manufacturing capabilities

Many businesses are motivated by the desire to outperform their competitors. Recent research indicates that companies must be able to identify, grow, and improve manufacturing capabilities that have the greatest impact on performance. The operations capability framework could help practitioners and researchers identify and develop critical operations capabilities for industry-winning strategies such as manufacturing strategy, specifically manufacturing capabilities and plant operational performance. Manufacturing strategy research aims to provide a structured decision-making approach in order to improve manufacturing economics and increase business competitiveness

The research looks into how companies use various manufacturing practices to improve specific sets of capabilities, with the primary goal of meeting market demands. As a result, the purpose of this study is to gain a better understanding of the role of operations strategy and its direct impact on operating performance. The study adds to the body of knowledge in the field of manufacturing strategy research and for practitioners in manufacturing operations. The research develops and tests metrics to assess the effects of various manufacturing practices on operational performance

1. Introduction

In relation to the breadth and depth of the literature, the following section examines various perspectives on operations strategy as classified by Slack et al (2016).

Manufacturing strategy, in this context, provides a structured approach to decision making in order to facilitate economic production. Operations management is the planning, scheduling, and control of activities that transform inputs into finished goods and services that evidently links with production economics’ administrative role. Manufacturing strategy is subordinated to operations management, i.e. strategy comes before management. These pressures have raised firms’ awareness of competitive priorities and operational capabilities (Pisano and Shih, 2012). The business strategy generates competitive advantage, which should then be applied to the operations strategy (Hayes and Wheelwright, 1984).

The definition of an operations strategy must include two major components (Pisano and Shih, 2012)). The first element refers to the goals of the operations function and can be defined as the priorities that a company wants to have in order to compete (Hayes and Wheelwright, 1984). Priorities are desired capabilities, or areas that should be emphasized, that a firm wants to have in the future (Dawar, 2013). Priorities (or objectives) direct management actions toward the development of the most appropriate operational capabilities (Hasket et al. 2008). The second element is a pattern of decisions made by a company that determines the actual capabilities of the operations system (Hayes & Wheelwright, 1984). In other words, operations capabilities are realized capabilities, i.e. those attained after management actions are implemented. Lastly, Haskett et al. (2008) and Dawar (2013) work confirmed that the success of firms was built on core manufacturing capabilities.

The goal of businesses is to develop difficult-to-copy capabilities that help a company stand out among its competitors. According to researchers, the primary basis for firm competition is their operational capabilities (Hayes and Pisano, 1994). Management actions are based on knowledge and the company’s limited resources. Management makes decisions under the constraints of limited resources, and not all capabilities can be maximized (Collis and Montgomery, 1995). As a result, operational capabilities highlight the importance of strategic management in adapting and integrating resources to meet customer expectations (Slack et al., 2015).

Several manufacturing firms have relocated their manufacturing operations to higher performance areas in order to gain a competitive advantage (Lafley et al., 2017). This is a well-established business practice that has been going on since the 1960s (Jensen and Pedersen, 2012). There are numerous studies on operations strategy in the existing literature in the operations management field that identify critical priorities and operations capabilities (Hasket et al. 2008). Although this issue is widely acknowledged, there is a gap in the literature regarding the identification and development of operations capabilities in most organizations. Sadun et al. (2017) has shown the complimentary link between managerial competence and business performance.

5. Operational Capabilities

Garvin (1987) used cost (price), quality, flexibility, delivery, and service as operational capability dimensions. Despite research indicating that innovation and sustainability are important aspects of operational capabilities (Vickery, et al., 1993; Pisano, 2015). The trade-off model and the cumulative (or sand-cone) model are two common models for the relationship between different capabilities. Some operations capabilities are more strategically important than others in the trade-off model, and they are distinct and developed one at a time (Pisano, 2015). As a result, managers must be selective in where they focus their attention. The trade-off model may become obsolete in today’s business environment, which is characterized by advanced manufacturing technologies and intense global competition, increasing the pressure on firms to excel in multiple capabilities (Pisano, 2015).

The current debate centers on whether these capabilities represent a set of trade-off options that businesses must consider, or whether they can be pursued cumulatively in combination, in a specific sequence, or as a progression. This study makes the crucial assumption that abilities evolve over time. It states that improving one capability can amplify another; it goes without saying that operational capabilities are inextricably linked. When developing operations improvement strategies, the relationship between operational capabilities must be considered. Capabilities and competences are terms that are sometimes used interchangeably. Capabilities enable a company to profitably exploit its resources, and they are created after defining specific priorities or objectives and carrying out specific management actions. As a result, the generation of capabilities has an impact on a firm’s performance. Capabilities are frequently conceptualized in the manufacturing strategy literature as a business unit’s intended or realized competitive performance or operational strengths, and are thus assessed using operational performance measures. High-level routines or bundles of routines are used to identify capabilities (winter, 2003). Routines and capabilities built on routines are more firm-specific and less transferable than resources because they are embedded in the dynamic interaction of multiple knowledge sources.