132 Part 2: Strategic Actions: Strategy Formulation
FMS car system.PNG
This photo illustrates the flexibility of computer aided manufacturing
lines as two different vehicle bodies are pieced together on the same line.shows the clear benefits of flexible pro-
duction. As Yuan Fleng Xin, manufactur-
ing engineering manager for the Changan
Ford partnership, notes: “We can intro-
duce new models within hours, simply
by configuring the line for production
of the next model, while still being able
to produce the existing models during
the introduction of new models ... This
allows the phasing-in of new models, and
the phasing-out of old models, directly
driven by market demand and not by pro-
duction capacity, lead time nor a need to
wait for infrastructure build-up.”^105 Often
the flexibility is derived from modulariza-
tion of the manufacturing process (and
sometimes other value-chain activities as
well).^106
The goal of a FMS is to eliminate the “low cost versus product variety” trade-
off that is inherent in traditional manufacturing technologies. Firms use a FMS to
change quickly and easily from making one product to making another. Used prop-
erly, a FMS allows the firm to respond more effectively to changes in its customers’
needs, while retaining low-cost advantages and consistent product quality. Because a
FMS also enables the firm to reduce the lot size needed to manufacture a product effi-
ciently, the firm’s capacity to serve the unique needs of a narrow competitive scope is
higher. In industries of all types, effective combinations of the firm’s tangible assets
(e.g., machines) and intangible assets (e.g., employee skills) facilitate implementation of com-
plex competitive strategies, especially the integrated cost leadership/differentiation strategy.Information Networks
By linking companies with their suppliers, distributors, and customers information net-
works provide another source of flexibility. These networks, when used effectively, help
the firm satisfy customer expectations in terms of product quality and delivery speed.^107
Earlier, we discussed the importance of managing the firm’s relationships with its cus-
tomers in order to understand their needs. Customer relationship management (CRM) is
one form of an information-based network process that firms use for this purpose.^108 An
effective CRM system provides a 360-degree view of the company’s relationship with cus-
tomers, encompassing all contact points, business processes, and communication media
and sales channels. Salesforce.com is the largest provider of online customer relationship
management, and it is moving to the cloud, allowing large database storage and access
from multiple devices including smartphones.^109 The firm can use this information to
determine the trade-offs its customers are willing to make between differentiated features
and low cost—an assessment that is vital for companies using the integrated cost leader-
ship/differentiation strategy. Managing supply chains through sophisticated information
networks is also prominent in today’s information-based society.^110 Such systems help
firms to monitor their markets and stakeholders and allow them to better predict future
scenarios. This capability helps firms to adjust their strategies to be better prepared for
the future. Thus, to make comprehensive strategic decisions with effective knowledge of
the organization’s context, good information flow is essential. Better quality managerial
decisions require accurate information on the firm’s environment.