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International Journal of Operations & Production Management

Operationalizing manufacturing strategy: An exploratory study of constructs and linkage


Jay S. Kim, Peter Arnold,
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Jay S. Kim, Peter Arnold, (1996) "Operationalizing manufacturing strategy: An exploratory study of constructs
and linkage", International Journal of Operations & Production Management, Vol. 16 Issue: 12, pp.45-73, https://
doi.org/10.1108/01443579610151751
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Operationalizing
Operationalizing manufacturing
manufacturing strategy strategy

An exploratory study of constructs and


45
linkage
Jay S. Kim and Peter Arnold
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Boston University, Massachusetts, USA

Introduction
During the last decade, the pressures of increasing global competition and the
rapid changes in product and process technologies have increased operations
managers interest in manufacturing strategy. The Manufacturing Futures
Survey (see Miller and Kim[1], which has been tracking the trends in US
manufacturing since 1982, reports that the effort to develop manufacturing
strategy was included among the top action items of the US manufacturers in
both 1988[2] and 1990[1]. Despite increasing interest, however, Hayes and
Pisano[3] report that many firms do not yet distinguish the consistent effort to
build manufacturings competitive capabilities which we refer to as the core of
manufacturing strategy from the adoption of various programmes like JIT
(just-in-time) or TQM (total quality management). Many manufacturing
executives also confess that implementing manufacturing strategy is indeed a
complex and sometimes confusing exercise. Frequently heard from senior
manufacturing executives are comments like: Implementing a manufacturing
strategy is even harder than developing one. Now that we know where to focus,
what do we do?[4]. Although the manufacturing strategy concept is appealing
to many organizations, its realization on the factory floor remains problematic
the practice gap.
Research in manufacturing strategy shows a similar gap. Although the
literature in this field has evolved considerably since Skinners[5,6] early work,
the review by Leong et al.[7] suggests that the field has not yet established a
solid research paradigm. They wrote: A review of the literature in
manufacturing strategy reveals an increasing level of interest in the field but no
similar acceleration in progress toward a well organized paradigm[7, p. 117].
The authors suggest three possible causes for this lack of progress as:
(1) dearth of cohesive theory-building efforts on the part of manufacturing
strategy researchers;
(2) shortage of survey-based empirical work; and
International Journal of Operations
(3) a lack of effort to integrate manufacturing strategy ideas with & Production Management, Vol. 16
No. 12, 1996, pp. 45-73. MCB
established concepts and theories developed in related disciplines. University Press, 0144-3577
IJOPM Studies in the field still lack a cohesive foundation that can guide researchers
16,12 efforts in building and testing theories the research gap.
This paper attributes these gaps in manufacturing strategy practice and
research to the lack of a collective understanding in how the fundamental
concepts of manufacturing strategy are operationalized. Fundamental
concepts refers to the notion of competitive priorities. Skinner[6] used
46 competitive priorities to formulate the concept of manufacturing mission and
argued that manufacturings key decisions should be geared towards improving
performance on a few selected priorities. Wheelwright[8] moved this argument
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further by presenting a two-stage process for the development and


implementation of manufacturing strategy. First, on the basis of the intended
business strategy such as low price or product differentiation[9],
manufacturings competitive priorities should be determined in terms of
relative emphasis given to low cost, quality, flexibility and delivery. Second,
various structural and infrastructural decisions should be linked such that
there is consistent support for chosen competitive priorities.
Although intuitively appealing, this framework (as represented in Figure 1)
does not explain how firms can operationalize the notion of competitive
priorities. Operationalize refers to the decisions that manufacturing executives
have to make. Since the inception of the manufacturing strategy concept,
researchers have regarded a list of structural and infrastructural decisions[8] as
the domain of strategic manufacturing management. However, manufacturing
executives are continuously looking at improvement programmes as the place
where manufacturing strategy should be operationalized. Hayes and Pisano[3]
claim, simply improving manufacturing by, for example, adopting JIT, TQM,
or some other three-letter acronym is not a strategy for using manufacturing
to achieve competitive advantage. In a subtle way, however, they recognize that
these programmes are what manufacturing managers consider when they think
of strategic management of manufacturing operations. If manufacturing

Structural decisions
Capacity
Manufacturing Facility
competitive priorities Technology
Business Vertical integration
strategies Price
Quality Infrastructural decisions
Delivery Workforce
Flexibility Quality
Figure 1. Planning and control
A conventional Organization
framework of
manufacturing strategy
Source: [8]
strategy is to be operationalized, the core principles of competitive priorities Operationalizing
need to be linked explicitly with those three-letter acronyms which manufacturing
represent the array of alternatives from which manufacturing executives may strategy
choose.
A process model of manufacturing strategy is proposed which addresses
this operationalization of competitive priorities into the choice of improvement
action plans. The fundamental question explored using this process model is: 47
how does a firm with particular competitive priorities choose among various
improvement programmes?
This process model of manufacturing strategy helps researchers and
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managers to understand the relationships between the competitive priorities


concept and manufacturing improvement programmes. In so doing, it helps to
bridge the gap between the wide recognition of the concept of manufacturing
strategy and its limited realization in industry. By identifying critical
constructs of the process model and by demonstrating a method for mapping
their interrelationships, this paper adds a building block to the theory of
manufacturing strategy.
This paper consists of five sections which collectively represent our theory-
building effort. First, a conceptual framework for the process model of
manufacturing strategy is developed. This model is built around the three
constructs (competitive priorities, manufacturing objectives and action plans)
and the linkages among them. Second, the survey data which facilitated the
thinking, along with methodology used to measure the variables are described.
Third, a factor analysis is performed on the data to develop scales that
represent the three constructs, and the results and their implications are
discussed. Fourth, multiple regression analyses are used to explore the linkages
between competitive priorities, manufacturing objectives, and action plans.
Finally, the quality and limitations of our empirical analysis of the process
model are assessed, and our thoughts on directions for future research are
presented.

A process model of manufacturing strategy: a theory-building


effort
Two distinct perspectives on the process of manufacturing strategy
The theory which this study attempts to build is on the process of
operationalizing manufacturing strategy. The term process has been loosely
defined in the manufacturing strategy literature as how such decisions (on
content) are reached in an organizational setting[7]. From the literature, two
levels of thinking are found in terms of what this how or process mean in
manufacturing strategy.
Typically, the notion of the process of manufacturing strategy was addressed
at the macro level. At this level, the process means how manufacturing
strategy is linked to corporate (or strategic business units) strategy and/or with
IJOPM other functional strategies. The core of macro-level process thinking is the
16,12 notion of consistency between the hierarchy of strategies. For instance, Leong et
al.s[7] predominant process model of manufacturing strategy covers
elements like corporate strategy, SBU strategies, functional strategy and
performance measures. This macro-level process perspective was also the focus
of the empirical study reported by Marucheck et al.[10] on the manufacturing
48 strategy process. Studies at the macro level certainly help researchers and
managers understand what strategic role manufacturing can (or should) play in
supporting the goals and objectives of business strategy. Furthermore, they
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reveal some critical success factors in formulating and implementing


