Charles H. Fine

Manufacturing Strategy: A Methodology and an Illustration

Manufacturing strategy is a critical part of the firms corporate and business strategies, comprising a set of well-coordinated objectives and action programs aimed at securing a long-term, sustainable advantage over competitors. It should be consistent with the firms overall strategies, as well as with other functional strategies. A methodology for designing such manufacturing strategies has been successfully tested in actual manufacturing environments, including the Packard Electric Division of General Motors.

An Empirical Study of Manufacturing Flexibility in Printed Circuit Board Assembly

This paper addresses the empirical verification of hypotheses that relate to the strategic use and implementation of manufacturing flexibility. We begin with a literature review and framework for analyzing different types of flexibility in manufacturing. Next, we examine some of the propositions in the framework using data from 31 printed circuit-board plants in Europe, Japan, and the United States. Based on our analysis and findings, we then suggest several new strategic insights related to the management of flexibility and some potentially fruitful areas for further theoretical and empirical research. Our findings include: more automation is associated empirically with less flexibility, as found in other studies; nontechnology factors, such as high involvement of workers in problem-solving activities, close relationships with suppliers, and flexible wage schemes, are associated with greater mix, volume, and new-product flexibility; component reusability is significantly correlated with mix and new-product flexibility; achieving high-mix or new-product flexibility does not seem to involve a cost or quality penalty; mix and new-product flexibility are mutually reinforcing and tend to be supported by similar factors; and mix flexibility may reduce volume fluctuations, which could theoretically reduce the need for volume flexibility.

Dynamic Process Improvement

This paper explores the economics of investing in gradual process improvement, a key component, with empirically supported importance, of the well known Just-in-Time and Total Quality Control philosophies. We formulate a Markov decision process, analyze it, and apply it to the problem of setup reduction and process quality improvement. Instead of a one-time investment opportunity for a large predictable technological advance, we allow many smaller investments over time, with potential process improvements of random magnitude. We use a somewhat nonstandard formulation of the immediate return, which facilitates the derivation of results. The policy that simply maximizes the immediate return, called the last chance policy, provides an upper bound on the optimal investment amount. Furthermore, if the last chance policy invests in process improvement, then so does the optimal policy. Each continues investing until a shared target state is attained. We derive fairly restrictive conditions that must be met for the policy of investing forever in process improvements to be optimal. Decreasing the uncertainty of the process making the potential improvements more predictable has a desirable effect: the total return is increased and the target state increases, so the ultimate system is more productive. Numerical examples are presented and analyzed.

Industry clockspeed and competency chain design: an introductory essay

Coping with the dizzying rate of change in the world today consumes much attention of industry and corporate leaders. Markets, technologies, and competitors all move more quickly than a decade ago and at light speed relative to a century ago. The half-lives of the leading business organizations seem to be shrinking as well, with each technological or organizational innovation unleashing another flood-tide of creative destruction. General Motors, IBM, and Sears each had their day in the sun, Microsoft is having theirs, but history provides one absolute in business as well as politics: All competitive advantage is temporary.

Equilibrium exit in stochastically declining industries

Abstract We study a complete information model of exit for an industry in stochastic decline. We characterize the entire set of pure strategy subgame-perfect equilibria for the exit game. In general, there are multiple subgame-perfect equilibria of our exit game, in contrast to several papers in the literature. Relaxing an assumption in those models (arguably in the direction of more realism) will give multiple equilibria in those models also. We provide (fairly restrictive) necessary and sufficient conditions for there to be a unique subgame-perfect equilibrium.

Interdisciplinary product design education

An approach to experimental education is presented that has succeeded at Massachusetts Institute of Technology (MIT) in motivating both engineering and management students to orient their academic studies and career plans towards design activities. The course emphasizes that product development is an interdisciplinary function requiring skills that span traditional departmental boundaries. The authors consider the demands of modern design practice in order to specify a model for educating design professionals. They describe the motivation for a new way of teaching design, and outline some of the difficulties in meeting this challenge. The course taught at MIT is described, and some related issues are addressed. The information distributes the results of experience in product design education to educators and practitioners. >

Business Cycles and Productivity in Capital Equipment Supply Chains

Cyclicality is a commonly observed phenomenon in market economies. Less well understood, however, is the amplification of cyclicality as one progresses up the supply chain from original equipment manufacturer (OEM) to first-, second-, and third-tier suppliers. Recent studies have focused on management techniques to minimize inventory costs when faced with amplification in product distribution chains (Baganha and Cohen 1996; Lee, Padmanabhan, and Whang 1997; Sterman 1989a).2 This paper instead examines long-term supplier productivity as influenced by amplification in capital goods supply chains.

Designing a manufacturing strategy

Abstract A manufacturing strategy is a critical component of the firms corporate and business strategies, comprising a set of well-coordinated objectives and action programs aimed at securing a long-term, sustainable advantage over the firms competitors. A manufacturing strategy should be consistent with the firms corporate and business strategies, as well as with the other managerial functional strategies. We present a process and a structured methodology for designing such a manufacturing strategy. This methodology has been successfully tested in actual manufacturing environments.

Bundling and Pricing of Modular Machine Tools Under Demand Uncertainty

In the early nineties, the global machine tool industry was struck by an economic downturn in most of its customers’ industries, especially the automotive industry and its suppliers. Consequently, a loss of more than 50% of production resulted in the German machine tool industry, see Figure 1 and the statistical reports published by the VDMA (1993, 1994b, 1995). German manufacturers were severely hit and many suffered losses that drove them out of business or forced them to merge with other manufacturers. Well known in the German industry are the Deckel merger with MAHO and afterwards the merger of Deckel-MAHO with Gildemeister in mid 1994. Overall, global competition between machine tool manufacturers has become fiercer. Recently, the German Machinery and Plant Manufacturers’ Association warned that it was almost impossible to generate profit by building machine tools in Germany, see VDMA (1991).