TWI Knowledge Summary

Manufacturing strategy

Manufacturing strategy can be defined as a set of co-ordinated objectives and action programmes applied to a firm's manufacturing function and aimed at securing medium and long term, sustainable advantage over that firm's competitors. The manufacturing function requires a strategy to ensure a match, or congruence, between the company's markets and the existing and future abilities of the production system. Manufacturing strategy generally addresses issues including:

  • Manufacturing capacity
  • Production facilities
  • Use of technology
  • Vertical integration
  • Quality
  • Production planning/materials control
  • Organisation
  • Personnel
Although it has not always been the case, it is now generally accepted that the health of the manufacturing function in a company is at the heart of its success, and that having a manufacturing strategy which aligns with overall business strategy and other functional strategies in an organisation is essential.

In practice, having a manufacturing strategy which shapes the structure, infrastructure and capabilities of a firm's manufacturing function does not ensure the success of a business. The strategic approach must be combined with a pragmatic approach to continuous improvement at an operational level if a company is to produce products at the rate, quality and cost that ensure competitiveness in their chosen markets.

Current issues

  • Low Cost Countries (LCCs)

    A key part of a manufacturing strategy is the definition of whether products are to be manufactured at the traditional manufacturing sites of an organisation or if the cost benefits offered make it beneficial to set up manufacturing in geographic areas with a low cost base (e.g. Eastern Europe, South America, China). Although it may often look appealing to set-up in low cost base areas, full account needs to be taken of the practical and logistical difficulties and the full financial implications of setting up and operating facilities in remote, underdeveloped countries.



  • Outsourcing manufacturing

    With the advent of e-commerce and the relative ease with which suppliers across the world can be identified and contracted to manufacture parts or complete products, many companies are including outsourcing of manufacturing in their strategy. Again, this can look appealing if part or product cost is the only factor considered but great care needs to be taken to ensure that product quality issues are properly addressed in the outsourcing exercise and the requirement for active management and control of outsourced manufacture needs to be recognised.



  • Mass customisation

    It is received wisdom that a route to achieving reduced costs and improving profitability in a company is to focus its activities on a limited range of technologies, volumes, products and markets.

    However, customers are becoming ever more demanding about the cost, quality and performance of the products that they buy and expect more variety and product customisation rather than less. An example of this is in the automotive sector. Customers now expect to be able to choose from a long list of vehicle options and thus to specify a vehicle which best suits their requirements. In other industry sectors, there is similar customer pressure for products that are truly optimised for their specified end use.

    In the future, companies will need to adopt manufacturing strategies and production technologies (programmable automation, flexible robotics, etc), which will allow increased manufacturing flexibility and the capability to respond quickly and cost effectively to demands for product variants or truly customised products.

TWI services

TWI is able to advise companies on their manufacturing strategies as well as assisting in strategy development and implementation. In addition, companies can be kept informed of developments in manufacturing processes and technologies that may impact their businesses and require modification of strategic direction.

For more information, contact the Manufacturing Support Group at manufacturing.support@twi.co.uk.

Further information

If you have a query on this subject please email TWI's Manufacturing Support Department. manufacturing.support@twi.co.uk

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