Professional Documents
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1.
Introduction
Despite two decades or more of research on the process and content of manufacturing strategy, core dimensions still remain at large:
Revision received September 1998.
{ The Max M. Fisher College of Business, The Ohio State University, 2100 Neil Avenue,
Columbus, OH 43210, USA.
{ The London Business School, The University of London, UK.
} The Kenan-Flagler Business School, The University of North Carolina, Chapel Hill,
USA.
* To whom correspondence should be addressed. e-mail: thill@lbs.ac.uk
International Journal of Production Research ISSN 0020 7543 print/ISSN 1366 588X online # 1999 Taylor & Francis Ltd
http://www.tandf.co.uk/JNLS/prs.htm
http://www.taylorandfrancis.com/JNLS/prs.htm
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W. L . Berry et al.
(a) there is no generally accepted method for its analysis and development;
(b) there is no framework for organizing management thinking regarding its
formulation that is generally accepted by executives and researchers;
(c) there are no commonly held concepts and language to communicate issues
and options among those concerned with its development and implementation.
Furthermore, the links between manufacturing strategy and other functional strategies are frequently unclear with the result that managements ability to connect the
strategic options in one function with relevant options in other functions is often
very limited. The result is that the `bunker mentality within a business is not only
reinforced but is also extended to the formulation and development of functional
strategies. Finally, debate and discussion of the linkages between manufacturing
strategy and marketing strategy are critical if a business is to be competitive in its
markets. The fact that management is often unable to link strategic options between
functions limits this debate and the e ectiveness of strategic outcomes in any business.
This paper presents a framework and methodology for guiding the development
of functional strategy in both marketing and manufacturing that has been tested in
numerous businesses over the past fteen years. Furthermore, the approaches used
in marketing have been applied successfully by marketers for nearly forty years.
The purpose of this paper is to provide a comprehensive statement on how to link
the functional strategies developed within marketing and manufacturing and to
illustrate these approaches by using a worked example of one company. The
approaches outlined are the result of many business-based applications. The company example is intended to illustrate the points embodied in the approaches used
while providing additional insights and emphasis throughout.
The paper builds on some of the key views held by the authors and which have
been derived from their extensive research in businesses.
(a) The analysis of customers and markets provides the basis for linking the
strategy development e orts in both of these functions.
(b) Frameworks and methodologies are an essential aid for executives when
formulating, articulating, debating, and implementing functional strategies
such as marketing and manufacturing.
(c) Similarly, frameworks and methodologies are essential for guiding research
in the study and analysis of functional strategies.
As would be expected, these views are re ected throughout the paper and help to
form some of the themes and outcomes on which the work is based. An outline of the
content and rationale of the paper is now provided. The rst section provides an
overview of the framework and methodology we use in analysing and developing the
functional strategies of marketing and manufacturing. Then we give an example that
illustrates the steps in each of the frameworks and how the supporting methodology
works. The nal section presents the conclusions which have been reached based on
extensive eld research completed (but not reported in detail here) over the past
fteen years in applying this framework and methodology to companies in such
diverse businesses as furniture, packaging, chemicals, electronics, printing, steel
and automotive components.
3601
tives.
ments and verify that the views on customer needs are correct both in terms of
perspective and emphasis.
. Step 3: check manufacturings performance against those customer requirements for which it is solely or partly responsible.
. Step 4: compare current and future manufacturing investments and developments (i.e. manufacturing strategy), with the customer requirements for which
it is solely or partly responsible.
. Step 5: identify the investments and developments necessary to resolve the
di erences between customer requirements and manufacturings performance.