manufacturing strategy, such as top-management commitment and proper
project orientation[10]. Nevertheless, it is difficult to find from these studies the
answers to the questions raised earlier in this paper now that we know
manufacturing is an important contribution to the corporate success, and now
that we know the competitive priorities in which the manufacturing function
should excel in, what do we do?
The question how should the manufacturing functions competitive priorities
be translated into decisions regarding improvement action plans? should be
approached from a somewhat different perspective than the macro-level study.
This alternative perspective should direct managers (and researchers)
attention to the internal process of operationalizing competitive priorities.
Instead of external consistency with the corporate or business strategy, this
perspective focuses on internal consistency between manufacturings strategic
task and the allocation of resources to various improvement action plans.
Questions asked from this perspective are, for instance, with the change in
competitive priorities towards responsiveness and flexibility, which
improvement plans should receive increased (or decreased) attention? It is this
perspective (considered the micro level) on which this study is focused.
Vickery[11] directed the process perspective towards this micro level by
recognizing the need for the means of achieving competitive priorities. More
specifically, Vickerys process model included three distinct steps in
operationalizing manufacturing strategy:
(1) identification of competitive priorities based on the business strategy;
(2) setting numerical targets for performance measures associated with the
competitive priorities;
(3) formulating and implementing structural and infrastructural decisions
that are consistent with the priorities.
The model proposed in this study is similar to Vickerys model in the first two
steps, but differs on the third step. Rather than the structural and
infrastructural decisions, it is proposed in this study to focus on choices
regarding improvement action plans. Figure 2 presents a generic micro-level
Operationalizing
Business strategy
manufacturing
strategy
Manufacturing strategy process

Competitive priorities
Relative importance of competitive capabilities
49

Manufacturing objectives
Relative emphasis on performance targets
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Action plans
Choice of improvement programmes

Figure 2.
A process model of
Business performance manufacturing strategy

process model for operationalizing manufacturing strategy, and the next two
subsections describe its central components.

Three constructs
Figure 2 includes three constructs representing distinct stages of the process of
manufacturing strategy. Each construct differs from the others in the level of
abstraction, with the competitive priorities being the most abstract and the
action programmes being the most specific. That is, while competitive priorities
are difficult to measure objectively, the decisions on action programmes are
relatively easy to capture in terms of financial requirements or managerial
concerns. Operationalization of manufacturing strategy thus requires multiple
stages of interpretation of highly abstract concepts to more tangible matters. It
is believed that separating these three constructs and then exploring their
interrelationships can help managers and researchers to understand the process
of manufacturing strategy more fully.
First, competitive priorities describe what the manufacturing function
should achieve with regard to cost, quality, flexibility and delivery, in order to
support the business strategy effectively. Conventional wisdom states that the
emphasis in the business strategy such as low cost, differentiation, and focus
of Porters framework[9] defines the desired degree of competence in each of
these areas. Over the last decade, the concept of competitive priorities has been
refined by many researchers. (See [7] for a good summary.) In addition, its
empirical validity was demonstrated by several studies of production
competence[12-14].
IJOPM Once the manufacturing function determines its competitive priorities,
16,12 measurable performance targets are established[11]. Researchers have studied
the performance measurement issues with the belief that traditional cost
accounting tools are often not conducive to guiding a manufacturing firm to
develop critical capabilities[15-17]. They argued that the manufacturing
functions decisions on various investment alternatives should be guided by the
50 firms strategic objectives rather than traditional cost accounting measures
alone. Therefore, the relative emphasis on various performance measures is
defined in this model as manufacturing objectives. Some manufacturing
objectives are closely related with cost (i.e. unit variable cost, materials cost and
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overhead costs), while others are more directly concerned with time (delivery
lead time, procurement lead time, new product development cycle and
equipment changeover time), or quality (defect rates and vendor quality). In
order to support the competitive priorities, manufacturing managers need to
select a few objectives and concentrate their effort on achieving them.
To achieve the selected set of manufacturing objectives, managers should
determine what improvement programmes to implement in the future. Over the
last two decades, the field of manufacturing management has seen numerous
programmes designed to improve manufacturing operations. Programmes like
JIT, TQM, materials requirements planning (MRP), computer-integrated
manufacturing (CIM) to name a few, were widely publicized as the panacea
for myriad industrial problems. However, while a particular programme is
capable of improving a particular facet of operations, the impact of a
programmes implementation is a function of the firm, the timing and existing
capabilities. Furthermore, since each action programme requires the allocation
of scarce resources, it is critical to determine which action programmes should
be adopted. In other words, prior to the adoption of a particular programme,
managers should recognize its expected effects on specific operating objectives.

Linkage between constructs


In order to build a cohesive theory to assist managers in operationalizing
manufacturing strategy, it is essential to understand the linkages among
competitive priorities, manufacturing objectives and action programmes. The
basic premiss of this study is that distinct relationships exist among the three
constructs. In the model presented in Figure 2, this premiss means that specific
manufacturing objectives should be established to support the competitive
priorities and, in turn, those objectives should guide the choice among various
action programmes.
Presumably, a firm with a particular set of priorities chooses to emphasize a
particular set of performance measures consistent with those priorities. In other
words, the degree of emphasis given to each individual objective is dependent
on the perceived competitive priorities. For example, if a high priority is given
to price competitiveness and a low priority to quick delivery, then
manufacturing managers should place a relatively higher emphasis on various Operationalizing
cost-related objectives than on measures related to delivery. In some cases, manufacturing
however, a direct linkage between individual competitive priorities and strategy
particular objectives may be difficult to establish. Indeed, it is well-known in the
literature that higher emphasis on quality objectives does not necessarily mean
lower emphasis on cost reduction. The studys contention is that the competitive
priorities influence, but do not define in isolation, the establishment of 51
performance targets in various manufacturing objectives.
Determining priorities and setting performance targets are important steps
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in implementing manufacturing strategy. However, these steps are less


meaningful if they are not followed by action plans designed to achieve the
priorities and objectives[18]. Thus, strategy is often defined as a set of action
plans pursued by an organization[8,19]. While programmes such as JIT, TQM,
CIM etc. have proliferated in manufacturing practice, they have not been
integrated with manufacturing strategy. Instead, management seems content
with investing in these programmes without a full sense of the strategic
implications[3]. For instance, if a firm sets an objective of reducing delivery lead
time, should the manufacturing function invest more in JIT? Training workers?
A computerized inventory control system?
The challenge to researchers and practitioners alike is how the process of
linking (i.e. aligning objectives with priorities, and action plans with objectives)
is implemented in a manufacturing firm. The two questions we addressed in the
context of Figure 2 are therefore summarized as follows:
(1) How does a firm which emphasizes a particular competitive priority
establish manufacturings functional objectives?
(2) How does a firm which emphasizes a particular manufacturing objective
choose among various action programmes?

