United 
Airlines springs to mind which which from the news yesterday er they're very 
much into survival okay so it's about thinking about that when you're t-, 
you're looking at strategy and manufacturing can obviously support that or 
operations and then who should be responsible we've we've d-, we've used a 
survey here done in America looking at just at six firms but they did some 
detailed interviews with them they asked them who's responsible for developing 
manufacturing strategy five of them use corporate level multifunction teams so 
that would be what some of you represented here so we're looking at directors 
and from all the different functions within the business okay that's what i 
would expect 
one firm said the vice-president of production and engineering er our argument 
with that is generally you would only use one person to develop the strategy if 
you had a particularly strong leader or if you had a relatively small business 
because then you don't have the spare people to sit around making strategy you 
have to kind of run it by yourself but generally i would expect to see 
corporate level multifunction teams there okay so the third question was how 
often should it be reviewed and we have a variety of er answers we've got 
yearly we've got every season according to the football shirts good or or maybe 
three times a season given what Manchester United do no fixed time depends on 
the situation again i'd like probably a little bit more detail with that in 
terms of what you mean you are absolutely right but er examples would be more 
helpful with that so for 
the mobile phone industry what what's the life cycle of a mobile phone product 
life cycle of a mobile phone do you think 
sf1226: a few months 
sm1227: half a year
sf1228: mm 
nf1221: half a year 
sf1228: 
nf1221: yeah it's about three months yeah some people say it's even less than 
that okay so if you've got that life cycle then obviously you're going to do 
this much more frequently if you go back to our aero engine then we're looking 
maybe every year every two years every five years okay so it you're absolutely 
right but examples would have helped me understand what you meant er er er 
three oh wow review period is industry dependent so this is what i guess you've 
reflected in this graph yeah so rapidly changing trends here in terms of mobile 
phones you did the teenage market one yesterday didn't you 
sm1229: yeah 
sf1230: mm-hmm 
nf1221: so that would be more frequent here and slow changing trends here okay 
so that's a very useful diagram there well 
done first time i've seen that and group one whenever the need arises yes 
although you have to be careful with strategy that you do set something in 
stone we would say and you don't just respond to every single change in the 
environment because the environment will change okay er the thing about 
strategy is that you have a set of policies that you can actually fix that you 
may flex a little bit but the general f-, er path of the company is fixed 
unless something major happens obviously like September the eleventh but other 
than that you you fix a direction because that's what will give you the focus 
and enable you to make a profit and take everybody with you in the company so 
there is that trade-off there with not not too responsive predicting the 
changes in the environment yes good luck [laughter] er keep on confirming 
alignment of manufacturing yes absolutely er i agree with that and i think i've 
covered yeah 
i've covered them all there we've put er we we use this these conference again 
with these firms one firm said continuously and er namex and i think if you're 
going to monitor strategy continuously then you unless you've got a fantastic 
real time data monitoring system then you're not actually going to do what you 
say okay so unless you've got the fancy electronic data systems equipment to 
help you er you're probably wasting your time all right i would say 
continuously monitoring strategy isn't that helpful four said quarterly 
combined with a major review so four are saying they review it every three 
months and then they'd have a major review and the recommends recommendations 
for that major review range from yearly to three to five years okay so 
generally it's it's rolling the the firms that i deal with my food companies 
they consider strategy five years out but they have like a th-, rolling three 
year strategy so even big multinational blue-chip 
companies still only look just that far ahead to actually put things down set 
things in in stone okay well done and finally then we're looking at what goes 
into a manufacturing strategy so the elements of manufacturing strategy and we 
have things like capacity resources technology logistics demand yes demand in 
terms of what feeds into capacity er economy in terms 
sm1231: the situation and 
nf1221: okay 
sm1231: 
nf1221: okay so yes i'd i'd take that at a higher level but yes it will 
indirectly influence er bill of materials and procurement yes costs good 
competition and then your scheduling systems M-P-S and er M-R-P and E-R-P do we 
know what they are you've all done logistics haven't you good excellent 
capacity perce-, er human resources good supply chain excellent whoever group 
five are well done er quality marketing and finance yes all of those things 
will you would ma-, need to make decisions about some of them would have more 
weight and have more detail in manufacturing strategy than others okay there 