3602
Corporate
objectives
W. L . Berry et al.
Marketing
strategy
Order
winning
criteria
Manufacturing strategy
Process
Infrastructure
The basis for this approach derives from the work of Hill (1994) in developing a
manufacturing strategy framework. This framework is included as table 1. It begins
with an analysis of business objectives and marketing strategy, moves to a description of markets and customer requirements in terms of the relevant order winners
and quali ers, and ends with an analysis of manufacturing strategy in terms of
process and infrastructure investments. This framework has had extensive eld testing in a wide range of industries, representing a signi cant sample size. This includes
48 companies ranging in size from annual sales of $40 million to $5 billion in the
following industries: packaging, furniture, steel, automotive, aerospace, textiles,
tobacco, plastics, pharmaceuticals, electronics, telecommunications, apparel, and
communications. The companies were located in the USA, Canada, Mexico,
Thailand, UK, Spain, France, Germany, Portugal and South Africa.
The methodology presented here extends Hills work in two ways. First, it explicitly links Hills framework to the marketing strategy framework that is generally
accepted by both executives and researchers (Corey 1992). Second, it provides the
methodology needed to apply this overall framework to strategic business decisions.
2.1. Examining marketings view of the business step 1
To examine marketings view of the business we used the framework presented in
gure 1 to describe and review the marketing strategy of the company (as a convenience to the reader, all portions of this paper that illustrate the application of our
methodology to Anonke Apparel will be set in italic type). The rst step in the
methodology concerns examining marketings view of the business and its strategic
initiatives. The marketing strategy framework shown in gure 1 indicates the process
by which marketers study markets and formulate strategies to serve them (Corey
1992).
Marketing/Manufacturing strategy illustration Anonke Apparel: To illustrate the
manufacturing strategy framework and methodology we have selected an apparel company located in Thailand named Anonke Apparel. This rm is an interesting example in
three ways:
3603
(c) the chief executive has a well-conceived manufacturing strategy which involves
an investment in advanced manufacturing technology in direct support of
market requirements.
As with much of marketing, analysing and understanding customers is paramount. We want to know who they are; what they buy from our product line;
when, where and how often their purchases occur; why they buy, that is, what
bene ts they seek; and how they buy which means what is their buying process.
Based on answers to these and similar questions, patterns of buying or groupings of
customers start to emerge called market segments. An essential element in market
segmentation is to assign customers to segments so that all customers within a
segment exhibit similar buying behaviour, while customers across segments exhibit
dissimilar buying behaviour (Buzzell 1987). This is because the goal of all marketing
strategies is to a ect buying behaviour in such a way as to work to the bene t of the
selling rm while meeting the demands of customers. By working with customers
with similar buying behaviours, marketers can develop a strategy for that market
segment which is speci c and peculiar to that segment. By the same token, they can
develop speci c, unique strategies for other segments. This bias has come to be called
target marketing.
While acknowledging that customer di erences are key, recognizing that other
rms are trying to do the same thing avoids myopic strategies which fail to recognize
the key role played by competitors. Even though it is true that all marketers try their
best to serve their chosen customers, their competitors are attempting to do the very
same thing. It is also true that competitors in a market possess unique capabilities.
Recognizing, acknowledging and specifying those di erences is the task of product
3604
W. L . Berry et al.
Segment A1:
Segment A2:
Segment B:
have no designers
submit samples and Anonke selects
ve month delivery typical
some buy directly from nished goods inventory
Table 2. Anonkes customers/segments.
3605
but are far less price-sensitive. These characteristics clearly play to Anonke s strengths
as illustrated earlier in the di erentiation analysis. Finally, by emphasizing hard-tomake products, Anonke is seeking markets which draw upon their manufacturing
strengths and move them away from price-sensitive, low margin segments.
Competitor analysis Anonke Apparel: Anonke competes with local Thai rms,
large global rms, and new competitors entering the market, especially from
Southeast Asia (see table 3). On a day-to-day basis, however, Anonke most often
faces its Thai counterparts. Making this task particularly di cult for Anonke is the
fact that each Thai competitor seems to compete in a distinct manner, particularly in
terms of products manufactured and sold (see table 4). Generally, Anonke s Thai
competitors have longer runs, more standard products, and lower manufacturing
costs. Under the process choice framework developed by Hill (1994), Anonke s competitors use high-volume batch processes. Anonke, on the other hand, has developed a lowvolume batch process to meet the needs of small volume customers as we will demonstrate later (see gure 2).