Scope of theory-building effort


The two questions above can be interpreted in many different ways, and the
theory of manufacturing strategy process is too broad to be addressed fully in
this single paper. It is therefore important, at this point, to clarify what it is
hoped can be achieved in this paper and what will be left for future research.
First, this studys framework for establishing linkages among these three
components of manufacturing strategy reflects the conjecture presented by
Hayes[20]. In his influential paper, Hayes defines three conceptual constructs
which define the manufacturing strategy process ends, ways and means.
Borrowing his hierarchical framework, this study attempts to explore
relationships among competitive priorities, manufacturing objectives and
action plans. Although Hayes argues that the decision flow should be bi-
directional, he has found that the top-down, ends-ways-means approach is used
in most cases. An exploratory work by Marucheck et al.[10] provides further
IJOPM empirical evidence that companies do follow the top-down process in the
16,12 development of a manufacturing strategy. The objective in this paper is not to
find which direction of decision flow (top-down or bottom-up) is better for
effective strategy formulation, and the perspective of the top-down approach as
the basis for the framework is taken. The question of whether the bottom-up
approach is more effective for strategic manufacturing management than the
52 top-down approach (as presumed in this study) is left for future study.
Second, the notion of linkage explored in this study is close to
Venkatramans[21] description of fit. As an attempt to provide strategy
researchers with a guideline for selecting and defining constructs and exploring
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the relationship among them, Venkatraman proposed six distinct levels of fit
that have different theoretical implications. Among them, this studys notion of
linkage is similar to the fit as gestalts and/or covariation. Fit as gestalts refers
to the degree of coherence between two sets of theoretical attributes and, in our
study, it represents how a particular direction of competitive priorities matches
with the establishment of manufacturing objectives. Fit as covariation, on the
other hand, refers to the pattern or stream of major and minor decisions, and
this aspect of relationship is critical in translating manufacturing objectives
into more specific decisions on improvement actions[21]. According to
Venkatramans taxonomy for various definitions of fit, these two categories fall
in the area where performance criteria are not explicitly considered and where
the functional form of relationships is less specific owing to many variables
included in the fit equation. As the knowledge base is built on these
constructs, it is believed that the research in manufacturing strategy could be
extended to address other dimensions of fit as well.
Third, the nature of this analysis is more descriptive and exploratory than
normative or confirmatory. The main interest is in examining how
manufacturing firms are addressing these linkage relationships, rather than
prescribing how they should be. Similarly, these constructs and linkages are
presented as found from an exploratory analysis, rather than testing any a
priori research hypotheses. This study provides a building block from which
normative and confirmatory studies can evolve.

The data
The remainder of this paper examines how the proposed process model can be
operationalized in an organization by performing a series of statistical analyses
with the data from the 1990 Manufacturing Futures Survey conducted by
Boston Universitys Manufacturing Roundtable. (For detailed information
about the survey, see Miller and Kim[2] and Kim and Miller[22].) The project
was initiated in 1981 to develop a comprehensive data set that can be used to
study the strategic aspects of manufacturing management. For the last ten
years, the content of the survey has been continually refined in order to improve
its relevance and data quality. Also, beginning in 1983, its geographic coverage
was expanded to include other countries such as Japan, various European Operationalizing
nations, and developing countries in the Pacific region such as Korea, manufacturing
Singapore, Taiwan, New Zealand, Australia and Mexico. Results from the series strategy
of surveys have been analysed by many researchers and published over the last
decade[23-25].
The survey includes over 200 individual questions designed to assess the
manufacturing firms business strategy, competitive priorities, manufacturing 53
objectives, action programmes and performance improvement. In order to
enhance the validity and reliability of the survey instrument, the research team
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spent a considerable amount of time in reviewing the previous years survey


results. Variables with a large number of missing responses were either deleted
or rephrased, and emerging issues and interests are continuously tested and
added to the survey instrument. Furthermore, the initial survey draft was
discussed intensely with the manufacturing executives participating in Boston
Universitys Manufacturing Roundtable meetings, and pilot testing was
performed with ten member companies before the survey was finalized. As a
result, the internal reliability of the questions in the survey has been maintained
at a high level[25].
The 1990 US survey was sent to 1,306 companies. Included in the mailing list
were respondents to the previous surveys, participants in various
manufacturing-related executive programmes, and 422 randomly selected
firms from the 1986 Duns business rankings. After two rounds of follow-up
mailings, 182 usable responses were returned, representing a 13.9 per cent
response rate. Respondents to the 1990 survey include firms from many
different industries, such as consumer products, electronics, basic, machinery
and industrial goods, and similarities and differences among the industry
groups were reported in Kim and Miller[22]. Table I provides several important

Overall Standard
Indicators average deviation

Annual sales revenue ($ million) 1,584.00 6,177.42


Pre-tax return on assets (% of assets) 16.67 15.05
Net pre-tax profit ratio (% of sales) 9.75 9.54
R&D expenses (% of sales) 4.36 4.58
Growth rate in unit sales (%) 7.61 10.63
Market share of primary product (%) 38.65 22.32
Number of plants in the business unit 10.59 16.57
Number of employees 8,747.12 32,636.78
Sample sizea 182 Table I.
Respondent business
Note: a All of the subsequent tables are based on n = 182 profiles
IJOPM characteristics of the respondents. These statistics indicate that the sample
16,12 tends to be biased towards larger and rather successful manufacturing
companies with an average market share of 38.7 per cent and annual unit sales
growth rate of 7.6 per cent.
Owing to the diversity of organizational structure where functional
strategies are developed, a manufacturing business unit (MBU) was selected as
54
the unit of analysis. An MBU is specifically defined as a level in the
organization where manufacturing is integrated into a business strategy, and
respondents were asked to select the area that best fits this description. Among
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the 182 respondents, 66 chose the entire company as an MBU, while 86 chose the
division and 20 the plant. Accordingly, typical informants for the survey were
operations vice-presidents or directors, indicating that the respondents
possessed reasonable knowledge of the firms business strategy and
manufacturing concerns. As Miller and Roth[25] argued in their paper on
manufacturing strategy taxonomy, the usage of MBU as a unit of analysis is
regarded most appropriate for this study since organizations build their
manufacturing strategies at different levels.

