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Strategic Planning and implications

Strategic planning is the development of a course of action designed to optimize a company's position over a long horizon. Strategic planning is a process covering many variables and unknowns in the near term and longer term. Some decisions that may result from the process could involve large capital invest­ments and how they will be financed. Certainly, decisions such as these have very important future consequences hence, manage­ment often avoids too many eggs in one basket to minimize risk.

In the area of manufacturing facilities and equipment, American Industry has often so tightly rationed capital that it has lost its competitive advantage. This is a very complex problem and cannot be fully explored in this paper. However, conventional wisdom, fear of error, shortsighted views, and obsolete mea­surement systems are all contributing factors. In addition, some manufacturing conglomerates are so involved with financial magic through acquisition that severe capital shortages and/or neglect result. For most, this is clearly chasing the wrong rabbit if World Class Manufacturing is (as it should be) a high priority.

A Missing Link

Strategic planning has become one of those in vogue or fashion­able terms which has taken a prominent position on the list of management lingo over the last few years. Our business schools pound the term into MBA candidates' heads. Mounds of literature on the subject have been published emphasizing marketing and finance with manufacturing only mentioned in passing, if at all, in a large percentage of cases. Consulting firms, specializing in strategic planning have sprung up all over the place, often creating more new terms, diagrams, panaceas, etc. including inexpe­rienced (and expensive) MBAs counseling America's boardrooms on future direction. Few of these consulting specialists have shop floor experience so they often fail to recognize the important correlation of manufacturing, other than in very broad terms, in developing overall corporate strategy.

Wickham Skinner was one of the first in noting manufacturing as a missing link in corporate strategy. In describing a pattern for failure, he wrote:

An examination of top management perceptions of manu­facturing has led me to some notions about basic causes of many production problems. In each of six industries I have studied, I have found top executives delegating excessive amounts of manufacturing policy to subordinates, avoiding involvement in most production matters, and failing to ask the right questions until their companies are in obvious trouble. This pattern seems to be due to a combination of two factors:

1. A sense of personal inadequacy, on the part of top executives in managing production. (Often the feeling evolves from a tendency to regard the area as a technical engineering specialty, or a mundane nuts and bolts segment of management.)

2. A lack of awareness among top executives that a production system inevitably involves tradeoffs and compromises and so it must be designed to perform a limited task well, with that task defined by corporate strategic objectives.

The first factor is, of course, dependent in part on the second, for the sense of inadequacy would not be felt if the strategic role of production were clearer. The second factor is the one we shall concentrate on in the remainder of this article.

Like a building, a vehicle, or a boat, a production system can be designed to do some things well, but always at the expense of other abilities. It appears to be the lack of recognition of these tradeoffs and their effects on a corpo­ration's ability to compete that leads top management to delegate often-critical decisions to lower, technically ori­ented staff levels and to allow policy to be made through apparently unimportant operating decisions.

It has taken many years for these insights to be duly recognized and unfortunately, we still have not fully corrected the problem source. In the same article he describes, with some very insightful precision, top management's shortsighted views:

The fact is that manufacturing is seen by most top managers as requiring involved technical skills and a morass of petty daily decisions and details. It is seen by many young managers as the gateway to grubby routine, where days are filled with high pressure, packed with details, and limited to low-level decision making—all of which is out of the sight and minds of top level executives. In total, a manu­facturing career is generally perceived as an all-consuming, technically oriented, hectic life that minimizes one's chances of ever reaching the top and maximizes the chances of being buried in minutiae.

In fact, these perceptions are not wholly inaccurate. It is

the thesis of this article that the technically oriented concept of manufacturing is all too prevalent; and that it is largely responsible for the typically limited contribution manufac­turing makes to a corporation's arsenal of competitive weapons, for manufacturing's failure to attract the top talent it needs and should have, and for its failure to attract more young managers with general management interests and broad abilities. In my opinion, manufacturing is gen­erally perceived in the wrong way at the top, managed in f the wrong way at the plant level, and taught in the wrong ,'v way in the business schools.

Continued

Part 1  Part 2   Part 3  Part 4  Part 5


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