3606
W. L . Berry et al.
Product
A1
A2
Blouse
Ski wear
Stadium jacket
Mens shorts
Jackets/pants
Jackets
Raincoats
Coats
Childrens jackets
Parkas
Pants
Jogging suits
Childrens shorts
Table 5. Anonkes products by segment.
Target large US companies like Zeus and Leland (segment A1) because they place large orders
and order once/year.
Target several European customers because of higher prices and stricter quality requirements
(segments A2 and B).
Emphasize di cult-to-manufacture products: more raincoats and fewer shirts.
Table 6. Anonkes marketing initiatives.
Product di erentiation Anonke Apparel: Anonkes product line by segment is
shown in table 5. Comparing this with the data shown in table 4, it becomes apparent
that Anonkes competitors di er signi cantly within each segment. Thus, Anonkes
competitive advantage may be stronger or weaker depending upon the market segment
under review. Generally, however, Anonke o ers a much broader line than nearly all its
Thai competitors, and this broad product line has important implications for manufacturing strategy.
3607
Sources: (1)
(2)
(3)
(4)
Marketing
strategy
Order
winning
criteria
Manufacturing strategy
Process
Infrastructure
Marketing interviews/discussion
Order sample from marketing/manufacturing
Information on manufacturing segments
Rethought manufacturing segmentation.
sample, usually containing 30 50 customers and products that provide a representative sample of relevant market segments. The appropriate size of the sample
depends upon the number of distinct market segments to be reviewed. Next, discussions are held with marketing and sales executives to identify the potential order
winners and quali ers for each of the customers in this sample. Once the set of order
winners and quali ers has been reduced to a small number of key items, the last step
involves developing weights for each of the order winners, and identifying the order
losing sensitivity of each quali er.
The customer data in the sample has two important uses. First, this data provides
a check on managements judgement concerning the relative importance of order
winners and quali ers. For example, the data can be used to check the actual level of
customer price sensitivity, the degree of delivery speed pressure actually experienced
from customers, or the actual demands concerning the level of quality conformance
in a product speci cation. When di erences occur between the data in the order
sample and the managerial judgements, these need to be resolved. Second, the data
in the customer order sample can be reorganized to re ect major groupings of
customers that have similar order winners and quali ers, and similar order winner
weightings. Such groupings form the basis for market segments that are characterized in manufacturing terms, indicating important di erences in the customer
requirements placed on manufacturing between segments.
Order winners and quali ers Anonke Apparel: Twenty-seven customers worldwide
were selected by the sales and marketing executives at Anonke as representative of the
market segments served by the company. Table 8 shows illustrative data from the
judgement sample which includes the critical manufacturing and non-manufacturing
order winners and quali ers, and their respective weightings.
The data in the judgement sample were organized to identify groupings of customers
with similar order winners and quali ers. Consequently, the customers were grouped
into the ve di erent market segments shown in table 9. These segments place the
following four very di erent sets of requirements on manufacturing.
(a) Segment FC (Few Competitors) involves small customer orders, has declining
sales, and is not highly price sensitive.
3608
W. L . Berry et al.
(a)
Customer
Buying
pattern
Home
o ce
location
Segment
Production
exibility
Pierre Duree
Ibrahim
A2
A2
France
France
FC
Iberian
Daisy Wraps
Couti
B
B
B
Spain
USA
Italy
Leland
Eurotech
Larouche
Fontainbleau
Phoenix-EEC
Phoenix-USA
Zeus-USA
Zeus-EEC
A1
A1
B
B
A1
A1
A1
A1
USA
USA
Swiss
France
Germany
USA
10/10
10/10
20/20
20/20
10/10
10/10
10/10
10/10
Jean Valjean
Monmouth
Bach
Naomi
Mulder
Toddlers
Niebuhr
Peppi
Sumata
Apres
B
A2
B
B
B
A1
B
A2
A2
B
Germany
Netherlands
Germany
France
Netherlands
France
Germany
Italy
Japan
Germany
20/20
20/20
10/10
10/10
30/0
10/?
10/0
10/10
20/20
20/?