Competitive priorities
In this paper, discussion is centreed around questions on competitive
capabilities. These capabilities represent an holistic set of tasks which should
be performed by the manufacturing function in order to support the business
strategy, and the degree of relative emphasis given to each of them represents
manufacturings competitive priorities. Expanding on the conceptual work of
Skinner[2] and Wheelwright[8] among many others, 15 competitive variables
from the five dimensions of price, flexibility, quality, delivery and service are
included in the survey. Table II briefly describes the competitive capabilities as
defined by the questionnaire.
For each capability, each respondent was asked to indicate its degree of
importance in competing successfully in the marketplace for the next five years.
A seven-point, self-anchoring scale was used where 1 = very unimportant and
7 = very important. Table II presents the average scores of importance on
competitive capabilities reported by the respondents. It shows that the
companies in our sample perceive that the capabilities in conformance quality,
on-time delivery and reliable products are most important. Following these
three areas are performance quality, low price and fast delivery. Among
the least emphasized capabilities are rapid volume and design changes,
broad product line and rapid mix changes. It is interesting to note that the
variables associated with quality and delivery capabilities are ones with the
smallest variation among the respondents. Managerial implications of these
rankings and other survey findings are reported in Miller and Kim[2] and Miller
et al.[26].
Average Standard Operationalizing
Competitive capabilities Notation importance deviation manufacturing
strategy
Price
Ability to profit in price competitive markets Low price 5.74 1.25
Flexibility ability to:
Make rapid changes in design Design change 5.18 1.37 55
Introduce new products quickly MPI 5.49 1.19
Make rapid volume changes Volume change 5.09 1.39
Make rapid product mix changes Mix change 5.38 1.16
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Offer broad product line Broad line 5.39 1.32


Quality ability to:
Offer consistently low defect rates Conformance quality 6.52 0.73
Provide high performance products Performance quality 5.99 1.04
Provide reliable/durable products Reliable/durable 6.30 0.94
Delivery ability to:
Provide fast deliveries Fast delivery 5.69 1.05
Make dependable delivery promises On-time delivery 6.33 0.75
Service ability to:
Provide effective after-sales service After-sales services 5.47 1.35
Provide product support effectively Product support 5.68 1.17 Table II.
Make product easily available Distribution 5.52 1.30 Competitive capabilities:
Customize products and services Customize 5.52 1.19 average importance
to customer needs and standard deviation

Manufacturing objectives
The survey asked respondents to indicate the relative importance given to each
of 34 different manufacturing objectives. As shown in Table III, these objectives
range widely from purely financial measures, to time-related dimensions, and to
items closely tied to quality improvement. The list of objectives is more
extensive than the one for competitive priorities, partially because of the lack of
theoretical development in the past. Unlike competitive priorities, the area of
manufacturing objectives has received less attention from researchers, and
consequently the list became long with less structure.
As in the competitive priority section, a seven-point, self-anchoring scale was
used where 1 = very unimportant and 7 = very important. Table III shows the
average importance scores of the 34 items. The results indicate that the firms in
the sample emphasize manufacturings role in improving quality in the supply
pipeline (e.g. improve conformance quality, improve vendor quality), reducing
unit costs (particularly overhead costs), and continuously shortening the time to
develop and introduce new products.

Action plans
The survey also asked about the action plans that each manufacturer intended
to emphasize during the next two years. Developed over the last ten years of the
IJOPM Average Standard
16,12 Manufacturing objectives Notation importance deviation

Improve conformance quality Conformance 6.04 0.98


Reduce unit costs Unit cost 5.71 1.08
Improve safety record Safety 4.38 1.58
Reduce manufacturing lead time MFG lead time 5.15 1.35
56 Increase capacity Increase capacity 3.80 1.71
Reduce procurement lead time Procure time 4.91 1.32
Reduce new product development cycle NPD time 5.55 1.19
Reduce materials costs Material cost 5.48 1.15
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Reduce overhead costs Overhead cost 5.59 1.11


Improve direct labour productivity DL productivity 4.96 1.31
Increase throughput Throughput 5.31 1.22
Reduce number of vendors Reduce vendors 4.44 1.38
Improve vendor quality Vendor quality 5.77 1.07
Reduce inventories Inventory 5.31 1.24
Increase delivery reliability Delivery reliability 5.31 1.26
Increase delivery speed Delivery speed 4.92 1.32
Improve ability to make rapid product mix changes Mix change 4.68 1.35
Improve ability to make rapid volume changes Volume change 4.45 1.40
Reduce break-even points Break-even point 4.93 1.24
Raise employee morale Morale 5.07 1.11
Maximize cash flow Cash flow 5.09 1.44
Increase environmental safety/protection Environment 4.68 1.50
Reduce capacity Reduce capacity 2.42 1.61
Increase product/materials standardization Standardization 4.52 1.36
Improve labour relations Labour relation 4.18 1.42
Improve white collar productivity WC productivity 4.96 1.14
Increase range of products produced by
existing facilities Product range 4.05 1.57
Meet financial shipping goals Shipping goals 4.84 1.42
Improve pre-sales service and technical support Pre-sale service 4.16 1.27
Improve after-sales service After-sale service 4.40 1.36
Change culture of manufacturing organization Culture change 5.30 1.57
Table III. Improve interfunctional communication Interfunctional
Manufacturing communication 5.52 1.23
objectives: average Improve communication with external partners External
importance and communication 5.13 1.33
standard deviation Reduce set-up/changeover times Changeover times 4.78 1.39

survey study, the action plan list includes 26 distinct alternatives a manufacturer
can employ to improve various performance measures. Again, each respondent
was asked to indicate their relative emphasis on each action plan using a seven-
point, self-anchoring scale where 1 = little emphasis and 7 = great emphasis.
The actions that manufacturers plan to take to achieve their key objectives
vary widely by company and industry. However, there is a common thread
among the firms in our sample, as seen by the high average scores reported on
some action programmes in Table IV. Particularly, it shows that linking
Average Standard Operationalizing
Improvement action plan Notation emphasis deviation manufacturing
strategy
Giving workers a broad range of tasks or Enlargement/
more responsibility enrichment 5.46 1.32
Activity-based costing ABC 3.87 1.72
Manufacturing reorganization MFG: reorganization 4.27 1.68 57
Worker training Worker training 5.41 1.19
Management training MGMT training 5.12 1.44
Supervisor training Supervistor training 5.23 1.32
Computer-aided manufacturing CAM 4.16 1.78
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Computer-aided design CAD 4.63 1.56


Value analysis/product redesign Value analysis 4.27 1.69
Interfunctional work teams Teams 5.19 1.70
Quality function deployment QFD 5.02 1.48
New processes for new products New process NP 4.98 1.63
New processes for old products New process OP 4.11 1.71
Information systems in manufacturing IS manufacturing 5.00 1.33
Information systems across functions IS interfunctional 4.99 1.43
Reconditioning physical plants Reconditioning 3.68 1.66
Just-in-time JIT 4.91 1.69
Robots Robots 2.54 1.47
Flexible manufacturing systems FMS 4.03 1.81
Design for manufacture DFM 4.95 1.73
Statistical quality control SQC 5.40 1.38
Closing and/or relocating plants Plant closing 3.05 2.13
Quality circles QC 3.52 1.86
Production-inventory control systems PIC system 4.55 1.52 Table IV.
Hiring in new skills from outside New skills hire 3.78 1.68 Improvement action
Linking manufacturing strategy to plans: average emphasis
business strategy MFG strategy 5.60 1.29 and standard deviation

manufacturing and business strategies is the top-rated activity. Manufacturing


strategy researchers have argued that it is essential for manufacturers to
explore how to deploy their resources for competitive advantage, and for the
manufacturing function to identify how to support the business strategy. The
survey data imply the agreement among the respondents towards that need.

