A SERVICE-ORIENTED MANUFACTURING STRATEGY

Introduces the concept of a manufacturing strategy based on a service orientation. Traditional manufacturing strategies have often been driven by cost minimization decisions and have encouraged the over-reliance by managers on inventories to satisfy demand. In today's business environment, a reliance on inventory is often not feasible. Suggests a reliance on capacity available to meet demand, as used by the service industry. Such a strategy is in direct conflict with most cost-accounting systems because of the absorption of overhead costs based on direct labour. Proposes two alternatives for changing the accounting system, to enhance the move towards the service-based strategy. Lastly, presents a case study of a US plant to illustrate the results that a company adopting this approach should expect.