Gorgio
Candida
Etyia
Italia
A2
A2
B
A2
France
Italy
Italy
Italy
LV
PF
PC
Q/Q
Q
Q/Q
10/10
10/10
10/10
Delivery
speed
Delivery
reliability
Q/Q
Q
Q/10
Q
0/10
Q/Q
Q
20/20
20
Q/Q
0/15
0/15
20/20
Q?
10/?
20/?
40/10
70/70
30/?
10/20
10/15
20/20
20/20
10/20
10/20
10/20
10/20
15/15
15/15
20/20
20/20
15/15
15/15
15/15
15/15
25/25
30/35
20/30
20/25
15/15
20/20
25/25
15/15
15/15
15/15
10/10
10/10
20/20
20/20
15/15
20/20
20/20
20/20
20/20
20/20
20/0
10/?
20/20
20/30
20/20
10/10
10/20
20/0
10/?
20/30
30/30
30/30
30/30
30/30
20/20
20/?
20/10
Q/?
Q/10
20/20
20/20
20/20
Q/10
Quality
Q/Q
Q/Q
20/15
Q?
10/20
10/10
0/20
10/?
Q/Q
Q/20
Price
Capacity Product
uplift features
10/?
30/?
20/20
30/20
10/10
30/?
10/0
20/20
20/20
20/20
20/20
Table 8(a). Anonkes market segments by order winning criteria: manufacturing related.
(b) Segment P (Price) is very price-sensitive and is increasing its demands for
reliable delivery.
(c) Segment PC (Partnership Collection) places a major emphasis on delivery
reliability with moderate growth and mid-range customer order sizes.
(d) Segments L V (L arge V olume) and PF (Product Features) have high growth
potential, place a wide range of customer order sizes that require production
exibility, emphasize delivery speed and delivery reliability, and are price
sensitive.
For Anonke, four key order winners require further analysis to evaluate manufacturing
performance and capabilities: price, delivery speed, delivery reliability, and manufacturings ability to provide small to medium customer order quantities. This latter
capability provides a strong, sustainable competitive advantage for Anonke in terms of
meeting the needs of speciality shops and boutique customers.
2.3. Checking manufacturing performance step 3
An understanding of a company s markets in terms of order winner and quali er
data provides the basis for analysing both a rms manufacturing strategy and its
performance against these customer and market requirements. The ellipse shown in
3609
Customer
Buying
pattern
Home
o ce
location
Segment
Sales
relation
Q/Q
Q
Pierre Duree
Ibrahim
A2
A2
France
France
FC
Iberian
Daisy Wraps
Couti
B
B
B
Spain
USA
Italy
Leland
Eurotech
Larouche
Fontainbleau
Phoenix-EEC
Phoenix-USA
Zeus-USA
Zeus-EEC
A1
A1
B
B
A1
A1
A1
A1
USA
USA
Swiss
France
Germany
Jean Valjean
Monmouth
Bach
Naomi
Mulder
Toddlers
Niebuhr
Peppi
Sumata
Apres
B
A2
B
B
B
A1
B
A2
A2
B
Germany
Netherlands
Germany
France
Netherlands
France
Germany
Italy
Japan
Germany
PF
Gorgio
Candida
Etyia
Italia
A2
A2
B
A2
France
Italy
Italy
Italy
PC
Country of
origin
Market
familiarity
20/10
10
10/10
10/10
10/10
10/?
10/10
10/10
LV
USA
Have
quota
20/10
10/10
20/0
10/?
10/10
0/20
20/20
Few
(competitors)
25/35
35
35/15
35
20/20
20/20
20/?
10/0
10/0
10/0
10/0
10/0
10/0
10/0
10/0
0/5
10/10
10/10
10/10
10/10
Partnership
(collection)
10/0
20/10
10/0
5/5
10/10
5/5
5/5
10/10
10/0
10/10
0/20
10/0
10/?
10/0
20/25
10/0
20/?