Measuring constructs: an exploratory factor analysis


The primary objective of this paper is to examine how competitive priorities are
linked to manufacturing objectives and action programmes in the process of
operationalizing a manufacturing strategy. The number of variables included in
each construct, however, is too large to conduct an analysis of the individual
linkages[27]. Therefore, a series of exploratory factor analyses were conducted
to reduce the large set of variables into a more manageable set of scales. Benson
et al.[28] and Saraph et al.[29] succinctly demonstrate the virtue of factor
IJOPM analysis in their quality construct study. The purposes of factor analysis in this
16,12 paper are twofold:
(1) to explore how various items within each of the three constructs
(competitive priorities, manufacturing objectives and improvement
action plans) interact with one another; and
58 (2) to develop scales (by combining several closely correlated items) to be
used in the following analysis on linkage.

Method and procedure


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Within each construct, a series of principle component analysis was run


utilizing varimax rotation. At each stage, factors with eigenvalues larger than
1.0 were carried for further analysis[30]. Also the procedure used by Sethi and
King[31] was applied and after each run all the items that showed loadings of
less than 0.35 on all factors, and items whose loadings were greater than 0.35 on
two or more factors were dropped. This procedure was repeated until no such
item was present. For example, Table V shows the results from the initial factor
analysis on the competitive priorities, and Table VI presents the results from the
final factor analysis after three iterations. As can be seen from the two tables,
this procedure increases the parsimony of the subsequent examination at the
expense of the completeness (or realism) of the study. For example, the factor
analysis results in Table VI include only ten items out of the original 15
competitive priorities. Two delivery-related variables (on-time delivery and fast

Competitive priorities Factors


variables 1 2 3 4 5

Conformance quality 0.8067


Reliable/durable 0.7404
Performance quality 0.6374
Product support 0.5789 0.5545
Volume changes 0.7410
Distribution 0.7225
Mix changes 0.6515
Fast delivery 0.5948 0.4846
Design changes 0.8317
NPI 0.7437
Customize 0.6850
After-sales service 0.4921 0.6113
Broad line 0.3500 0.4871
On-time delivery 0.3677 0.3972 0.4461
Table V. Low price 0.7822
Results of initial factor Eigenvalue 4.20 1.73 1.37 1.17 1.07
analysis on competitive % variance explained 28.0 11.5 9.1 7.8 7.1
priorities: varimax
rotation factor loadings Note: Factor loadings larger than 0.350 are shown in the table
Factors Operationalizing
CF1 CF2 CF3 CF4 manufacturing
Competitive priorities Process Quality Product Price strategy
variables flexibility flexibility

Volume changes 0.7944


Distribution 0.7435 59
Mix changes 0.7177
Conformance quality 0.8366
Reliable/durable 0.7526
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Performance quality 0.7169


Design changes 0.8164
NPI 0.7373
Customize 0.6411
Low price 0.9677
Table VI.
Eigenvalue 3.01 1.44 1.20 1.01
Results of final factor
% variance explained 30.1 14.4 12.0 10.1
analysis on competitive
Cronbachs alpha 0.675 0.696 0.642 N/A
priorities: varimax
Note: Factor loadings larger than 0.350 are shown in the table rotation factor loadings

delivery), two service-related variables (product support and after-sales service)


and one flexibility variable (broad product line) are excluded from further
analysis.
In order to ensure the reliability of each factor, Cronbachs coefficient alpha
was also used to test the internal consistency among the items included in each
factor[32]. Since this study was exploratory in its purpose, a threshold level of
0.50 was applied to eliminate internally inconsistent factors, as used by Sethi
and King[31] on the basis of Nunnallys[33] recommendation.

Competitive priorities construct


Table VI shows the final results of the factor analysis on the competitive
priorities. The results show that the four distinct factors have considerable
explanatory power (66.6 per cent) for the variances in the ten variables. Based
on the factor analysis results, four competitive priorities constructs (CF) were
developed. The title for each construct (process flexibility, quality, product
flexibility and price) was selected to represent the included variables as closely
as possible.
It is interesting to note that the variables that have been traditionally referred
to as flexibility are loaded onto two different factors. Volume and product mix
flexibility, along with the abilities to offer broad distribution, are loaded onto the
first factor in Table VI, while design flexibility, new product introduction
capability and the ability to customize products are loaded separately to the
third factor. It appears that traditional flexibility measures consist of two
separate constructs; one that enhances the availability of the current product
mix (CF1: process flexibility) and one that supports the generation of new
IJOPM products or modification of design to meet the customers needs (CF3: product
16,12 flexibility).
In addition, quality-related priorities (conformance quality, performance
quality and product reliability) are closely loaded into a single factor (CF2:
quality), indicating the manufacturing managers mature understanding of
their importance. Finally, the capability to compete in a price competitive
60 market is a single-item factor (CF4: price) clearly distinguished from other
priorities.

Manufacturing objectives construct


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Table VII shows the results of factor analysis on 34 individual variables in the
manufacturing objective construct. The data reduction procedure described
earlier eliminated 15 items, leaving only 19 in six factors. These six factors
explain 61 per cent of variance among them. The significantly reduced number
of variables represented in Table VII reflects the current state of our
understanding on manufacturing objectives. While the manufacturing strategy
literature has paid much attention to the concept of priorities, performance
measures or manufacturing objectives have not yet been studied intensively.
More rigorous research in the future will lead to a better understanding of the
composition of manufacturing objectives.
Nevertheless, several factors provide interesting insights to manufacturing
executives thinking on their objectives. The two factors associated with time
are particularly interesting. One factor (OF2: operations improvement) includes
variables that are closely associated with improving manufacturing throughput
time, such as procurement lead time reduction and new product development
cycle reduction. These objectives are correlated with vendor consolidation and
materials/product standardization. The two objectives loaded to the other factor
(OF6: delivery improvement) are more closely associated with measures for the
external customers. Time-based management appears to consist of two distinct
facets in its realization one focused on measures internal to manufacturing
and the other focused on the external measures.
All of the cost-related objectives are well loaded into the single factor (OF1:
cost improvement), showing the higher level of understanding by
manufacturing managers in this dimension. Also interesting to note is the third
factor (OF3: administration improvement) where white-collar productivity was
highly correlated with improving internal and external communication.
Concerns on environmental protection and safety improvement are also singled
out into OF4 (safety improvement), and service-related objectives are distinctly
recognized by OF5 (service improvement).

