Published by:
Harvard Business Publishing
Length: 8 pages
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Abstract
Many large manufacturing companies are finding themselves at a cost disadvantage in markets they have dominated for years. This is because of excessive overhead structures and the emergence of the "robust" competitor, comparable in size and product scope but able to produce at a lower unit overhead cost. High-overhead companies should not cut overhead by outsourcing or downsizing. If they expect to retain their size and also become more cost competitive, they must rethink their manufacturing systems.
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Abstract
Many large manufacturing companies are finding themselves at a cost disadvantage in markets they have dominated for years. This is because of excessive overhead structures and the emergence of the "robust" competitor, comparable in size and product scope but able to produce at a lower unit overhead cost. High-overhead companies should not cut overhead by outsourcing or downsizing. If they expect to retain their size and also become more cost competitive, they must rethink their manufacturing systems.