To improve manufacturing operations, don’t forget to fix the organizational issues that can hinder performance. These guidelines can help your company choose the optimal manufacturing setup, based on such factors as your industry, markets, customers, products, internal capabilities, competitive position, and overall strategy. Also included: tactics for managing the inevitable tradeoffs.

Effectively managing service operations is crucial to controlling labor costs and improving customer satisfaction. By addressing six drivers of performance, executives can go a step further — turning their service operations into a key source of competitive advantage.

CFOs and other senior executives already know the importance of inventory management. And yet even the most attentive managers often find it difficult to get it right. In our work with clients, we've found that decision makers often rely on external benchmarks that seldom deliver expected insights. And they make operating assumptions that send them down the wrong path. Two of the classic misconceptions: improving the accuracy of sales forecasts is the best way to reduce inventory and beefing up customer service requires keeping more inventory on hand. The fact is, both assumptions can lead to inventory gluts or shortages.

We typically ask clients 10 questions that take the pulse of a company's inventory health. They are designed to assess the effectiveness of inventory reduction processes as well as the sophistication and breadth of those efforts.

During the early days of the quality revolution, when quality improvement efforts were focused primarily on manufacturing, managers measured hard facts – errors, rejects, and production time – as a way to document tangible improvements in the production process.

But quality is no longer a revolutionary idea. As it has spread beyond manufacturing and as the movement has matured, the words "quality" and "measurement" have taken on new meaning.

Vertical integration does not necessarily mean that a company's upstream plants supply inputs to its downstream operations. In fact, it is more likely that they do not.

Placing a new research, design, or engineering center in emerging markets demands more than just “location, location, location.”

In recent years, many companies have been focusing on achieving productivity gains in their internal operations. Most have improved internal processes, reduced overheads and eliminated redundant activities. With TQM, Six Sigma and other related methodologies, they have improved the quality of their products and services and rid their operations of profit-reducing mistakes. Many companies have introduced Enterprise Resource Planning (ERP) systems and other productivity-improving forms of information technology, albeit with sometimes-mixed results. As worthwhile as these initiatives have almost certainly been, however, the 80-20 rule would suggest that companies will ultimately begin to run into declining returns in their further efforts to improve internal operations. For some companies, 20 per cent of the most promising internally oriented initiatives may already be delivering 80 per cent of the potential gains to be had. Fortunately, realizing productivity improvements at the edge of the enterprise -- at the interfaces with customers and suppliers -- represents a largely untapped frontier of opportunity.

How intelligent forecasting can lead to better decision making.

Working capital is an important measure of a company’s financial health. It’s defined as the difference between Current Assets and Current Liabilities (Working Capital = Current Assets – Current Liabilities). When a company has positive working capital, it is able to pay off its short-term liabilities from assets that can be quickly converted to cash.

Inventory is a part of current assets and therefore has a direct impact on working capital levels. Because of its impact on working capital and for many other reasons, ensuring that inventory is managed properly is critical for business success.

Many executives demonstrate a great mastery when it comes to justifying increased spending, but have no methodology for saving. In his new book, IESE Prof. Ignacio Urrutia discusses the 10 common mistakes in cost cutting and offers practical advice on how to successfully cut back spending.

Many companies are trying to cut costs by reducing the number of product classifications (stock-keeping units or SKUs) they offer. Here’s a story of a typical SKU optimization effort and 10 provocations that companies can use to help achieve lower costs, fewer out-of-stocks, higher revenues and lower prices.

Managing complexity in products, processes, and supply chains is a growing challenge. The related costs are often hidden, but they can be a significant drain on profitability. This paper provides guidance on how to uncover the true costs of complexity, optimize the value of product portfolios, and master complexity across the value chain. By following these guidelines, companies can achieve a 25 to 100 percent increase in profit margins.

McKinsey research identifies six management practices used by companies with high-performing supply chains, including segmenting supply chains to get control of complexity, applying lean tools, and tailoring supply networks to optimize service and costs. The findings have implications for executives in high tech, manufacturing and assembly, pharmaceutical, and retail industries.

Customers continue to demand greater value at ever-lower prices. But for many companies, the ability to produce savings through more traditional cost-cutting measures is nearly exhausted. The solution: Combine cost-cutting initiatives with design and development activities, using cost-driven product and service innovations to create new streams of profitable growth.

Designing a manufacturing network entails devising and managing flows of innovation and know-how—not just determining what to produce and where—and organizing the resulting logistics flows.

Though often missing, a formal operations strategy can guide the crucial decisions that build competitive advantage.

Private label products, or store brands, can bolster a store’s market share and positively impact retail sales. But what effect do private label products have on the supply chain? Is introducing a store brand always a good idea, or can it have detrimental effects as well? Marc Sachon and Víctor Martínez de Albéniz propose a model that can help retailers determine whether introducing a private label product is a wise idea.

Buffeted by years of offshoring, formidable Asian competitors and a global economic downturn, some companies are finding ways to make manufacturing in the U.S. a competitive advantage.

Fixed costs turn growth into profit. But they can also turn declines into big losses. Variabilization—transforming your fixed costs into variable ones—offers an attractive alternative. A variabilized cost structure is responsive, adapting rapidly to both increases and decreases in demand. Many companies are doing more than variabilize their own costs, they are developing and offering “variabilization solutions” to their customers. This trend suggests that the basis of competition will shift from scale to agility, orchestration, and risk management.

The A.T. Kearney Assessment of Excellence in Procurement is the most comprehensive global study of supply management best practices. In the May/June issue of Supply Chain Management Review, Editorial Director, Frank Quinn interviewed A.T. Kearney Partner and AEP co-leader Randy Watson. In the interview, Watson highlights the traits of supply management excellence that differentiate leading companies from followers. There are three important factors: a clear mandate from management, an unswerving emphasis on delivering value, and a willingness to invest in people, processes and technology. Drawing on the survey findings, Watson tells how companies can get on track to develop these competencies in their own organizations.

Risk—particularly supply chain risk—has become ubiquitous as globalization causes supply chains to lengthen. Accenture and Oracle combine forces to provide a point of view that will help companies understand the nature of supply chain risk—and what they can do to mitigate it.

Business and IT managers have failed to get at the root cause of Balanced Scorecard ineffectiveness. Getting the most from corporate data will continue to be elusive until business management strategy and data management architecture are aligned.

Procurement mastery—significantly outpacing competitors in areas such as sourcing, category management and supplier relationship management—can be immensely profitable and yet a surprising number of companies never implement a procurement-optimization effort. Accenture can help companies understand the nature of procurement mastery—how and why to achieve it, and how it contributes to high performance.

Companies compete in a multi-polar world—an environment characterized by a new and more complex phase of increased economic interdependence across multiple centers of economic power and activities. Accenture research into global operations reveals that succeeding in this environment demands a new way of thinking about global operations. In particular, it points to five guiding principles that can position companies for high performance on this new global stage.

Procurement lies at the heart of a successful green strategy.