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Footprint strategy
Companies who get their Manufacturing Footprint Strategy right could be leaders for a generation, those
that get it wrong may well fade from view. Andrew Allcock talked to the authors of a major new study*

M anufacturing Footprint Strategy –

making the right things in the right
places – is not simply a glamourised
Manufacturing, Cambridge (see box,
opposite). It is a new approach to the
design and configuration of
The 43-page publication follows more
than 10 years’ work by the institute in the
development of tools to underpin the
version of outsourcing, offshoring, manufacturing plants across the world; application of Manufacturing Footprint
restructuring or of locating production in the goal being a co-ordinated network of Strategy, while over the last four years
emerging markets, emphasises the operations working collectively, rather these tools have been employed both
study’s author, Institute for than individually, at their best. fully and partly by a number of major
manufacturers. These companies
included makers of hydraulic products,
Roadmapping – the pushes and the pulls large vehicles and automotive
components. One benefit of this new
Now Year 1 Year 2 Year 3 Year 4 Year 5 strategy is quoted as being a landed cost
reduction of as much as 45 per cent.
Key customers Legislation on
demand tailored sustainable Many leading companies have
Market and products materials manufacturing footprints – plants and
environment activities located globally – which have
Competition Competitors evolved over time, or that are the result of
in traditional offer ‘me too’
markets
merger and acquisition. The footprint in
such cases is more suited to yesterday’s
Launch new market, not tomorrow’s, it is suggested.
Products/ Pilot launch Roll out to all units
services generation Manufacturing Footprint Strategy, the
offering next step after lean, has a pay-off
Develop Pilot ancillary Roll
added-value services out
equivalent to or even greater than that
customer offering achieved through the application of lean.
Besides, many large companies, nearing
Restructure distribution
channels
the end of their lean journey, face
Marketing and
commercial Adjust sales diminishing returns.
strategy
Develop supply chain That said, the two approaches are
management processes
complementary; both are ‘continuous’
activities and both share standard
Phase 1 closures
Phase 3 processes and require new corporate
Redirect Capex to new transfers roles to drive continuous operational
Global technologies Phase 2
transfers
manufacturing
Centralise commodities in A moulded products company has a set of
low-cost countries
© Institute for Manufacturing, Cambridge

Move to distributed opportunities providing the context for

plant network
Move high-value-add product groups to reconfiguring its manufacturing network. On
flexible local facilities
the market side, customers are asking for
Semi- Flexible Mass tailored products; traditional automated
flexible process customisation
Process/ production proceses are hindering progress
materials Testing & development through Flexible automation towards this. At the same time both customers
technology technology pilot development and consumers are demanding products with
Conversion from conventional to sustainable materials improved environmental performance; indeed,
legislation on this is expected in four years

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COVER STORY

cost advantage – a major threat.

Institute for Manufacturing, Cambridge University Categorising parts in one of four
groups guides the make-or-buy decision,
IfM, Cambridge is one of the UK’s 16 Innovative Manufacturing Research Centres and but this is independent of any production
this latest report results from its publicly funded research activities. location consideration. Where parts are
Established in 1998 with around 34 staff, IfM now boasts some 200 – most on the strategic, embodying the core
research side. Indeed, only eight people are on the ‘professional practitioner’ side, competence of the organisation, these
the bit that undertakes commercial work, helping companies implement the fruits of should be made in-house – in the
its research. opposite case, parts should be bought in.
The Institute organises some 70 events each year, helping to disseminate Where there is no expertise/capability in-
manufacturing research knowledge. house or externally, then supplier
development is the approach taken,
which ultimately moves the item into the
improvement. And, just as with lean, concern itself with the first three. ‘buy’ area. For those items that are
external encouragement from both For the ‘why’, it is necessary to apply a strategic but where the supply base has
customers and investors is a factor, says road-mapping technique that sets out the greater expertise/capability in
the publication. forces that pull and push the organisation manufacture, an alliance to achieve long-
– so business/market opportunities term security of supply and some
NOT A QUICK FIX (taking in competitor threats) for the exclusivity is the best approach. But a
If the conditions necessary for the former, and technology development for ‘make some’ strategy can also be
adoption of the strategy are only now the latter. Linking the two helps identify legitimate if it makes supplier
becoming more readily accessible, the the key imperatives for manufacturing management easier, offers a positive
necessary metrics by which the (see diagram, opposite). Incidentally, this marketing consequence, or where design
development and performance of a road-mapping exercise has application authority is retained. These situations can
network of operations can be measured within non-global manufacturers, too. change over time, of course.
and monitored collectively are themselves Because the resultant road map will Support in making these decisions is
“much less mature than those applied at include plant closures and new start-ups, guided by a decision tree, which brings
plant level”. So this new enterprise the stakes are high, so there is need to
adaptation process “needs to be in place create a compelling “burning platform”
for 10 years or more as it will take at least on which the justification for change can
that long for globalisation of markets to be built. For example, one company
stabilise, for infrastructures to mature justified the need for change by
and for the fundamental footprint extended competitor
changes to be set in place”. analysis which revealed
So it’s a long haul not a quick fix, but that newly globalised
the authors offer this galvanising competitors
statement: “The few that get this right would soon
could be leaders for a generation. Those develop a
that get it wrong will, most likely, fade 20 per cent
from view or be swallowed up in ongoing
industry consolidation.”
The institute says that there are four
key issues that Manufacturing Footprint
Strategy must address: Why is it
DEBUTART: JURGEN ZEIWE

