Manufacturing Strategy and Operations

Assembling a competitive advantage in

operations
Despite years of experience with operations improvement
methods such as Lean and Six Sigma, many manufacturers
arent able to conduct rapid, integrated operations
transformations across a complex production system. Its
a capability they need to address global manufacturing
competition, increasing customer expectations and shifting
global economics. Companies that can rapidly develop
high-performing production systems can also develop
competitive advantage just as quickly.
More than some of the parts
Manufacturers face common challenges when it comes
to their production systems. They need to understand
what drives core operations. They must exceed customer
requirements at a reasonable cost. They have to pinpoint
where to add value inside and outside their company
on a global basis. Delivering rapid, transformational and
sustainable improvements across an entire production
system is a difcult task for companies at best. So is
working with suppliers to improve delivery performance,
reduce cost and bolster quality. And where merger and
acquisition (M&A) activity is involved, targeting and
delivering operational synergy is even more complex.
Our Manufacturing Strategy and Operations team provides
the methods and experience to achieve breakthrough
performance across complex value chains. Our systematic,
results-oriented improvement process can help a company
and its people achieve tangible, strategic results. We back
up the advice and improvement capabilities we bring to
clients with a delivery model based on results, not activity.
How we can help
Our Manufacturing Strategy and Operations offering
brings improvement from the tactical level to the strategic,
where operating strategies are clearly linked to customer
expectations and business performance. We have
helped companies achieve step-function performance
improvements in a number of industries and products.
From improving plant operations and overall equipment
effectiveness to managing global production networks and
integrating operating strategies with business strategies
Deloitte has helped clients achieve tangible results.
Our services include the following areas:
Manufacturing strategy development
Facility rationalization and manufacturing expansion
Production systems and lean operations improvement
Supplier collaboration and development
M&A-related operational synergy realization
Bottom-line benets
A strategic operations transformation supports a companys
cost, service and quality objectives by dramatically reducing
delivered unit cost, improving responsiveness, removing
process variance and reducing operational risk. We help our
clients generate benets such as:
Up to 50 to 90 percent reduction in lead times
Up to 15 to 30 percent reduction in internal costs
Up to 30 to 70 percent reduction in inventory
Up to 10 to 40 percent reduction in purchased costs
Five ways to get more value now
Link to the overall business plan. The decisions that
shape manufacturing shouldnt be distinct from the
ones that shape the future of the company. Make sure
Operations has a seat at the table when overall strategy
is created, then translate that enterprise-wide view into a
clear set of directives that operations can run with. Dene
the objectives well enough that any person in any plant
can understand and execute them.
Look beyond the four walls. If you focus only on
plant-level improvements, you may make tactical gains
while missing strategic improvement. Instead, look beyond
the four walls to examine each products end-to-end
production network, including external factors that affect
it before and after its in your hands. Many manufacturers
talk about managing the product value stream, but few
can translate that into functional steps that save money.
Move problems off the line, not along the line. Focus
hard on a specic problem area and you may move that
problem instead of solving it. Instead of pushing issues up
and down the line, take a systems engineering approach
so you can understand where they arise and what the
root causes are. If theres excess inventory at one point
in the chain, the answer may lie in line usage rates, space
allocation, sourcing or how parts are used.
Use pilots to gain momentum. Dont let best get
in the way of better, and dont let your plan for a
comprehensive production overhaul stop you from
realizing quick wins. Pick a pilot value stream and execute
a systematic improvement approach youll learn from
it, demonstrate value, and be better able to sell change
to the organization. This brings a better focus to the
improvements you execute tomorrow.
Insist on results. Start with a clear understanding of what
success is and how it will be measured. At the end of
the day, an operational transformation effort must have
a meaningful impact on overall business performance.
Tactical improvements dont add up to strategic change.
When you hear about dramatic improvements, insist upon
a clear link to business impact and value.
Manufacturing Strategy and Operations in action
When this aerospace and defense company landed a
major military contract, it needed to develop a global
production model to deliver a complex weapon system
faster and more efciently. Deloitte helped the company
dene the overall production system and its governance,
and a detailed implementation road map for managing the
transition to full-rate production. Then we helped the client
implement it. The company is on its way to increasing
throughput by a factor of 10 in less than four years while
generating hundreds of millions of dollars in benets.
Related insights
The Material Flow Challeng e
Merging Manufacturing and Sourcing Strategies for
Global Opportunity: The Global Factory
How to Prot from People Management Practices in
Manufacturing
Generation Y: Changing the Face of Manufacturin g
China: Still Manufacturings Shining Star ?
Case study
Battle Ready: Revolutionizing major weapon system
production for a major global aerospace and defense
company
Related offerings
Supply Chain Strategy
Supply Chain Planning
Sourcing and Procurement
Product Development
Logistics and Distribution
Business Analytics
Benchmarking
For additional information
www.deloitte.com/us/manufacturingstrategyops
Contacts
Doug Gish
Principal
Deloitte Consulting LLP
dgish@deloitte.com
Mike Reopel
Principal
Deloitte Consulting LLP
mreopel@deloitte.com
Allan Krul
Principal
Deloitte Consulting LLP
akrul@deloitte.com
Sudhir Menon
Senior Manager
Deloitte Consulting LLP
svmenon@deloitte.com
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