will be a financial department obviously manufacturing have to think about 
costs and finance okay er capacity yes planning machines flexibility in 
production good logistics and inventory yes very important er and 
infrastructure in terms of organization and facility so that's nicely organized 
there by group two that's that group there isn't it and then group three 
looking at capacity customer relationships excellent somebody cares about the 
customer here [laughter] well done group three that's right at the back isn't 
it well done er finance suppliers R and D good because you need to link that 
into manufacturing although that wouldn't be s-, those decisions wouldn't only 
be made in manufacturing i 
nm1220: so think back to H-G Plastics yesterday evening all their major 
problems their inability to cope with their new products and change and then 
you were in the fashion business where it was their lifeblood so R and D yes 
dealing with new product introduction expecting that things will change very 
very important and something that not all the companies are terribly good at 
nf1221: good and then group one we've got inventory machine efficiency yes 
because that will help you deliver i guess were you the ones that put oh no 
this is group one were you the ones that put profitability no that was here 
okay er packaging good packaging 'cause we talked about packaging yesterday 
didn't we capacity and production and H-R excellent so well done you you know 
er quite a lot about manufacturing strategy already don't you yes so you think 
great she can say we can all go home now this is wonderful [laughter] 
but er unfortunately no that doesn't mean that it means i'm just going to talk 
er in more detail about the things that we think you already know okay so what 
we're going to look at now is our response to group the your your question four 
which is on the content of manufacturing strategy and of course i've given you 
all my pens haven't i let's take a pen so manufacturing strategy can be divided 
into two things content and process so when you think about manufacturing 
strategy you can think about it in these two ways now the content of a 
manufacturing strategy is what's in it okay that's relatively obvious and 
that's what you've responded to for your question four okay what are the 
decision areas of manufacturing strategy what is in manufacturing strategy 
that's forms the content of it the process of manufacturing a strategy is how 
you make those decisions it's the procedure the method 
the framework so the three frameworks that we'll be taking you through later 
will detail the process of making a manufacturing strategy so there are two 
elements to it we've asked you to brainstorm the content er we're going to now 
show you what the academics say should be in the content and then we'll take 
you after the break through three examples of how the process works and we'll 
have an exe-, exercise to do there too so that you can understand these 
particular frameworks do you understand that does that make sense yeah that's 
that's what we'll be doing okay so we're now looking at the content of 
manufacturing strategy and your response to question four we've taken these 
writers er Hayes and Wheelwright they work from America and they've been 
writing about manufacturing strategy from the nineteen-eighties so they've been 
around quite a long time the reason we go back that far is because this not 
only 
being one of the first texts on the subject it's also been used a number of 
times subsequently in various other frameworks okay so other academics have 
used this work further down the line and hopefully you'll see that reflected in 
the frameworks that we take you through so we've got manufacturing strategy 
there and around the outside of this circle we've got the eight elements of 
manufacturing strategy as proposed by Hayes and Wheelwright and i'm going to 
talk about four of them to you and then i shall hand over to namex who's going 
to talk about the other four going up to the break the four that i'm going to 
talk about are the major decision areas the ones that set the boundaries of 
your business the ones that define the bricks and mortar if you like and you'll 
see that in your texts that you've got in front of you we divide it like this 
so i'm going to be talking about capacity issues facilities technology and 
vertical integration and i will explain 
what that is when we get there we call these the structural decisions okay so 
they define the boundaries of your business they are the big decisions the 
major capital investment that you will make as a company namex will then talk 
about the infrastructural decisions which are about the supporting mechanisms 
in order to make the most effective use of the the structure that you've 
defined the analogy that we use for this er is one of computing i'm presuming 
you all have a computer given that you're on this course when you go out and 
buy a computer and you'll have to correct me if i'm wrong here having never 
gone out and bought one myself you go out and you decide what memory you can 
afford yeah and you buy a computer with the maximum memory you can afford 
because that sets doesn't it defines the boundary the limits of what your 
computer will do when you've got it okay so it's the memory that actually fixes 
the limits the boundary of your your 
computer and it's like the the structural bit isn't it it actually defines 
outlines what you can do with it then i assume you'll choose your software your 
