M Strategy1

7/28/2019 M Strategy1

1/18

Manufacturing Strategy

Lecture 1

Professor Bernard HonProfessor Bernard HonSchoolSchool of Engineeringof Engineering

The Lecture ProgrammeThe Lecture Programme

Review of manufacturing

Competitive strategies Product & manufacturing analysis

Formulation of manufacturing strategy

Benchmarking

Global manufacturing.


2/18

AssessmentAssessment

Module specifications published in VITAL.

Assessment by examination only.

One 2 hour paper, answer 3 out of 5 questions.

Outline of Lecture 1Outline of Lecture 1

The nature and importance of manufacturing.

Common problems of manufacturing industry. Opportunities and threats in manufacturing.

Global manufacturing issues.

Vital topics in manufacturing.


3/18

What is Manufacturing?What is Manufacturing?

The use of machines, systems and humanresources to transform raw materials andsupply chain inputs into a value-addedsaleable product.

What is Manufacturing today?What is Manufacturing today?

Providers of lifetime service around a

manufactured product. A blurring of the distinction between

manufacture and services, leading to,

away from the initial sales revenue tolifetime revenue.


4/18

Implications of Extended DefinitionImplications of Extended Definition

To lock out competitors

To lock in customers

To increase the level of differentiation.

Vandermerwe and Rada, 1988

Living in a Manufacturing WorldLiving in a Manufacturing World

Alarm clock electric shower towel toothbrush, comb, contact lens, glasses,clothes, watch, trainers, toaster, egg slicer,

knife and fork, coffee cup, cordless kettle,radio, TV, remote control, purse, creditcards coins mobile hone ba holdallbackpack, bus, car, train, lift, computer,digital projector, screen, cable, 13 ampplug, light bulb, pen, notebook.


5/18

SIC Codes for Manufacturing

Importance of ManufacturingImportance of Manufacturing

The UK is the worlds sixth largest manufacturermeasured b out ut.

150 billion per annum to the economy.

Contributes 14% of UKs national output (21% in

1997).

Accounts for over 50% of UK exports.

Direct employment of just under 3 million people, i.e.,11% of all employment.

CBI estimated a further 3 million jobs through thesupply chain and service industries.

Total number of manufacturing enterprises is 158,528with a combined turnover of 447.2 billion in 2003.


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Importance of ManufacturingImportance of Manufacturing

Contributes 14% of UKs national output (21% in1997 .

Accounts for over 50% of UK exports.

Direct employment of just under 3 million people, i.e.,11% of all employment.

supply chain and service industries.

Total number of manufacturing enterprises is 158,528with a combined turnover of 447.2 billion in 2003.

Contribution of Different Sectors to the Total

Manufacturing Value Added in 2003

21855

16565

6145 Food products, beverages and tobacco

Textiles and textile products

4222

375

2662

18830

15598

Leather and leather products

Wood and wood products

Pulp, paper, paper product s, publishing

printing

Coke, refined petroleum product s and

nuclear fuel

Chemicals and products and man-made

fibres

Rubber and plastic products

Non-metallic mineral products

2609

15188

76675340

14782

11722 Basic metals and fabricated metal

products

Machinery and equipment not elsewhere

classified

Electrical and opt ical equipment

Transport equipment

Manufacture not elsewhere classified

ESRC


7/18

Contribution of Industry to GDP

35

% GDP 1997

15

20

25

30

0

5

Japa

n

China

Italy

Can

ada

Germ

any

Indi

a

Franc

e UK

USA H

K

Size of Manufacturing Sectors

16

4

6

8

10

12

0

Food&Drink

Elect.Eng

Papers&Printing

Chemicals

MechEng.

Textiles

MotorVehicles

MetalProd.

Minerals

Aerospace

Metal

Others


8/18

Company Size in Manufacturing Industry

40

50

60

70

80

0

10

20

u nd er 20 20-49 50-99 100-199 200-499 500-999 1000+

Common Problems of Manufacturing IndustryCommon Problems of Manufacturing Industry

Lon lead times for new roduct introduction and

change

Excessive stocks and work-in-progress

Low capital turnover ratio, i.e., too much under-utilised equipment

Too much non-value-added activities in offices and

shop floors

Low productivity due to inadequate planning and lowlevel of investment.


9/18

Manufacturing Investment in the UKManufacturing Investment in the UK

Total Mfg Investment B Mfg as a % of total business investment

8

10

12

14

16

18

0

2

46

2001 2002 2003 2004

ESRC

Manufacturing as Percentage of GDP from1973-2000

OECD, CNS, US BEA


10/18

Present/Future Market Characteristics- 1Present/Future Market Characteristics- 1

Shorter product life cycle.

Emphasis on new product development.

Globalization.

Single European currency.

Mobility of transnational companies.