Q/Q
20/20
20/20
20/20
Q/Q
20/10
50/30
30/30
30/30
30/30
Order winning criteria (xx/yy) where xx current year and yy three years hence. If yy 0, this
customer will be phased out. If yy ?, a major change is occurring within a customers management.
Product features: superior workmanship or fabric material. Sales relationship: longstanding sales relationship. Country of origin: purchased because it was produced in a particular country. Market familiarity:
superior knowledge of local market. Have quota: have available quota where competitors do not.
Partnership (collection): long term customer relationship in producing a given collection; the customer
is reluctant to change suppliers because design detail con dentiality is desired.
Table 8(b). Anonkes market segments by order winning criteria: non-manufacturing related.
table 10 indicates the need for debate regarding how well the current manufacturing
strategy supports the market requirements placed on the company, both now and in
the future. Where gaps in performance exist, this diagram also indicates the need to
debate potential strategic options that would improve the competitiveness of the
company by reducing the gap between market requirements and manufacturing
capabilities.
The rst step in assessing company performance against market requirements, i.e.
against the key order winners and quali ers, is to collect operating data for the
representative customers and products in the judgement sample. The data shown
in table 11 and gure 3 has been included to illustrate how company performance
can be assessed in terms of key order winners and quali ers. In this case, price and
delivery speed and reliability are critical areas at Anonke Apparel.
3610
W. L . Berry et al.
Segments
Few
competitors
Price
Few competitors
Partnership/coll.
Product features
Market familiarity
Sales relationship
Have quota
Price
Delivery speed{
Delivery rel. {
Production ex.
35/25
30/35
20/20
15/10
15/15
15/15
% Sales/growth}
Product di culty
Buying pattern
Order size
4/ 5
1
A2
1084
Order winners
Large
volume
Product
features
Partnership/
collections
16/16
11/11
27/27
35/30
20/20
14/13
20/20
10/18
21/24
13/19
16/16
13/13
16/16
8/15
20/18
16/12
20/20
3/ 44
1 3
B
31 588
57/272
3 5
A1
11 592
22/245
1 3
A2, B
3132
14/132
1 3
A2, B
4366
20/20
47/37
{ 150 days now; 45 days after fabric delivery, 60 120 days future. { 2 weeks in peak season. } All in
percentages.
Corporate
objectives
Marketing
strategy
Order
winning
criteria
Manufacturing strategy
Process
Infrastructure
Information such as that shown in table 11 and gure 3 should include customer
and market pro tability analyses, and cost estimates of supplying products in various volumes (including those outside the normal range). The contemporary work on
Activity-Based Costing to determine cost drivers, and the Theory of Constraints to
identify process bottlenecks and their impact on product pro tability provide an
excellent framework for contribution margin analysis (Campbell et al. 1997,
Spoede 1996). Such an approach ensures that marketing strategies are developed
which take into account the company s capabilities and their customers contributions to pro tability as distinct from their contributions to revenue. (Elishberg and
Steinberg (1987) surveyed joint decision-making categories and concluded that there
3611
. Flexibility important in
Price related:
Dir. mat. (% price)
Dir. Mat. ($/pc.)
Cont. marg. ($/pc.)
Cont. marg. (% price)
Cont. margin ($/hr.)
Delivery related:
Avg. quote LT (days)
Avg. actual LT (days)
Avg. lateness (days)
Few
competitors
Price
Large
volume
Product
features
Partnership
collections
51
13.73
10.62
39
2.54
67
2.54
0.72
19
1.38
63
8.24
3.14
24
1.48
60
14.95
7.27
29
1.77
58
13.27
7.53
33
2.28
146
173
27
172
176
4
170
197
27
164
190
26
161
166
5
Actual and quoted delivery speeds are not meeting customer requirements; actual delivery speed is not
meeting quoted speeds.
3612
Corporate
objectives
W. L . Berry et al.
Marketing
strategy
Order
winning
criteria
Manufacturing strategy
Process
Infrastructure
Table 12. Alignment process. Overview: manufacturing strategy versus current performance.
company expects that other customers in the large volume (L V ) and product
features (PF) segments will soon be pressing for delivery lead times between 60 and
120 days.