operating systems or whatever and you'll choose based on what you can afford 
the best software that will maximize the use of that memory space that you have 
yeah so what's the memory now namex is it about every time i ask this it goes 
up thousands of bytes [laugh] gigabytes or what's what's the 
sm1232: forty to eighty gigabytes 
nf1221: forty 
sm1232: to eighty 
nf1221: forty to eighty gigabytes now is what you would generally have as your 
memory yeah okay every th-, yeah every year we do this it it it it jumps 
[laugh] quite a lot okay so that would set the boundaries of your computer and 
then you would choose software to give you the best and most effective 
operation of that computer okay so the the software 
sm1232: 
nf1221: you choose the software first 
sm1233: yeah and if you 
sm1234: everyone wants to use Windows so you can choose the software and then 
go for the maximum 
sf1235: 
nf1221: okay but choosing software doesn't necessarily set the size of your 
computer does it the memory does that 
sm1234: er mm 
nf1221: the memory fixes the boundary of your computer 
sm1234: yeah 
nf1221: but i accept that you might do one before the other okay so the memory 
is like the structure here the hardware okay that sets the boundary of your 
computer and the software is the thing that makes it run as effectively as 
possible and as namex says generally now we have to have Windows don't we er 
thanks to Bill Gates all right okay so that's the analogy i'll be covering 
structural and namex will be covering infrastructural so we're going to take 
each one in turn and we're going to think about what goes into manufacturing 
decisions in these areas so the first one is capacity now can i have some 
examples of the businesses that you developed in the context what 
sf1236: rental business rental business 
nf1221: rental business renting what 
sf1236: everything [laughter] er we had this 
sf1237: electronic items 
sm1238: electronic 
sf1236: electronic items and 
nf1221: electronic items okay what else have we got so we've got a rental 
business for electronic items what else 
sm1239: transportation 
sm1240: transportation 
nf1221: transportation okay what kind of transporta-, 
sm1240: cars 
nf1221: cars renting you did renting as well right anybody else do anything 
anybody make anything 
sf1241: 
sm1242: well we did a restaurant 
nf1221: 
you did a restaurant okay what type of restaurant 
sm1242: Chinese food 
nf1221: Chinese food [laughter] good er we could do with that in this country 
[laugh] okay anything else 
sm1243: cafe 
nf1221: cafe 
sm1244: restaurant 
nf1221: restaurant wow at the back 
sm1245: restaurant 
nf1221: restaurant 
sm1246: 
sm1247: 
sm1246: 
nf1221: you're all in the same group so how many how many groups are in this 
room then are you all in 
ss: 
nf1221: okay okay so different groups right so we've got a restaurant and we've 
got a rental business okay what did you decide how did you decide on the 
capacity how did you decide on how big your restaurant would be or how big your 
car rental business 
would be 
sf1236: we were looking at er the money that was given to us and like how much 
can we afford and also at the lifetime of the products 
sm1249: it was the lifetime of the goods and how productive are your goods er 
to you know to keep up to date with technology and stuff because it's 
electrical items T-Vs have only a shelf life of what three years or something 
you know so 
nf1221: yeah okay 
sm1249: yeah we thought about that too 
nf1221: okay so you looked at the market 
sm1249: mm-hmm 
nf1221: and you looked at developments of technology how how in terms of the 
restaurant namex sorry to put you in s-, 
sm1248: demand on the demand 
nf1221: on the demand how did you decide what the demand's going to be 
sm1248: 
it's like research 
nf1221: research through research 
sm1248: yeah 
nf1221: you know this is absolutely right because this is what companies do 
they do market research to try and work out what the demand is likely to be 
okay in order to set your capacity you've got to have some understanding of 
what the demand's going to be now you can do that through looking at 
technologies and how far you think that's going to develop you can also do it 
through surveys focus groups all kinds of market research but you need to 
understand what that demand is going to be in order to be able to set your 
capacity so how does the capacity compare with past present and future demand 
so that's what you'll be thinking about when you're def-, deciding what 
capacity you need okay capacity is how big how big a restaurant how big a 
rental business yeah how big a cafe how many chairs are going to go in it yeah 
how do i decide that okay it's all the same thing making these 
decisions 
nm1220: extra facilities for free 
nf1221: yes [laughter] when you're going to invest okay if your restaurant 
really took off namex and it was really popular er would you consider building 
another restaurant or would you consider extending the one you've already got 
or would you consider putting more tables in the same restaurant yeah okay all 
of these things you've got to think about and you would have to decide do i do 
that do i have a new restaurant ready do i build double the capacity i think 
i'm going to need and hope that i'm going to expand or do i wait until i've got 
my full restaurant and then decide to build or recruit more people and and this 
same is true for your businesses and your cafe at the back there so when are 
you going to invest the money that you need are you going to do it before the 
