Manufacturing Strategy

The industrial strategy, an essential, regular exercise in a changing environment

Emerging countries’ accelerated economic development, shifting consumer markets, frequent regulatory changes (e.g. environmental), the appearance of new risks (e.g. climate), and the emergence of new technologies are forcing directors to regularly revise their manufacturing strategy, with shorter forecast horizons.

Context and challenges

Evolving markets (globalization, emergence of low-cost countries, etc.) and client demands (expected service levels, proximity, pressure on prices, etc.) are forcing manufacturers to define new development strategies (innovation, services, reactivity/flexibility, depth of ranges, productivity), which require them to reconsider their manufacturing organization.

By revising their manufacturing strategy, companies are seeking to improve the structural positioning of their production units in terms of geographical location, size, production technologies, and product range, with regard to their business strategy (markets, volumes, products). They are also searching for the optimal balance between:

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  • Proximity: of clients, the product design/process, suppliers or raw material stocks, the existence of transport infrastructure, etc.
  • Cost savings: specialization of sites, simplification of logistics flows, cost of labor vs energy vs transport, etc.
  • Risk: distribution of production between sites or rapid transfer capacity, local social climate, national political climate, etc.
  • Managerial capacity: size of "manageable" team vs leadership of the best managers, versatility or multi-skill, etc.

The following questions are also part of manufacturing strategy:

  • What is the company's core business and, bearing in mind the market, which activities should be kept in-house (make) and which should be outsourced (buy)?
  • Should the company specialize factories to simplify management or plan multi-sourced products to release manufacturing flexibility and/or locate production closer to its market?
  • Is there any point in creating pooled manufacturing units for semi-finished products or components, to supply all finished-product factories?
  • Which manufacturing resources should be set up when industrializing a new product family (new site(s), distribution among existing sites, etc.)?
  • How can existing manufacturing assets be rationalized, while ensuring the operational continuity to supply clients?

How can Argon Consulting help you?

  • Defining manufacturing strategy
  • Developing and improving medium-/long-term scenarios that take into account provisional activity, existing and future capacities and operational performance objectives, based on our own modeling and optimization tools, which take into account all aspects necessary for this optimization (product families, demand and related macro ranges, modeling of capacity constraints, modeling of different costs, allocation algorithms, etc.)
  • Identifying the technical and financial resources to be mobilized
  • Ensuring the plan is compatible with environmental, human, geographical, and cultural constraints, etc
  • Developing the transformation program for implementing the target organization (transformation roadmap)
  • Deploying this plan and managing the relevant required change (development of culture, behavior and skills, communication, etc.).

Case Studies

Identify the paths of improvement of industrial performance for an automotive equipment supplier