Present/Future Market Characteristics- 2Present/Future Market Characteristics- 2

Extensive practice of outsourcing.

Agility, flexibility and reconfigurability.

Increasing protectionism.

Volatile exchange rate for pound sterling.

Extended and virtual enterprises.

Advanced technology widely available.


11/18

VW Beetles 1938-2003

The product life cycle of modern cars, unlike VWBeetles, is about 6-7 year.

Paradigm Shift in Manufacturing

Transfer Line

Group Technology

FMS

J IT

Holonic Systems?

Factory of the Future?


12/18

Opportunities and Threats in ManufacturingOpportunities and Threats in Manufacturing

EconomicFactors

Demographyand

Lifestyles

TheEnvironment

ExternalThreats

MarketFactors

Technology Market, Product andService Opportunities

External Threats to ManufacturingExternal Threats to Manufacturing

EconomicFactors

The Credit Crunch

Financial volatility

US deficit effect

Demographyand

Lifestyles

Fewer supporting technicians

More demanding work patterns

Greater mobility of workers

TheEnvironment

Public and government pressure

Resources depletion

ExternalThreats

ro uc an process po u on

MarketFactors

More competition

Deregulated public procurement

TechnologyLoss of access

Substitution

Disruptive technology


13/18

World Competitiveness ScoreboardWorld Competitiveness Scoreboard

Switzerland Hong Kong SAR21 1111

WEF

Singapore

Sweden

Finland

USA

Canada

Taiwan

Qatar

Belgium

5

4

6

1

2

3

4

5

10

17

26

19

12

13

14

15

GermanyNetherlands

Denmark

Japan

UK

orwaySaudi Arabia

France

Aust ria

Austral ia

WEF 2008 and 2011

78

3

9

12

67

8

9

10

1527

16

14

18

1617

18

19

20

Comparison of Manufacturing Labour Costs

$/hr

10

15

20

25

0

5

GER JPN USA FRA UK SGP SKO HK HUN PRC


14/18

The Worlds Top Ten Banks by Profit- 2011The Worlds Top Ten Banks by Profit- 2011

Pre-tax ProfitB

China Construction BankJ P Morgan ChaseBank of ChinaHSBC

.26.44824.85921.46319.037

naChinaUSAChinaUK

Agricultural Bank of ChinaBNP ParibasBanco Santander

Goldman Sachs

.18.23017.40616.07912.892

ChinaFranceSpainUSA

The Banker, July 2011

International Comparison of Robot Usage

Unit ('000)

200

250

300

350

400Japan

Europe

US

0

50

100

1990 1994 1998 2002

FT 5/10/99


15/18

Opportunities in ManufacturingOpportunities in Manufacturing

EconomicFactors

Dynamic Pacific rim

Single European UnionGlobalization

Demographyand

Lifestyles

Affluent population bulges and ageing

Need for Quality of Life product and

services

TheEnvironment

Preferences for green products

New EOL Directives

Market, Product andService Opportunities

MarketFactors

More open, multi-niche marketsHigh value products and services growth

Mass customisationShorter life cycles

TechnologyMulti-technology products

Intensification

EU Member States


16/18

European UnionEuropean Union

Austria 8.3Belgium 10.5

Lithuania 3.4Luxembourg 0.5

Population, m

.Cyprus 0.8Czech Republic 10.3

Denmark 5.4Estonia 1.3Finland 5.3France 60.9

.Netherlands 16.3Poland 38.1

Portugal 10.6Romania 21.6Slovakia 5.4Slovenia 2.0

Germany 82.5

Greece 11.1Hungary 10.1Ireland 4.2Italy 58.8Latvia 2.3

Spain 43.8

Sweden 9.0United Kingdom 60.4EU27 491.0

2008

Distribution of World Population

Country size in proportion to Population. www.worldmapper.org


17/18

Distribution of World GDP

Country size in proportion to GDP. www.worldmapper.org

Recent StudiesRecent Studies

Competing with the Worlds Best, CBI, 1991

Can Europe Compete, Financial Times, 1994 Technology Foresight, OST, 1995

Manufacturin 2020 2001

UK Manufacturing Strategy, 2004

High Value Manufacturing, 2008


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Trends in ManufacturingTrends in Manufacturing

Global manufacturing and outsourcing.

Strong emphasis on supply chain network.

Increase focus on service package.

Management of change and innovation.

Impact of ICT.

. New EU End-of-Life and Sustainable Development

directives.

Miniaturization.

Instructions Schedules Classical Key PerformanceIndicators

Systems Approach to Manufacturing

Manufacturing

System

Materials

Components

Tooling

Staff

Products

Waste

Scrap

DataAnalysis

Production

Output

Time

Yield

Time

Machines Test equipmentCost

per unit

Time

Byrne, G, 2009

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