Manufacturing strategy and performance: a study of the UK engineering industry.

Introduction

Each year manufacturing companies in the UK compete for the Management Today - Cranfield School of Management Best Factory Awards. To determine which manufacturing plant qualifies for the award of "United Kingdom Best Factory" requires a comprehensive understanding of the production methods and the manufacturing performance of each applicant for the award. This information is gathered, in the first instance, by the use of a questionnaire. The aggregation of this survey data, which is performed to protect the confidentiality of individual company information, constitutes a unique set of facts that could prove to be beneficial for the empirical research of both manufacturing strategy and manufacturing performance.

The uniqueness of this database is the strategic and operational information that it holds. The strategic management information collected is the type of customer service that each company strives to deliver to gain a competitive advantage. The operational data gathered are the measurements of current performance for both manufacturing and customer service. The range of manufacturing performance information sought includes data on both the key performance indicators and their principle drivers. For example, information is requested on the total manufacturing lead time of a product and the production lead time of a typical or average component.

This database is a valuable source of information for another reason. A recently published review of empirical studies of manufacturing strategy, carried out by Minor et al.[1], concluded that even the most carefully planned surveys are adversely affected by lack of response and by lack of standards in reporting financial and manufacturing data. They emphasized that the development of databases for empirical analysis would be a definite contribution to the discipline and for this to happen manufacturing managers must have an interest in the research, or something to gain by making the effort to respond. The data supplied for this empirical research meet this condition for improved data integrity. It is in the interest of those who enter the Best Factory competition to complete the questionnaire as accurately as possible because all factories short-listed as potential award winners are visited to audit their manufacturing practices and performance. There is also considerable prestige to be gained by winning a Best Factory Award.

The Best Factory Award survey also complements the empirical research carried out by those responsible for the Manufacturing Futures survey project. Miller and Roth[2], in their search for a taxonomy of manufacturing strategies, designed their survey instrument to research the types of competitive manufacturing capabilities that are sought by US manufacturing companies. Their survey also investigated the relative importance of 36 listed key action programmes to improve the effectiveness of production operations and 29 manufacturing performance measures that could be used. The purpose of their research did not require the collection of data on current manufacturing performance and perhaps this is the contribution that this survey can add to that resulting from the Manufacturing Futures survey.

There is a need to research current manufacturing practices and performances. The review of empirical manufacturing strategy studies, carried out by Minor et al.[1], concluded that relatively few have been made which specifically address the effects of manufacturing strategy on business performance. One definition of business performance is the quality of customer service delivered and the examination of how manufacturing strategy can affect customer service quality was an important objective of this research project.

Previous research on the strategy-performance relationship

Although little research has been carried out on the relationship between manufacturing strategy and business performance, a phenomenon that many strategic management researchers did study, during the 1970s, was the business strategy-performance relationship. An early theory[3] postulated that business performance is a consequence of two variables. These are the effects of the uncontrollable variables on a business, such as the market conditions, and the results of the decisions that are made that manage the controllable business performance variables. This theory was expressed as follows:

Performance = f (controllable, non-controllable variables).

Ackoff[4] argued that the managerial decisions which make a significant impact on business performance are of two types, those made for efficiency or for operations management purposes and those taken to improve effectiveness. It is the latter of these two types of decision making that he considered to be strategic management actions.

To provide an explanation for …