The level of vertical integration in the production process, the distribution of physical resources, and

relationships with suppliers are all factors that are influenced by operations strategy. This strategy also
decides how and where a product or service will be made. In addition to this, it should discuss the
optimal level of technology that the company ought to implement within its operational procedures.
Check out the Global Issue feature to learn how variations in national circumstances can result in
variations in the design of products and the facilities used to manufacture them from one nation to the
next.

Advanced Manufacturing Technology (AMT) is currently undergoing a revolution in operations all over
the world and is expected to continue to have a significant impact as businesses strive to integrate a
variety of different business activities by utilising the principles of computer assisted design and
manufacturing (CAD/CAM).

The implementation of just-in-time production techniques, computer-aided design and computer-aided

manufacturing (CAD/CAM) systems, computer numerically controlled systems, automatically guided
vehicles, robotics, manufacturing resource planning (MRP II), and optimised production technology all
contribute to increased levels of flexibility, rapid response time, and overall productivity. These
investments not only result in an increase in the company's fixed costs, but they also have the potential
to create substantial difficulties for the business if it is unable to achieve economies of scale or scope.
The Baldor Electric Company, which is the most successful manufacturer of industrial electric motors in
the United States, recently constructed a new facility in order to eliminate occupations that were
deemed unattractive and had a high rate of employee turnover. The plant was able to produce motors
at a cost that was competitive with those made in Mexico and China, while having only one tenth of the
staff of its other factories overseas. 29

The life cycle of a product will frequently have an impact on the production strategy of a company.
There will be an increase in the production volume of a product as sales of that product increase. This
increase in production volume can range from lot sizes as low as one in a work shop (manufacturing of
one-of-a-kind items requiring skilled labour) all the way up to connected line batch flow (components
are standardized; each machine functions such as a job shop but is positioned in the same order as the
parts are processed) to lot sizes as high as 100,000 or more per year for flexible manufacturing systems
(in which components are grouped into manufacturing families in order to generate a wide variety of
mass-produced goods) and dedicated transfer lines (highly automated assembly lines making one mass-
produced product using little human labor). According to this theory, over the course of time and in
response to rising levels of demand, the product evolves into a standard and eventually becomes a
commodity. The result is that efficiency triumphs over flexibility.