demand grows or when the competitors do 'cause if somebody 
opened a r-, Chinese restaurant down the road you may er you may have a problem 
on your hands or your restaurant may be so good that it doesn't make any 
difference okay and when demand is assured are you going to wait till you've 
definitely got that demand before you take the plunge now there's always a risk 
involved in any business set-up which is why so many of them fail okay but 
there are also many that succeed okay but you have to make these risks here so 
you can see here it's the big decisions here you've got a set amount of money 
generally generally it's what you can borrow or what you already have and you 
have to decide how big an organization are you going to make and the same is 
true for manufacturing if you're actually going to make you're going to make a 
pen or a bottle of water or in my case a Mars bar or an ice cream yeah you have 
to decide how big that how much what the demand is likely to be okay looking 
now at 
we call it facilities or process choice once you've decided what the demand's 
likely to be then you can decide how many plants or restaurants or rental 
premises or cafes you're going to need so how many of them the size of them and 
the location so are they going to be near the markets near the near the major 
markets near customers or near the natural resources in the industrial 
revolution the beginning of the industrial revolution in this country all of 
our plants were based near the natural resources the textile mills were based 
in the north everything was based near water because everything was steam 
powered okay er so nowadays that tends not to be true it's true in some places 
in the world still like the big steel firms in India Tartar Steel et cetera er 
they tend to have place their plants near the natural resources but generally 
companies go near the markets or their customers okay so you're tend-, if 
you've got an international company they'll 
have a hub in Europe somewhere for their European operations they'll have 
somewhere in America somewhere in the Far East new and up and coming markets at 
the moment we discussed that yesterday some examples what are growing markets 
at the moment growing economies 
sm1250: China 
nf1221: China is an enormous potential when er i went to China ten years ago 
everybody rode bicycles now everybody wants cars or has cars yeah it's an 
enormously developing successful nation and companies are falling over 
themselves to get into China and have a plant there because they'll be near the 
market and they can tailor their products to the specific Chinese requirements 
okay er and that same is true for any other er nation South America Africa i 
guess will be will be the next one okay 
sm1249: 
is that is that just to reduce the transportation costs in getting the goods to 
the coun-, to that country or is it so that there can actually be a physical 
presence of those people as well 
nf1221: there's lots of issues and namex covers a lecture on international er 
manufacturing in which you'll cover this in more detail but er a lot of the 
time it is down to the markets it's also down to the government in the country 
demanding that you can't just import 
sm1249: mm 
nf1221: you've got to set up a business there and employ local people so 
there's often a lot of other reasons but er generally people go out there 
because i-, in order to be able to tailor your product you've got to understand 
what the people want and the only way to do that is to try and employ some of 
them 
sm1249: mm 
nf1221: okay 
sm1249: right 
nf1221: so it you tend to see companies actually positioning out there er it's 
easier transporting most goods is difficult people will it's 
easier to transport raw materials generally especially when everything's 
packaged so highly now it's so easy to damage the packaging and then 
sm1249: yeah 
nf1221: you've wrecked it organization of the plants not only have you got to 
decide how many and where they are you've got to decide how you're going to 
arrange them so are you going to arrange them in products process based are you 
going to have dedicated plant to making one or two particular products or are 
you going to have a plant that makes a variety of products you would have seen 
with the the example yesterday H-G Plastics they made was it kit-, old 
kitchenwa-, new kitchen range and 
sf1251: homeware 
nf1221: old 
sf1251: homeware 
nf1221: office or whatever other plastic equipment it was 
sf1251: no it was homeware 
nf1221: homewares yeah so do you have one plant that does everything or do you 
split it and have the new ideas and the new designs in one area and the old 
designs in the other yeah these are the things that you need to think about at 
this level and process choice then which would be line batch or jobbing and we 
talked about what jobbing was yesterday what a job shop was if we look at this 
diagram now we can see that we can select the process the manufacturing process 
for our strategy it tends to be dependent on the volumes that we li-, we think 
we're likely to make so if we're making a nuclear submarine which was one of my 
examples yesterday then we're really looking at a project aren't we because not 
many people make nuclear submarines if we're looking at glass er er steel 
whatever we're looking at continuous process okay very high volume er i guess 
my biro i haven't got one today but the biro anything card paper 