necessary to evolve? What are the

strategic components and processes that
form the basis of a distinctive market
position? Where should the plants be
located? How best can the transition be
achieved and monitored? Machinery will

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COVER STORY

established. Plant location can then be

Additional risk factors in ‘make or buy’ considered and subsequently assessed
against a set of strategic performance
Answering these questions helps define the choice between make, strategic criteria with modifications to the initial
alliance or buy and to identify the key risks that need to be mitigated decision then made. The next step is
Start aggregation to deliver the enterprise-
Could the supplier Buy wide solution, and sees an analysis of the
Make/
strategic become an effective synergies between products/processes/
alliance Yes competitor? plants in terms of shared overheads and
No Is the work-package assets, for example. This will typically
Are there technologies process hard to
Make/
transfer?
Make one reduce the number of plants in total. This
strategic in this work-package Yes place
alliance Yes we must protect? last item is then tested against “likely
No
No future worlds” and adjusted accordingly.
Will investment in our
Does performing this own ability to perform Continue
Make work-package enhance
Yes our ability to innovate? this work-package make Yes to make A RICHER SEAM TO MINE
us more competitive? The report details all of these steps, but a
No
No key point to understand, it stresses, is that
Are we giving the many restructuring projects have in the
Make some supplier too much Is our service quality
Yes vulnerable to supplier Make some past focused on outsourcing and

© Institute for Manufacturing, Cambridge

negotiating strength?
No
Make/
Would the supplier make
strategic this capability available
Yes
alliance to our competitors?
No
Make Is the true cost of
Yes supplier development
prohibitive?
into the equation various risks (see box
above). This is particularly helpful in
guiding the ‘strategic alliance’ choice
where risks can be high. Offsetting
strategies in this case can be equity
participation, exclusivity agreements and
‘make some’ strategies.
The make-or-buy decision is key as it
confirms the components and process
platforms that need to be the focus for an
organisation’s manufacturing plants and
so also directs investment decisions and
process improvement activities
Again, while this is part of the
Footprint Strategy, all companies can use
this make-or-buy approach and, in the
case of sub-contractors, can use it to steer
their business to be in a particular area
that is attractive to its customers. One of
the authors, Paul Christodoulou, says:
“The growth in contract manufacturing
services is a good example of where new
and aggressive suppliers have developed
proactive strategies to meet the
outsourcing trends of many market
cycle-time variations? Yes
offshoring driven by cost-reduction logic.
No Cost reduction is only “part of a much
Is the transfer richer seam of strategic possibility”. The
Make some
irreversible? Yes
key question is, it says: “What are we
No
expecting our global manufacturing
Is performing this
work-package Make some network to deliver?” Apart from lower
No Yes
necessary in order to cost this includes the ability to rapidly
manage suppliers?
serve customers with high quality
products and services; offer customised
leaders. Indeed, some have developed product services; deliver product and
significant competitive advantage and product production process development
bargaining power as a consequence – that can be rapidly deployed globally; and
even to the extent where they may prove the support of environmentally
a threat to the incumbent leaders.” sustainable production.
Deciding where parts should be made Again, this network design element
– occupying some 14 pages of the report can be applied to smaller companies in
– is a “delicate balancing act”. Relying outsourcing and production transfer
solely on computer optimisation tasks situations. “We have advised SMEs in
risks “drowning in data”, while making an offshoring projects, making use of the
analysis at too high a level may offer network design tools, and have advised
over-simplified, generalised guidelines on the process of transferring production
that appear meaningless. The answer is a itself,” Mr Christodoulou adds.
multi-stage approach, the initial stage In conclusion, the authors says this:
being to create a framework, laying out “Reconfiguring manufacturing [for global
the master process, creating basic manufacturers] is, perhaps, the biggest
definitions and defining simplifying spanner left in the toolbox for reducing
assumptions within which to work. our cost base, but it is a multi-function
In larger companies, breaking the spanner which can bring many other
decision down between global product strategic benefits.”■■
groups is usually sensible because *Making the right things in the right places
product families tend to share – a structured approach to developing and
characteristics and market requirements. exploiting ‘manufacturing footprint’
Following this, plant roles are designed strategy. Copies cost £25 + p&p
and then plant co-ordination principles (www.ifm.eng.cam.ac.uk).

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