Action plans construct


The survey included 26 action programmes that can be employed to improve
the performance of manufacturing. Table VIII shows that 13 of them are cleanly
Factors Operationalizing
Manufacturing OF1 OF2 OF3 OF4 OF5 OF6 manufacturing
objectives Cost Operations Administration Safety Service Delivery strategy
variables improvement improvement improvement improvement improvement improvement

Overhead costs 0.8113


Unit costs 0.8089 61
Materials costs 0.7477
Break-even points 0.6925
Procure lead time 0.7964
New product
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development cycle 0.7017


Reduce vendors 0.6001
Standardization 0.5949
Shipping goals 0.3824
Interfunctional
communications 0.8332
External
communication 0.7539
White collar
productivity 0.5789
Environment 0.8412
Safety 0.8075
Cash flow 0.5092
After-sales service 0.8884
Pre-sales service 0.8671
Increase delivery
reliability 0.8685
Increase delivery
speed 0.8497
Eigenvalue 4.37 2.26 1.92 1.69 1.33 1.26 Table VII.
% variance Results of final factor
explained 20.8 10.7 9.2 8.0 6.3 6.0 analysis on
Cronbachs alpha 0.792 0.668 0.717 0.617 0.817 0.783 manufacturing
objective: varimax
Note: Factor loadings larger than 0.350 are shown in the table rotation factor loadings

loaded into four factors. As in the case of the manufacturing objective


construct, a large number of variables were loaded into more than one factor,
making the data reduction process difficult. As mentioned earlier, the procedure
we adopted sacrifices a considerable degree of realism for the purpose of
parsimonious analysis.
Table VIII represents four distinct factors in manufacturing improvement
actions. Training programmes (workers, supervisors and management) are
cleanly loaded into one factor (AF1: training investment), indicating how
pervasive manufacturers interest is in investing in its human resources. A
variety of new managerial technologies, such as DFM, value analysis, CAD, JIT
and ABC, are loaded into one factor (AF2: integration investment), indicating
IJOPM Factors
16,12 AF1 AF2 AF3 AF4
Action programme Training Integration IS Process
variables investment investment investment investment

Supervisor training 0.9027


62 Management training 0.8509
Worker training 0.7546
DFM 0.7901
Value analysis 0.7181
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CAD 0.6279
JIT 0.6124
ABC 0.4056
IS in manufacturing 0.8866
IS across functions 0.8667
New processes OP 0.8232
New processes NP 0.7415
QC 0.3659
Table VIII. Eigenvalue 4.20 1.62 1.40 1.23
Results of final factor % variance explained 28.0 10.8 9.3 8.2
analysis on improvement Cronbachs alpha 0.847 0.685 0.889 0.523
action plans: varimax
rotation factor loadings Note: Factor loadings larger than 0.350 are shown in the table

that manufacturing managers see these actions as the major tools for
improving the co-ordination of many activities required to deliver higher value
to customers. Investments in information systems, both within the
manufacturing function and across functions, are loaded into the third factor
(AF3: IS investment), while the action programmes in developing new processes
(either for existing products or for new products) are factored together with the
quality circle activity in AF4 (process investment).
Noticeably missing from the list are some action plans with high overall
scores (see Table IV), such as interfunctional teams, developing manufacturing
strategy and statistical quality control. A closer look at the factor analysis
results revealed that these items tend to load onto more than one factor,
indicating that respondents tend to perceive them to be answers to many
different needs. Also various investment programmes in new process
technologies (such as robots, CAM and FMS) are excluded from the further
examination owing to their poor loading onto distinct factors. As mentioned
earlier, these missing variables need to be studied more systematically in future
research.

Linkage between constructs: a regression analysis


The readers attention is drawn back to Figure 2. The underlying assumption of
this research is that strategic manufacturing decisions are made hierarchically
in a top-down direction. That is, managers determine the competitive priorities Operationalizing
of the manufacturing function on the basis of their business strategy and, with manufacturing
that knowledge, establish a set of objectives, and then make the investment strategy
decisions among various action programmes. How each construct is linked with
others in this top-down operationalization process is now explored. With the
scales developed in the prior section, a series of regression analyses to
investigate linkages among competitive priorities, manufacturing objectives 63
and action plans is conducted.

Method and procedure


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First, the scale value of each factor was determined by a simple average of the
included items. For example, the scale score of CF5 (quality priority) is a simple
average of importance given to conformance quality, reliability/durability and
performance quality (see Table VI). As suggested by Kim and Mueller[30], the
exploratory nature of our study justifies using factor-based scales, which do
not directly use the loadings found from the factor analysis.
The regression analysis was conducted in two stages. First, the relationship
between competitive priorities and manufacturing objectives was studied by
observing each manufacturing objective scale as a dependent variable and all
competitive priority scales as independent variables. Then a similar approach
was used to explore the relationship between manufacturing objectives and
action plans. For each dependent variable included in this study, we used the
REGRESSION procedure in SPSSx were used with the STEPWISE option. The
results from the STEPWISE procedure were compared with the results from the
ENTER procedure where all independent variables were included in the
equation. Since there was no significant difference between these two
procedures, the results are reported from the STEPWISE procedure.

Competitive priorities and manufacturing objectives


This regression analysis is based on the premiss that the importance given to a
particular manufacturing objective is a function of competitive priorities. Thus,
each objective factor (OF1 to OF6) is used as the dependent variable, and all the
priorities factors (CF1 to CF4) are potential independent variables to enter the
equation based on the STEPWISE procedure. Table IX summarizes the
regression results. For each dependent variable (manufacturing objective scale),
all the independent variables that are selected by the STEPWISE procedure are
listed with expected beta coefficient and significance level. Also, the R2 value
and F-statistic are given for each equation. Figure 3 summarizes the regression
results using arrows to show significant regression relationships.
Results from the regression analyses provide some useful explanations
regarding how a firms emphasis on a particular set of manufacturing
objectives is influenced by its competitive priorities. Some obvious links
between the two constructs are confirmed by the results. For example, the
IJOPM Dependent variables
16,12 OF1 OF2 OF3 OF4 OF5 OF6
Independent Cost Operations Administration Safety Service Delivery
variables improvement improvement improvement improvement improvement improvement

CF1 0.1942
64 Process 0.0220
flexibility
CF2 0.4828 0.3232
Quality 0.0002 0.0126
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CF3 0.3865 0.2264 0.3194 0.1930 0.2205


Product 0.0000 0.0026 0.0004 0.0422 0.0204
Table IX. flexibility
Relationship between CF4 0.2896 0.2064
competitive priorities and Price 0.0000 0.0013
manufacturing objectives: R2 0.1669 0.1815 0.0495 0.1165 0.1337 0.0942
results of multiple F-statistic 35.8610 39.6860 9.3142 7.7794 13.7317 9.2515
regression analysis with
Significance (F) 0.0000 0.0000 0.0026 0.0001 0.0000 0.0002
the STEPWISE
procedure Note: Numbers in each cell represent the regression coefficient and its significance level (in italics)

extent to which cost improvement objectives (OF1) are emphasized is in large


part determined by the importance given to the low price priority (CF4) with
high statistical significance. This strong relationship indicates that firms in the
sample understand how the low price priority should be operationalized into
cost-oriented manufacturing objectives. Also, both operations improvement
objectives (OF2) and administration improvement objectives (OF3) are
significantly affected by the priorities given to product flexibility (CF3). Firms
with high priorities on rapid design changes, new product introduction, and/or
customization, tend to seek improvements in both the operational flows (like
shortening procurement lead time with reduced vendors) and the information
flows (like improving interfunctional and/or interorganizational
communications).
Table IX also includes some less obvious links between priorities and
objectives. For example, both the service improvement objectives (OF5) and
delivery improvement objectives (OF6) are correlated with two priority factors
quality (CF2) and product flexibility (CF3). These results can be interpreted in
two different ways. First, companies which emphasize quality (Table II shows
that the variables in quality received highest scores among the individual
priorities items, and variances among the responses were rather small) seek
advantage through improved services (OF5) and delivery objectives (OF6). The
sand-cone model proposed by Ferdows and De Meyer[24] supports this
explanation: as the requirements for a basic level of quality are satisfied, firms
tend to use that base as a jumping-off point to improve other competitive
dimensions like delivery dependability. A second reason for these results may
Competitive Manufacturing Action Operationalizing
priorities objectives plans
manufacturing
strategy
OF1
Cost
improvement
65
CF1 OF2 AF1
Process Operations Training
flexibility improvement investment
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OF3 AF2
CF2 Administration Integration
Quality improvement investment

