Production Strategy
TermiKnowledge - Supply Chain, Procurement and Inventory Terminologies
Production strategy is a blueprint of sorts, detailing exactly how your production is going to proceed, what will be produced, who is producing, when it is going to be produced, and ultimately, how all this is going to affect the bottom line of your company. Production strategy is essentially what drives your business to the point where it can go on growing, instead of staying stagnant or shrinking. It is the skeleton of any supply chain management system, because it dictates how your resources are being used, how much are they going to get produced, how they are going to get distributed, and ultimately how they are going to get returned to your customers. If you do not have a plan for how you plan to distribute your products, or how you plan to sell them, then the chances are good that you will soon find yourself in financial ruin. Production strategy also outlines what your products should accomplish, and how this is supported by the company, and is most often brought to fruition through the product pathway.
One example would be if your company was involved with manufacturing, as well as distribution. If you plan to simply manufacturer the products that you distribute, rather than develop new products from the ground up, then your production strategy must address the development strategy. If you are developing products, then you must have a production process that is able to deliver these products to your customer in a timely manner, and in an efficient manner as well. This is where a long-term planning process comes into play. If you are developing products, or making any changes to the production process at any time, then your development strategy must also adjust accordingly. This is why there must always be a balance between your short-term and long-term plans, and how you will continue to support your production process in the event something does go wrong.
Inventory-controlled strategy also goes hand-in-hand with the development strategy piece. If you want to configure-to-order just your inventory, or just your customer's orders, then you must make sure that your logistics department is ready for this change. This includes having a way to properly configure-to-order your inventory and your customer's orders, while being able to maintain an accurate inventory count. If you find that there are difficulties in accomplishing either of these tasks, then you are not ready to configure-to-order.
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