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


Who Manages Manufacturing?

Finally, the head of manufacturing can balance the obligation to interact with other functions by helping executives from those functions understand manufacturing. Although the idea may be daunting to all involved, it is a good practice to let marketing and sales executives run a factory for a short time and truly learn the complexity of plant management.

Today, there is more reason for hope in the manufacturing sector than many people think. Productivity is on the rise in heavy industry. During the last 30 years, manufacturing has seen a consistent reduction in costs, an increase in throughput, an improvement in service quality, a rise in scalability to meet future growth, and a greater degree of flexibility to introduce new products and services quickly. This has happened because manufacturing leaders have been driven to think strategically within their function, if only to compete effectively. Now, many companies are ready to expand that contribution more explicitly, making manufacturing part of the larger team. A great deal can be accomplished when the engine room chief steps out from belowdecks and joins the other leaders at the helm.

The Michelin Way in Manufacturing
by Thierry Chiche

Humility is critical to achieving industrial excellence. Although it may be difficult for a plant director or manufacturing senior vice president to hear, it’s important to accept that manufacturing operations are not the center of the organization. Industrial excellence is achieved primarily when there is alignment between a company’s manufacturing activities and its global strategy.

As manufacturing executives, we need to ask ourselves these kinds of strategic questions: What are the activities that our manufacturing operation should perform at a level of excellence to help the global strategy of the company? How can we perform these activities to build a sustainable competitive advantage for the company? What processes and machines are needed to best support this set of activities?

At Michelin, we think, contrary to popular belief, that there is not a single model of industrial excellence. After all, manufacturing activities and processes should be based on a company’s unique needs and circumstances; they cannot be generically applied across organizations. As a plant director for Michelin’s Roanne factory, I conducted an annual internal and external diagnosis to help identify the processes we needed to improve so they could dovetail with the company’s overall strategy. Since then, our company has set up an ambitious program called “The Michelin Manufacturing Way” to standardize processes across Michelin’s network of plants, to deploy world-class practices in those processes, and to align the organization toward delivering concrete results in areas like innovation, product development, productivity, costs, inventory, and time-to-market.

In our experience, the act of designing solutions is extremely simple compared to the complexity of implementing them. The Michelin Manufacturing Way, like industrial excellence in general, relies on a key component other than processes and programs: recruiting and developing the best people and making sure they maximize their potential, both as individuals and in building the competencies of the team. General George S. Patton used to describe great management with two words: direction and speed. Although a manufacturing organization’s direction should mainly be the result of a good strategic analysis, its speed comes mostly from the people within the plant and from their willingness to perform at a high level and to improve the factory’s activities and processes each day.

The development of empowered organizations enables managers to share responsibility with the workers through delegation and accountability for local performance. It also fosters powerful teams in which the best employees elevate the performance of the weakest. As a plant director, I spent a lot of time trying to give employees and teams the motivation to work toward continuous improvement, which is essential for industrial excellence. There are many tools on the market (Six Sigma, kaizen, TQM, and the like) that can be used to develop and train employees, but the use of these tools is not an end in itself. The tools should be a means for building the willingness to improve.

For example, throughout our Roanne factory, we implemented a full set of steering processes consisting of scorecards and performance boards on the shop floor; these were used to assess the daily and monthly performance of the plant. We also implemented monthly performance appraisals to build individual employee accountability.

This was a huge amount of work, and we were very proud of achieving it in a 900-employee plant within six months. In fact, most of this project was devoted to training all the workers and coaching the managers, aspects that are often downplayed in an implementation like this. At some point we even decided to close the factory for two days to provide a meaningful block of time for training. This training effort in our 30-year-old plant helped employees build a shared willingness to act as a team for the greater good of our company.

We all know that industrial life is not placid. New products, process renewals, regulatory changes, and the ever-increasing speed of change outside the factory bring new challenges to the plant floor every day. Besides well-designed strategic analysis, the only way to properly confront and manage all these challenges is to build, as widely as possible within the organization, a willingness and competency to act toward continuous improvement. This, more than all the tools available on the market, is a requirement for industrial excellence.

Thierry Chiche ([email protected]) is vice president of manufacturing, passenger-car and light-truck tires, Europe, for Michelin Group, and oversees 17 plants throughout Europe. Previously, he was plant director of Michelin’s Roanne factory, a 900-employee plant located in France.

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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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