CF3 OF4 AF3


Product Safety IS
flexibility improvement investment

OF5 AF4
CF4 Service Process
Price improvement investment

Figure 3.
OF6 Linkage between
Delivery
improvement competitive priorities,
manufacturing
objectives, and action
Note: Each arrow represents a statistically significant relationship between independent plans: results from the
and dependent variables as found from the STEPWISE procedure. A dotted line regression analyses
represents a negative relationship

be the lost realism which resulted from the previous factor analysis
delivery- and service-related competitive priorities, that might have more
obvious links with OF5 and OF6 were not included in the regression study
because of their poor loading into any distinct factors. Similarly, manufacturing
objectives that are closely related with improving quality were not included in
the six objectives factors.
By focusing on the arrows coming out of a priority construct in Figure 3, it
can observed that the product flexibility factor has the broadest influence on
establishing manufacturing objectives. That is, CF3 (product flexibility) has a
significant relationship with all objectives except the cost reduction objective. In
the meantime, priorities in CF1 (process flexibility) showed a significant
IJOPM relationship with only the safety improvement objective (OF4). This contrast
16,12 gives us an interesting insight on how the composition of manufacturing
flexibility is shifting from one that is more internally oriented (process
flexibility: CF1) to one with a more market-oriented aspiration (product
flexibility: CF3).
Overall, the degree of linkage between competitive priorities and
66 manufacturing objectives, as found from the regression results, is modest at
best. The results certainly include some close linkages between these two
constructs. Indeed, the high level of statistical significance (i.e. F-statistic for
each regression equation) supports the framework established earlier. However,
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the proportion of variance explained by the model (i.e. R2 s range between 5 per
cent and 18 per cent) is not particularly high, suggesting that the
operationalization of manufacturing strategy is neither a clear-cut process, nor
a step mastered by the responding managers.

Manufacturing objectives and action plans


Similarly, it was conjectured earlier that a firms choice of action plans should be
based on the set of manufacturing objectives. In this section, another set of
multiple regression analyses is conducted with each action plan scale as the
dependent variable, and all of the manufacturing objective scales as
independent variables. The results from the STEPWISE procedure are shown
in Table X.

Dependent variables
AF1 AF2 AF3 AF4
Independent Training Integration IS Process
variables investment investment investment investment

OFI 0.2137
Cost improvement 0.0352
OF2 0.5021 0.3110
Operations improvement 0.0000 0.0065
OF3 0.3931 0.1752 0.2218
Administration improvement 0.0000 0.0471 0.0300
OF4 0.1882 0.3023 0.2387
Safety improvement 0.0068 0.0003 0.0037
OF5 0.1469 0.2562
Service improvement 0.0373 0.0012
Table X. OF6
Relationship between Delivery improvement
manufacturing R2 0.1629 0.2652 0.1623 0.1599
objectives and action F-statistic 16.3493 20.0978 10.7831 10.2752
plans: results Significance (F) 0.0000 0.0000 0.0000 0.0000
of multiple regression
analysis with the Note: Numbers in each cell represent the regression coefficient and its significance level (in
STEPWISE procedure italics)
As in the prior section, the analysis shows several interesting links between the Operationalizing
two constructs of manufacturing strategy. Action plans grouped into AF1 manufacturing
(training investment) are most significantly correlated with manufacturing strategy
objectives geared towards administration improvements (OF3). This strong
link implies that our respondents plan to invest heavily in training
(particularly management and supervisor training) to support their objectives
of enhancing cross-functional communication. In the meantime, investment 67
plans for enhancing integrative mechanism (AF2) are correlated with objectives
for improving operational measures (OF2), indicating a close link between tools
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like DFM, CAD and value analysis, and the manufacturing objectives in
reducing new product development cycle and supply chain rationalization.
These two objective factors (OF2 and OF3) also affect firms investment plans in
information systems (AF3), while process improvement plans (AF4) are highly
correlated with the cost-oriented manufacturing objective (OF1). These
linkages are generally consistent with the existing theory of manufacturing
strategy, indicating a more clear operationalization between manufacturing
objectives and action plans.
Some linkages are, again, less obvious. For example, it is quite difficult to
explain why there should be a clear correlation between service improvement
objective (OF5) and integration investment (AF2) or process improvement
(AF4). If these respondents were specifically asked, In order to achieve the
objectives of improving services, which action plans would you emphasize in
the future?, the answers may not be the plans in AF2 (like DFM, CAD or ABC)
or AF4 (improving process for existing or new products). Additionally, the
results do not show any action plans that were significantly correlated with
delivery improvement objectives (OF6), and there was a missing link between
operations improvement objective (OF2) and process investment (AF4) which
has been the focus of many studies.
Despite some of these questionable linkages found in the regression results,
the objectives-actions link provides more satisfactory results than the priorities-
objectives link. In addition to the more plausible linkages found above, the
r-square scores shown in Table X (ranging between 16 per cent to 26 per cent)
tend to be somewhat larger than those from the prior regression results found in
Table IX (ranging from 5 per cent to 18 per cent). It appears that manufacturing
managers represented in the sample understand how to make action plan
decisions on the basis of manufacturing objectives, better than their capability
in translating competitive priorities into manufacturing objectives.

Competitive priorities and action plans alternative linkages?