industry anything that you'll make in very high volumes the commodity products 
that we talked about yesterday in the Puttick grid then you're looking really 
at continuous process or a line a production line most products because of the 
variety that we have tend to fall in the middle which is batch some form of 
batch production okay but you can combine them as hopefully you would have seen 
in your logistics module okay technology then once we've decided where we're 
going to put our plants and how big they're going to be then we have to look at 
what we're going to put in them so what's the equipment going to be and this is 
where we pull in technology which Paresh talked about earlier is it going to be 
general purpose that means you have some flexibility with the equipment is it 
going to be dedicated is it going to be state of the art which means we'll need 
a very high level of skill labour but f-, less labour or is it 
going to be general purpose where we'd need more labour er to do the operation 
generally okay so you need to think about these things here level and type of 
technology employed okay so is it as i said is it going to be state of the art 
or is it going to be cheaper much cheaper general more general purpose machines 
the degree of automation will affect what labour you choose in this country we 
tend to have highly automated processes in some of your countries you tend to 
have more labour intensive processes it's whatever suits your country and your 
economy you have to run with whatever's whatever you have okay er i think that 
we we overdo it here we th-, we spend too much on automation and we just get 
things going wrong much quicker [laugh] because the proce-, automation speeds 
everything up okay so i don't think it's worth every time removing huge amounts 
of labour er unless you understand exactly what your process is doing okay 
identifying key processes deciding what you're going to do about set-ups what 
you're doing to do about maintenance changeovers supervision flexibility and 
skill levels all will need to be considered in terms of your rentals business 
your restaurant your cafe you would have thought of all of these things yeah er 
how what people how many waiters you're going to need how many chefs you're 
going to need how many what equipment you'll need what equipment in terms of if 
you're renting electronic stuff you've got to buy it all to rent it what level 
you're going to use to buy that okay what level of equipment you're going to 
use and the final one for me is vertical integration does anybody know what 
that means 
sm1232: it's when you buy up er different companies at different stages of the 
process 
nf1221: 
yes 
sf1252: the amount of control in er 
nf1221: that's right 
sf1253: 
nf1221: yeah yeah 
sm1232: like er when Ford bought up the railways and the rubber er factories 
nf1221: absolutely yes it's it's the amount to which you own the supply chain 
so it's exactly what you said it's about con-, how much you control of the 
supply chain processes er how many companies you bought at different stages in 
the supply chain it's the amount of the supply chain that you own the example 
you would have been given yesterday with Ford Model T was that Henry Ford owned 
the entire supply chain okay er from mining the ore to make the steel panels to 
actually selling the car to the customer and he had a totally vertically 
integrated company i have to say it is more of an academic term than the one 
that's used in 
practice but when you see it that's what it means other people call it process 
positioning er it means the same thing you're looking at the direction of it o-,
do you want to buy your distributors do you want to buy some of your suppliers 
okay these decisions will form part of your manufacturing strategy what 
relationship are you going to have with the supply chain where is the power in 
the supply chain how are you going to respond to that er what kind of 
relationships are you going to have with the other p-, other companies in the 
chain are you going to go for joint ventures and this is tends to be what 
happens when people go abroad like to China some form of collaboration so that 
you can actually partner companies that are in other countries and that that 
tends to be quite typical er and what m-, m-, make buy decisions are you going 
to have and s-, some time this week you'll do a le-, a lecture on outsourcing 
and that will go through this in more detail the the 
make buy decision what elements of this pen are you going to make yourself and 
what bits of it are you going to buy in from suppliers and subcontractors okay 
nm1220: sorry it's technology i'm too old for it right we've now got a factory 
we've decided where it is how big it's going to be how we're going to lay it 
out what level of technology what machines we've put in it and it's no darn use 
to us at all 'cause we can't actually do anything with it yet can we first 
thing we need are some people how are we going to select them do we need people 
with lots of skills who are going d-, have to do three day assessment centres 
or are they just lumping things around and we can grab the first twenty people 
that walk past the gate how are we actually going to select our employees what 
criteria do we use what skills do we need do we need nuclear scientists 
do we need skilled technicians lab technicians plumbers bricklayers people with 
particular skills they've taken several years to get or do they just need 
specialist skills from our business that we don't actually want anybody else to 