The delivery information for customers in the judgement sample indicates that
Anonke currently promised customers delivery lead times averaging 146 to 172 days
(see table 11), depending on the market segment. It also indicates that the delivery lead
times actually experienced by customers average 166 to 197 days, depending on the
market segment. During the peak selling season (April to September) customers experience even longer delivery lead times averaging from 143 to 236 days, depending on the
market segment.
L ikewise, delivery reliability is an important issue with customers. Overall, actual
deliveries currently average 4 to 27 days after the promised delivery date. Further,
deliveries average 26 to 27 days late in the two highest growth segments (L V and
PF). Customers expect delivery within a two week window during the peak selling
season for April through September. During this period, however, deliveries average
15 to 86 days after the promised delivery date.
Productions ability to provide small to medium order quantities is important in both
the L V and PF segments (see table 8). To check the companys performance against
this aspect of production capability, relevant data on productivity, contribution margin,
and customer order sizes were collected. The plot of productivity (units per hour)
against customer order size shown in gure 3 includes all the data for customers in
segment A2. This plot shows that productivity is roughly constant for a very wide range
of customer order sizes in the low to mid volume range. Similar plots were observed for
contribution margin/labour hour versus customer order size. These results indicate that
the production process provides good support for this market requirement.
Price is a key criterion in two segments: P and L V . The data in table 11 indicate
that the percent contribution margin in these two segments is low. The principal reason
for this is that the direct material cost, which is primarily fabric cost, is high. Therefore,
while previous investments by the company in automated pattern making and laser cloth
cutting have helped to reduce cost, manufacturing needs to support further corporate
e orts in direct material cost reduction.
3613
Order winning
criteria
Process choice
Production exibility
Price
Delivery speed
Delivery reliability
Infrastructure
Training
Systems ?
Systems ?
3614
Corporate
objectives
W. L . Berry et al.
Marketing
strategy
Order
winning
criteria
Manufacturing strategy
Process
Infrastructure
Table 14. Alignment process overview: manufacturings view of business and initiatives.
over times between customer orders. This investment representated a deliberate decision
to invest in a low-volume batch process choice to create competitive advantage as
indicated in the diagram in gure 2.
Investments to support product features
The investment in an industrial training facility provided important bene ts in the
development of employee skills to produce enhanced product features.
Several conclusions can be drawn by comparing the manufacturing strategy with the
performance data provided by the order sample. This involves comparing actual manufacturing capabilities to the market requirements.
(a) Manufacturing initiatives have provided important support for three of the
order winning criteria: price, manufacturings ability to cope successfully
with low to medium customer order speci cations, and product features.
(b) Investment in sewing lines provides good support for low- to mid-volume
markets, and positions the company as the most e ective in processing low
volume batch products.
(c) Although the investments in automated pattern making and laser cutting
support low cost production, a key area for improvement is to further reduce
fabric cost, especially if the A1 market segment is to be emphasized.
(d) While the investment in automated pattern making shortens this step in the
process, manufacturing does not currently have the capability to support current and future market requirements for delivery speed and delivery reliability.
2.5. Developing strategic issues and recommendations step 5
The nal step in our methodology is to identify the areas of misalignment
between marketing and manufacturing strategy, and to develop options to improve
the strategic t between these two functions. As a consequence, the debate may
involve a discussion of changes in both marketing and manufacturing strategy, i.e.
a discussion involving markets, marketing initiatives, and manufacturing investments. This is indicated by the large ellipse in table 14.
To illustrate this point the strategy issues/recommendation discussion for Anonke
Apparel included below highlights two important areas of misalignment at this company. These are:
3615
Marketing:
Growing emphasis on three segments: large volume, product features and partnership
collections
di cult-to-manufacture products
Manufacturing:
supporting delivery speed and reliability
supporting price sensitive segments
performance reward systems
Table 15. Anonkes alignment process overview: develop strategy issues/recommendations.