The two regression analyses performed above are based on the premiss that the
operationalization of manufacturings competitive priorities into improvement
programmes consists of two stages one linking priorities with objectives and
the other linking objectives and action plans. Since the degree of abstraction
IJOPM differs considerably between the establishment of competitive priorities and the
16,12 investment choice among action plans, it was concluded that the objective
construct should play the bridging role. What if, however, an examination of the
linkage was attempted without the middle construct? In order to explore the
degree of direct linkage between competitive priorities and action plans,
another set of regression analyses was conducted. Table XI shows the results
68 from this step, where each action plan factor was used as a dependent variable
and competitive priorities were used as independent variables.
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Dependent variables
AF1 AF2 AF3 AF4
Independent Training Integration IS Process
variables investment investment investment investment

CF1
Process flexibility
CF2 0.4078 0.5956 0.4848 0.4791
Quality 0.0013 0.0000 0.0012 0.0010
CF3 0.2846
Product flexibility 0.0014
CF4 0.1499 0.1810
Table XI. Price 0.0155 0.0160
Relationship between R2 0.0588 0.2599 0.0598 0.0975
competitive priorities and F-statistic 10.6284 19.6660 10.8102 9.1282
action plans: results of Significance (F) 0.0013 0.0000 0.0012 0.0002
multiple regression
analysis with the Note: Numbers in each cell represent the regression coefficient and its significance level (in
STEPWISE procedure italics)

Overall, compared with the results shown in Table X (which include


manufacturing objectives as independent variables), r-square scores are smaller
in Table XI. More specifically, r-squares in Table XI range 0.06 to 0.26, while
they are between 0.16 and 0.27 in Table X. This comparison partially supports
our two-stage framework presented in Figure 2, in that improvement action
plans are more directly related to the manufacturing objectives than with the
competitive priorities. Nevertheless, the smaller r-squares observed in Table IX
(linking competitive priorities with manufacturing objectives) make it difficult
to claim that the two-stage model is more powerful in explaining the
operationalization of competitive priorities than this alternative single-stage
model.
Although this comparison does not give a definite answer to which linkage
(either two-stage or direct) is stronger, the patterns which emerge from the two
analyses provide some interesting insights into the research of manufacturing
strategy process. One of them is the strong presence of quality priority (CF2) in
Table XI. Earlier in Table IX, it was found that CF3 (product flexibility) was the
most influential factor affecting manufacturing objectives (appearing in five
regression equations). In contrast, Table XI and Figure 4 show that CF2 Operationalizing
(quality) was included in all four equations. While emphasis on quality priority manufacturing
has a strong influence on manufacturing managers choice of action plans, it strategy
does not appear to affect managers thinking in determining manufacturing
objectives. This discrepancy suggests that there exist gaps between the
structured model of operationalizing manufacturing strategy (as represented
by our model in Figure 2) and the manufacturing managers practice in 69
formulating priorities and action plans.
The contrast between Figure 3 (results from the two-stage model) and Figure
4 (results from the direct linkage model) also provides interesting insights to the
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notion of direct and indirect linkages. For example, Table XI indicates that the
product flexibility priority (CF3) is directly correlated with the integration
investment (AF2), and through Tables IX and X a map like Figure 5 can be
constructed which highlights the indirect relationship between CF3 and AF2
through three manufacturing objective factors operations improvement
(OF2), administration improvement (OF3) and service improvement (OF5).
Within the framework of this paper, it is postulated that the emphasis on
product flexibility requires manufacturing managers to improve on the three
objectives, and the need to improve these objectives causes them to choose
action programmes which are directed towards cross-functional integration (i.e.
DFM, CAD and value analysis). The significance of this indirect relationship

Competitive Action
priorities plans

CF1 AF1
Process Training
flexibility investment

AF2
CF2 Integration
Quality investment

CF3 AF3
Product IS
flexibility investment

AF4 Figure 4.
CF4 Process
Price investment Direct linkage between
competitive priorities
and action plans:
results from the
Note: Each arrow represents a statistically significant relationship between independent regression analyses
and dependent variables as found from the STEPWISE procedure
IJOPM Competitive Manufacturing Action
priorities objectives plans
16,12

OF2
Operations
improvement
70

CF3 OF3 AF2


Product Administration Integration
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flexibility improvement investment

Figure 5. OF5
Direct and indirect Service
linkages between improvement
competitive priorities
and action plans: a case
around product flexibility Indirect linkage
priorities
Direct linkage

could be tested against the direct linkage between CF3 and AF2 using more
rigorous statistical methodologies like path analysis. This further analysis can
help researchers to deepen their understanding of the process of
operationalizing manufacturing strategy.

Summary and conclusion


In this study, a process model of manufacturing strategy was developed in an
attempt to close the gap (in practice as well as in theory) in operationalizing the
fundamental concepts of competitive priorities into more concrete decisions on
action programmes. This process model includes three constructs which form
distinct stages of developing manufacturing strategy competitive priorities,
manufacturing objectives and action plans. Using large-scale survey data,
factors were examined in each construct and the linkages among them
explored.
The factor analysis provided some useful insights into the content of
manufacturing strategy. That is, some variables in priorities, objectives and
actions tend to mingle together to form some distinct factors. Furthermore,
some of these factors appear to emerge somewhat differently from the way the
literature has suggested. For example, the existence of two distinctive
flexibility-related factors was observed:
(1) one within the given product set (referred to here as process flexibility);
and
(2) the other related to new products or design (product flexibility).
Also it was found that time-related manufacturing objectives consist of two Operationalizing
distinct factors: manufacturing
(1) one internal to manufacturing; and strategy
(2) the other geared towards external customers.
These deviations from the literature imply that the content of manufacturing
strategy is gradually changing shape in practice, thus indicating the need for 71
continuing research in that dimension.
The two-stage framework of linkage was used to enhance understanding of
the operationalization process of manufacturing strategy. The statistical
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significance shown in each regression relationship indicates that there is a


considerable fit between competitive priorities, manufacturing objectives and
action plans. In other words, if a firm has competitive priorities focused on a
certain dimension, its manufacturing objectives and action plans tend to
display a particular direction. These results partially support the process
model, and provide the basis for future research in better understanding how
manufacturing strategy is developed and implemented.
Several questions need further investigation in order to make the theory of
manufacturing strategy process more complete. The remaining questions are
organized into two groups one within the scope of the model presented earlier
in this paper, and the other on the possible extension of the model. First, the
statistical results, although positive in some relational issues, indicate some
breakdowns of linkages the non-existence of intuitively obvious links. It is
speculated that various externalities cause managers to adopt certain objectives
and implement certain action programmes. These externalities may include top
management insistence, a mismatch with business strategy, or perhaps a lack
of sophistication in the managers understanding in one of the three constructs.
Better scales are certainly needed, and more rigorous studies with limited scope
(e.g. the direct and indirect relationships presented in Figure 4) may prove to be
useful for future theory-building efforts.
Second, this study did not consider performance. It was therefore
descriptive in nature, examining how firms are placing emphasis on various
variables and how these emphases are related to each other. It was a study on
how decisions are made, rather than how they should be made. Questions still
remain on the issues of performance. Do firms that make decisions in the
pattern as found in this study perform better than those that do not? Do firms
following a particular set of linkage patterns show distinctive performance in
some particular areas? Furthermore, this study was static in its perspective,
using the data composed of a snapshot of manufacturing strategy.
Researchers are beginning to address whether competitive priorities are
indeed a cumulative concept[24] and, in that case, the fit or linkage among the
three constructs has to be built around the pattern of accumulation rather than
the state of emphasis at a given time. In other words, the path an organization
IJOPM follows in building capabilities might be related to the historic pattern of
16,12 investment on improvement actions. These questions, among others, remain to
be answered by future study in order to complete our understanding of the
complex nature of manufacturing strategy.

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