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 / Autumn 2006 / Issue 44(originally published by Booz & Company)


Who Manages Manufacturing?

Long-term strategist, juggler of diverse tasks, or productivity champion — the role of operations chief can deeply affect a company’s direction.

Illustration by Leigh Wells
Perhaps the best way to understand manufacturing in many companies is to compare it to the engine room of a cruise ship. So says Michel Lurquin, the manufacturing chief at the biopharmaceutical firm UCB Group. “If everything goes well, few staff or passengers will be interested in it,” says Mr. Lurquin. “But if the engine fails, it can totally ruin the cruise.”

It’s an apt analogy because it highlights the habit that many companies have of taking their manufacturing leadership for granted. But beyond that, the analogy suggests that the head of manufacturing could make a much greater strategic contribution, especially in determining a company’s short- and long-term potential. On a cruise ship, for example, a thorough understanding of the engine room’s capabilities might prompt the captain to choose a different route to reach the ultimate destination. The captain and the engine room chief, working together, might even conclude that they could take the ship farther than originally planned.

The same is true for corporate leadership where manufacturing is concerned. And that’s where the opportunity lies. In rethinking the responsibilities of the manufacturing head, many companies have an opportunity to revitalize their operations and to bring new capabilities to their strategic focus.

To be sure, that would represent a great leap from the current state of affairs. The role of manufacturing chief has evolved, over the past two decades, in an almost haphazard fashion. Simply put, many chief executives don’t know what is going on in the engine room and aren’t even aware that they should care. Still, a handful of the most successful companies today have begun to realize that the path to best performance depends on reclaiming manufacturing as a core competence with strategic value. And, increasingly, the catalyst for this shift is the manufacturing leader.

How many manufacturing chiefs have stepped up to the challenge to play such a role? Not many. Some are not invited; others have not accepted the invitation. But although this trend remains very much a work in progress, one thing is already clear: Recasting the role of the manufacturing leader — providing a deliberate answer to the question of who manages manufacturing — is a high-leverage prerequisite to winning back the manufacturing advantage that many companies need.

To bring some clarity to the role played by manufacturing executives, in early 2006 Booz Allen Hamilton conducted in-depth surveys and interviews with heads of manufacturing in more than 50 companies based in Europe, the United States, and South America. We asked respondents about their experiences as leaders, their understanding of costs, their use of time, and their prioritization of tasks, as well as their perception of the overall manufacturing organization and its role within the corporation.

Not surprisingly, the survey indicated that the manufacturing chief is not easily portrayed: There is no established model for the background, skill set, or priorities of the head of manufacturing. For example, the range of functions varies dramatically from one company to the next, extending from supply chain planning, which is a natural overlap, to parts of sales and marketing, which represents a less logical leap. In short, the production chief position is populated by professionals who bring highly diverse skills to the job and apply vastly different leadership styles, consequently getting very different results.

But no matter how their roles differ, these heads of manufacturing tend to have a common set of challenges. They must maintain a delicate balance between competing priorities, focusing on the direct needs of plant management while addressing the broader issues of optimizing assets, coordinating with other functions, and determining manufacturing’s role within the corporation. Seldom do they have sufficient time to deal with the fundamental causes of their day-to-day problems, which exacerbates those short-term concerns, leaving even less time for long-term planning. And the information (such as cost analysis) on which they base decisions is typically insufficient.

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  1. Eliyahu M. Goldratt, Theory of Constraints: What Is This Thing Called Theory of Constraints and How Should It Be Implemented? (North River Press, 1990): The master of corporate fables shows how to see the patterns of operations flow.
  2. Kaj Grichnik, Conrad Winkler, and Peter von Hochberg, “Manufacturing Myopia,” s+b, Spring 2006: Argument that the root cause of industrial decline is not cheap overseas labor or technological change, but the piecemeal implementation of manufacturing strategy. Click here.
  3. Wallace J. Hopp and Mark L. Spearman, Factory Physics: Foundations of Manufacturing Management (Irwin/McGraw-Hill, 1995): The most comprehensive guide for a strategy-oriented manufacturing manager.
  4. Jeffrey Rothfeder, editor, Manufacturing Realities: Breaking the Boundaries of Conventional Practice (strategy+business Books, 2006): How to build supply chain competence and confidence, from the top down and the inside out. Click here.
  5. James P. Womack and Daniel T. Jones, Lean Solutions: How Companies and Customers Can Create Value and Wealth Together (Free Press, 2005): Exploration of the link between customer awareness and manufacturing prowess.
  6. For more business thought leadership, sign up for s+b’s RSS feeds. Click here.
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