have that we've got to train people in ourselves what training have we got to 
do are we going to take people in and train them from scratch in our way of 
doing things in the way to work our machines the way we do our processes or are 
we going to try and take people trained from other companies just by offering a 
little bit more money [sneeze] job content are they there just to join things 
together every ten seconds for eight hours a day are they going to rotate 
through lots of diferent jobs are we going to make their jobs interesting are 
we going for a cellular layout where they've got responsibility for particular 
things what job content are we giving people and they'll certainly be 
interested in that how are we 
going to pay them is it just payment by results are they paid hourly on 
attendance are they paid weekly are they paid monthly on a salary are they on a 
bonus system is it a group bonus individual bronus company bonus how are we 
going to pay them certainly as i say our workforce if nobody else is vitally 
interested in that and it's obviously a significant part of our costs again 
where are we going to pitch our pay are we going to pay the minimum we can get 
away with pay the average for the area or are we going to be paying sort of top 
dollar we want the best people we want to be seen as the best employer what job 
security are we giving are we a Japanese company with our s-, middle managers 
offering them effectively lifetime employment or are we in California with at 
will employment when for no reason at all at a moment's notice you can be 
sacked or you can walk out perfectly reasonable standard conditions in 
California what are we 
going to do about job security so we've now got some people how are we then 
going to organize them we've got to actually organize them so they know what 
they're doing where they are who they report to who's responsible for what are 
we going to have the traditional functional silo system where we've got 
accounts R and D sales production et cetera and then within production have we 
got department one with its manager department two with its manager or is it 
going to be a product based thing where you've got a department making small 
round products another department making big square products is it going to be 
customer based where you've got this department working for Ford different 
department working for Toyota is there a matrix organization are you in a 
product ty-, pro-, er sorry project type environment where you've got people 
working on a project but also responsible for to the manager for their 
particular skill 
very common in fairly technological and technical enterprises what type and 
style of management traditional old fashioned supervisors with bowler hats cell 
leaders and team management matrix style way t-, if you've got a matrix who's 
the more important of the two managers you report to and very very importantly 
we've mentioned it before this afternoon we'll be looking at it in a lot more 
detail your measures we said if you've got a strategy how do you know it's 
working because you measure it you've got key measures to tell you what is 
important to tell you you're succeeding and probably even more importantly to 
tell you where you're not doing well enough or even failing if you've not got 
appropriate measures you haven't got any sort of system so measures for success 
vitally important to go alongside any strategy and communications how are you 
going to actually communicate with the workforce from top 
management through to middle management to team leaders to the actual workforce 
are you going to have big banner headlines as you walk in every morning 
flashing lights giving you the message and moral for today going to have a 
firm's newspaper are you going to have team briefings daily weekly monthly team 
meetings away weekends to build team spirit how are you going to actually 
communicate or are you are you deciding that you're not actually bothering to 
tell anybody anything 'cause all your strategies are too secret for everyone to 
know then you've got some people you've got some organization you can actually 
start making things but at what quality have you got to make them what is 
driving your quality system who de-, who determines your quality are you going 
for ISO nine-thousand type certification often a good selling point to say that 
but what does it really mean is that really important means you've got very 
good quality systems it doesn't necessarily mean you've got very good quality 
your quality systems purely internal are they your own systems are you 
controlling that are you setting the standard perhaps they're legally required 
some industries absolutely vital aircraft industry aerospace industry never 
mind what you think about the quality the C-A-A and the F-A-A will tell you 
whether things are good enough or not also pharmaceuticals every government in 
the world has its own standards for pharmaceuticals what can be sold at what 
quality at what strength and so such there may well be legal quality standards 
or they may be customer imposed certainly as i said i was many years in the 
auto components industry most of our factories were ISO nine-thousand 
registered but that didn't really matter a lot Ford's Q-one status was far more 
important Ford weren't really bothered they assumed we'd got our ISO nine-
thousand but to continue doing business 
with Ford we had to pass Ford's quality system inspections so that who's 
