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Tools for strategic planning and decisionmaking for future concepts of operation (UNIQUE) Ismo Ruohomäki

Why produce? What should be produced? Where should it be produced? When should it be produced? How should it be produced? For whom should it be produced? These are the strategic questions that any company needs to ask itself before it begins to manufacture something to sell. Answering these questions in a global economy is necessary again and again throughout the company’s lifetime when it wants to grow, maximize efficiency and, sometimes, to survive. Global firms have more choices for locating their activities than ever before. Answering these questions is tricky, and spontaneous solutions seldom hit the target. How can SMEs, in particular, be helped with their strategic production planning and decision-making? How can SME managers be helped to plan, profoundly, their production-related development issues and giant advances, especially when they are not familiar with these kinds of issues in their daily lives.

redesign the production concept, focus of the value chain, resources and technology assets has to flow out of the company’s strategic objectives. Based on VTT’s own experience, too often, a company’s production activities live their own life with no coherence of competitive strategy. Secondly, many companies try to plan for only one ‘likely future’ with no alternative scenarios. Thirdly, companies tend to laggard in their decision-making. Finally, when the decision-makers have their back against the wall, they have no other course than to move forward, perhaps replacing outof-date machinery, making urgent value chain decisions, cutting down overall costs that are too high or making hasty movements to grow globally. The reason for this may be imminent weaknesses in strategic planning. If the organization does not know where its production practices stand, it is unclear in determining where it wants to go and how it will get there.

Objectives Introduction The three main factors driving this study are globalization; everlasting need for competitiveness, especially in high-cost countries; the networked way of production; and new technological opportunities. The need for strategic agility is greater now than in the past. Being strategically agile demands constant reassessment of the production concepts of operation supporting the company’s business. The concept of operations includes the company’s expedient own or partnership-based manufacturing, sourcing and supply. The need to

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The research project ‘UNIQUE – Tools for Strategic Planning and Decision Making for Future Concepts of Operation’ aims to deepen knowledge about strategic production planning and decision-making. The project focuses on the OEMs – mainly SMEs – in the mechanical engineering industry, which is the largest sector in the technology industry, employing more than 125,000 people and contributing more than 20% of Finnish exports. The project develops and incorporates a profound understanding of strategic decision-making and, with special emphasis on the factors,

VTT Research Highlights 3  

Production matters. VTT in global trends. Kai Häkkinen (ed.)

VTT Research Highlights 3  

Production matters. VTT in global trends. Kai Häkkinen (ed.)