(a) the inability of the company to meet the delivery speed and reliability requirements of the large volume and product features market segments;
(b) the focus on the large volume segment which does not exploit the company s
investment in low/mid volume production exibility in the factory nor the skill
level of the workforce.
These require discussion and debate within the company to resolve the di erences in
marketing and manufacturing strategy.
At Anonke, the key manufacturing options to improve strategic alignment (shown
in table 15) involved reducing customer lead times and increasing delivery reliability.
Further analysis of the data collected in the representative sample revealed that, currently, over half the operations lead time is explained by delays in ordering fabric once
the customer orders have been accepted, and starting manufacturing once fabric has
been received from suppliers.
Such delays could be avoided by making enhancements to the companys manufacturing planning and control system to improve customer order tracking in purchasing
fabric, in placing and receiving orders from suppliers, and in scheduling manufacturing
operations such as pattern-making, cloth cutting, and sewing operations. Other
enhancements include introducing improved capacity planning methods to ensure that
su cient capacity exists to begin manufacturing operations once fabric has been
received. Furthermore, since the lead time to purchase fabric represents one-third of
the customer lead time, still another option involves making changes in the purchasing
area to improve the quality of forecast information concerning fabric requirements and
colours, or investing in inventory to stock standard fabric types. A further option would
be to change the companys performance measurement system to evaluate delivery
speed and delivery reliability performance on a regular basis.
Other strategic options to be considered involve reducing direct material cost to
better support the A1 market segment. Alternatives here include an increased emphasis
on sourcing and supplier development by purchasing to improve supplier pricing.
As with manufacturing, marketing needs to review the strategic decisions concerning market positioning to bring the marketing and manufacturing strategies into better
alignment. Three major options in marketing strategy become apparent from this process overview and application.
The rst was to review Anonke s current emphasis on the A1 segment. This segment
has represented a major sales growth area for the company, with over half the current
sales volume. There are several important reasons that justify this initiative. Such sales
involve high volume, non-seasonal items that enable the company to level factory
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output. Even so, when these sales are viewed in terms of their contribution margin, they
are much less attractive than the A2 market segment. Furthermore, the A1 segment
does not exploit the low/mid-volume production exibility of the factory nor the skill
level of the workforce. It also places pressure on the companys infrastructure, requiring
investment and development of the purchasing function in order to cope with high fabric
costs and tight delivery dates. In fact, the A1 segment ts the high volume/low cost
manufacturing strategy of the company s competitors much better than the niche/low to
medium volume production strategy adopted by Anonke Apparel.
A second major option was to increase the companys emphasis on some of its
European customers. These customers, while more demanding when it comes to product
quality, are less price-sensitive. This means that they better t Anonke s chosen manufacturing strategy than the large US rms in the A1 segment currently being courted by
marketing.
The nal option was to increase further the emphasis on di cult-to-manufacture
garments. Again, these products t Anonke s manufacturing strategy in much the same
way as with its European customers.
3.
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of this paper, can be measured in terms of productivity and contribution margin, and
data can be used to support strategic arguments to target market segments with low
volume production requirements, i.e. the product features segment noted in table 8.
Finally, the framework and methodology enables manufacturing performance to
be tested against customer requirements to assess the alignment between marketing
and manufacturing strategy. The delivery speed and reliability issues in Anonke
provide an interesting example of this. Clearly, the current and future market
requirements for short reliable customer lead times cannot currently be supported
by manufacturing. Therefore, discussion and debate are necessary in order to
develop strategic initiatives in manufacturing to retain competitive advantage. In
this way the manufacturing strategy framework and methodology presented here
indicate areas of mis-alignment between marketing and manufacturing strategy, and,
therefore, drives the business strategy debate!
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Benningson, L. A., 1996, Changing manufacturing strategy. Production and Operations
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Buzzell, R., 1987, Note on market de nition and segmentation. Harvard Business School,
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Jan./Feb.
Clark, K. B., 1996, Competing through manufacturing and the new manufacturing paradigm: is manufacturing strategy passe? Production and Operations Management,
5 (1).
Corey, E. R., 1992, Marketing strategy An Overview, Harvard Business School, Reference
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