imposed it whose quality have you got to meet to be in business who's 
responsible for quality have you got a quality manager an inspection department 
or does everybody accept responsibility for their own quality they do their own 
S-P-C checking their own gauging their own passing off and stamping in legally 
required industries are you going for total quality management are you going 
for t-, quality as the driving culture of the organization how are you dealing 
with quality and then how are you controlling it day to day are you going for S-
P-C systems are they done manually are you going to automate it put things to 
automatic inspection checks part way down the line how are you actually going 
to control it how are you going to measure it or are you going to the ultimate 
to have capable processes the six sigma approach in ul-, in the ultimate go 
into condition 
monitoring we know this process is good all we need to s-, measure is the 
vibration and temperature of these bearings on the machine and so long as 
they're within patr-, control parameters we know the product will be right 
because it is working so far within the agreed specification that we know so 
long as the process is right the product will be right the best way of doing 
quality one could say but it's very expensive very technologically demanding is 
that what your market needs do you need that level of quality and then finally 
we've got all these things we've actually got to decide what we're making when 
we're making it so we need some sort of production planning we need to be able 
to get the materials and parts we need and all the services the electricity the 
water whatever so how are we going to try and forecast forward how are we 
trying to know what is required of us in the future are we trying to guess that 
or are we 
only working make to order we don't do anything till an order arrives how do we 
load the factory how do we schedule it how do we decide which we're doing next 
er what order we're doing things what goes on which machine next what goes 
where next how do we actually decide what the factory is doing and even if 
you've got a production line sounds easy 'cause you you know the next thing 
down the line is a Toyota Corolla and the one after that's another Toyota 
Corolla but what colour is it going to be is it two door or four door does it 
have air con or not is it left-hand drive is it right-hand drive scheduling all 
those things within the overall pattern how are you controlling it not going to 
go into a lot of detail here and i mean most of the logistics and ops 
management module is talking just about those things have you got an M-R-P 
system are you trying to work J-I-T are you using Kanbans for pulling material 
are you using complex mathematical scheduling models 
because you've got a high variability high route change sort of manufacturing 
er what level of automation because that affects it we've talked about the 
technology but perhaps different factories different levels of automation 
because different requirements in different countries people are you going to 
give them any flexibility are you having a cell where all you do is say to the 
cell and the team leader here is this week's work you sort it out or are you 
saying when you finish this job the next one will have arrived along the 
conveyor belt to you and that's the one you do next do you have to go to the 
computer system and that tells you because we're updating in real time or are 
we giving you a day's work a week's work what flexibility have we got how much 
planning and flexibility do we allow our people in what they do next and our 
sourcing subcontracting who are our suppliers how do we choose suppliers how do 
we relate to them how do we 
order from them have we got an automatic level switch in the tank that when 
that's triggered it sends the order automatically and the tanker rolls up four 
hours later do we have some sort of subcontracting policy have we set a maximum 
level on our capacity because we know we're all right if there's a short term 
boom Heartland Engineering down the road can do some for us at a short notice 
how do we deal with all of these sort of things when we can answer those sort 
of things we can say we know we have the basis for running a manufacturing 
organization so what Hayes and Wheelwright's eight steps are doing they're 
almost a ticklist check these can you answer this can you answer that because 
if you've got an answer in each of those boxes you've probably covered most of 
the contents of your manufacturing strategy and just to take it broader you 
think of those same eight headings and effectively you can apply those same 
eight headings to a restaurant to a 
hairdresser's to a cinema to a finance company so yes we're talking 
manufacturing today but the same conditions apply to any operational 
organization that's doing anything at all they've got to make decisions under 
those same things sure the headings under each of those major headings might be 
slightly different to reflect the different business but they've got to still 
go through those same sort of decisions so that as i say is how you broaden 
this subject out from narrow manufacturing to the wider broader operations 
front so there we've dealt with content i think now is a very appropriate time 
to take a break and then after the break we'll spend the second session we'll 
just looking at some of the academic models and the things behind the actual 
process of getting there so see you about ten to