Production strategy

As-is analysis

Transparency about the current competitive situation, product portfolio and customer requirements.

In the first step, we analyze both the company’s internal status quo and the corporate environment. Experience has shown that the corporate and marketing strategy play a central role here, as they form the basis for the direction of all corporate activities. They define the long-term goals and priorities and show why certain measures and decisions need to be taken. They therefore set the direction and help to bring production and the product portfolio in line with the overarching objectives.

The subsequent segmentation of the products helps to gain a clear overview of the product portfolio and to differentiate between customer requirements. While costs are often the decisive criterion for commodity products, other differentiation factors such as a convincing service or a wide range of configurations are usually decisive for premium and customer-specific products. We also look at the prevailing principles of make-to-stock (MTS), make-to-order (MTO) and engineer-to-order (ETO) in order to assess the impact on the production strategy.

The as-is analysis is also based on a comprehensive examination of your current competitive and market situation. This makes it possible to identify existing trends and developments that are crucial for strategic alignment.

The results of this phase are summarized in the form of a clearly structured overview that shows strengths, weaknesses, opportunities and risks. This summary forms the basis for deriving the strategic direction of production in the next step.

Our service packages:

• Recording the corporate and marketing strategy and translating it into requirements for production
• Grouping of the most important products into product families, identification of customer requirements for each product family (including consideration of the MTS, MTO and ETO principles)
• Carrying out a competitive and market analysis
• Carrying out a stakeholder analysis
• Strengths, weaknesses, opportunities, risks as a basis for defining objectives

Your benefit:

1. External view of the company’s strategic direction
2. Alignment between customer, marketing and production perspectives
3. All relevant stakeholders on board

Goal definition

Clarification of the strategic direction and requirements for production.

After analyzing the current situation, there is a wealth of information that now needs to be translated into concrete production goals. First of all, the overarching question of how you want to differentiate yourself on the market must be clarified. For example, through cost or quality leadership? By providing customized production or exceptional service? There are often two or three dominant differentiation factors that form the basis of your production strategy.

In addition to the differentiation factors, there are often targets for conquering new markets, occupying niche markets and expanding the product and service portfolio, among other things. The goals defined in this phase are defined SMART for a period of 3 to 5 years together with all relevant stakeholders. The result is the Rothbaum strategy compass, which clearly and bindingly describes the strategic direction of production for the coming years.

Our service packages:

• Definition of the overarching differentiation strategy (e.g. costs, quality)
• Translation of the corporate strategy into specific, measurable, achievable, realistic and time-bound (SMART) goals for production
• Definition of key figures for each target area, e.g. OEE, capacity utilization or reject rate
• Rothbaum Strategy Compass: Consolidation of the differentiation strategy, production targets and key figures

Your benefit:

1. Production and corporate strategy go hand in hand
2. Anchoring production as a central component of the company’s success
3. Target-oriented management of production
4. Measurability and traceability of successes

Core decisions | Levers

Setting the central course for the future production strategy.

Once the production targets have been clearly defined, the question arises as to how they can be implemented in concrete terms. We differentiate between seven central production levers to ensure that the previously defined goals are met.

1. Operations footprint (locations, size, specialization, layout, logistics concept)
2. Vertical integration(make-or-buy, supplier selection, supply chain management)
3. Process technology (vertical integration, production technology, production processes, equipment, degree of automation)
4. Production planning and control (production program, capacity planning, sales and operations planning, warehouse planning, order processing)
5. Organization & employees (organizational structure, bonus system, employee development)
6. Operational excellence (lean tools, just-in-time principles, improvement programs, performance systems & KPIs)
7. IT architecture (MES system, ERP integration, cybersecurity, performance monitoring)
   
   

An elaborate improvement program could potentially be derived from each production lever, but this is often associated with a high consumption of resources. Instead, our aim in strategy work is to make the key decisions for the next 3 to 5 years, develop a clear vision for the future and shape the target image of production holistically and sustainably for the coming years.

Our service packages:

• Evaluation of production levers through comparison with industry standards
• Development and justification of a 3-5 year target picture for each lever
• Identification of quick wins and immediate measures
• Cost-benefit analysis of medium and long-term planned measures

Your benefit:

1. Outdated and inefficient processes are uncovered
2. Concrete levers guarantee realistic target achievement
3. Benefit from best-practice experience from the Rothbaum partner network
4. 360-degree view ensures that all key aspects are covered

Implementation and monitoring

Ensuring gradual and sustainable implementation.

The immediate measures and medium and long-term strategies identified in the previous phase cannot usually be implemented as part of day-to-day business alone. It is therefore necessary to define improvement projects that specify the timeline, responsibilities, key milestones and potential risks. These projects are integrated into a roadmap that enables clear prioritization.

We use an operating model to implement the strategy holistically and maintain an overview at all times. We rely on methods such as Objectives and Key Results (OKR), Management by Objectives (MbO) or Hoshin Kanri. For example, the strength of the Hoshin Kanri method developed in Japan is the alignment of the operational activities of all employees with the objectives of production. The X-matrix (see image) serves as a visual tool to link strategic objectives, key projects and key performance indicators with each other and to monitor the degree of fulfillment on a recurring basis.

Our service packages:

• Definition of improvement projects and transfer to a roadmap
• Software-based implementation in operating model (e.g. Hoshin Kanri)
• Anchoring strategy implementation in regular communication
• Visualization of the production strategy for the store floor

Your benefit:

1. Consistent implementation of the production strategy in the entire operations area
2. Definition of responsibilities and resource planning
3. Generate acceptance and alignment by operationalizing the goals

What is a production strategy? 

A production strategy is a longer-term plan for the development of production capabilities that support the corporate strategy and secure competitive advantages. It includes decisions on production technologies, location, layout and degree of automation, for example.