Distribution of manufacturing strategy decision-making in multi-plant networks

Abstract

This paper is concerned with the manufacturing strategy decision-making structure in multi-plant networks, i.e. how strategic manufacturing decision-making authority is distributed between the network level (i.e. headquarters) and the plant level. We use survey data from 107 manufacturing plants. This research identifies three different structures: centralised at the network headquarter, decentralised to the plant and integrated between central headquarters and the plant. All decision areas follow the same pattern, i.e. full centralisation, full decentralisation or full integration. We do not find any support for that some decisions are centralised while others are decentralised. Product volume and process type are significantly associated with the choice of decision-making structure. In particular, high product volumes are associated with a centralised approach, and a low degree of process flow orientation (such as project manufacturing, job shop and flow shop) is associated with a decentralised approach. The integrated approach is associated with a combination of lower product volumes and higher degrees of flow orientation. Choosing the right decision-making structure for the product and process mix seems to lead to high levels of operational performance.

Keywords:

• authority
• autonomy
• decision categories
• exploratory study
• manufacturing networks
• operations strategy
• responsibility
• survey research