Strategic Planning
Part 6 of 7

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Capacity Management Strategy

Capacity management strategy listed under structural choices is often neglected during the strategic planning process. Too often capacity management decisions are determined only after the fact when other structural deci­sions have been implemented and capacity management alternatives are severely limited or costly to change. Ca­pacity management strategy is an important strategic issue affecting a variety of competitive advantage alterna­tives. Therefore, this strategy must be determined early and integrated into the total strategic configuration.

Focused Factories

This concept involves the creation of a factory within the traditional factory that is dedicated to the production of a particular product or product family. The volume of the product or product family must be sufficient to justify the dedication of the required production resources. The idea is to specifically select resources, hard and soft, to produce the product(s) efficiently, in the requested volumes and varieties, and to simultaneously create or support the competitive advantages outlined in the marketing strategy for those products.

Vertical Integration

Decisions must be made concerning which parts are to be supplied by vendors versus made in-house and what func­tions will be performed by vendors or customers versus internally within the company. Assuming duties formerly performed by vendors or customers is called backward and forward vertical integration respectively. The manufac­turing strategy must make these determinations.

Workers and Systems

Workforce skills, organizational structure, and systems can vary dramatically depending on what the marketing strategy has specified for particular products. These infrastructural choices must be reviewed as part of the manufacturing strategic planning process.

The manufacturing strategy is now formulated by making all of the structural and infrastructural choices outlined above. They are tailored to specifically create and support the competitive advantages and volume and variety speci­fications in the marketing strategy. As in the earlier case, all functional conflicts are identified and resolved by top management in a manner in the best interest of the company as a whole. If necessary strategic plans created earlier in this process are revised and all strategies are reexamined for correct linkages.

Manufacturing Strategy Linkages

This procedure links the marketing and manufacturing strategies into a consistent and cohesive structure.

Since the marketing strategy was based on and linked to the corporate strategy, all three strategies developed so far are linked and coordinated. Such coordination will reduce conflicts between the strategies and insure each is target­ing the same corporate goals and objectives.

Step 4: All Other Functional Strategies

With the corporate, marketing, and manufacturing strate­gic plans complete, all other company functional strategies must be completed. The purpose of these remaining functional strategies is to support the three (corporate, marketing, and manufacturing) strategies already com­pleted. The same kind of linkages are required between each of these new functional strategies and those already developed. Linkages should also exist between the indi­vidual members of the other functional strategies.

To be Continued