What is Production Strategies? – Its Types & Importance

A business requires to make all sorts of planning in human resources, finance, accounting, technology, sales, marketing, production, and many more. Planning is the first step towards taking any right decision for the better functioning of the organization. Production planning or strategies play the most significant role, whether in the general or manufacturing sectors.

This article intends to elaborate detailed information regarding types of production strategies, classification, importance, and more.

Production Strategies

It is a high-level plan that businesses make for high productivity growth while satisfying all the critical stakeholders of the process. It serves like a written document that starts with companies vision/ mission and ends with overall consumer satisfaction.

It is the set of action plans required to enhance the production of goods or services of the company. These strategies comprise of utilizing men, land, labor, machinery, or other technologies in order to increase production, and decrease manufacturing costs. There are different types of production strategies utilized by different MNCs, small companies, manufacturers, or MSMEs to increase their productivity; hence sales and revenue.

Types of Production Strategies

The production strategies are classified under three categories: business strategies, Competitive advantages, and competing priorities. All the various types of production strategies are as follows:-

1) Cost Rationalization

We all know that a production line involves lots of cash and other resources. Under this strategy, the business priorities the cost-cutting by taking various steps such as production on a large scale. Once there is more production, all other expenses like advertising, promotion, R & D, customer service, and quality inspection are rationalized based on the large production. Most of the FMCG companies or organization with low-quality production follows this strategy mostly.

2) Product Differentiation

Being unique and different is a great way to create its own space for organization. Under this strategy, companies take an altogether different route on quality, pricing, pre-sales services, advertising, post-sales services, appearance, advertisement to look different. The well-known 30 minutes delivery challenge of a famous pizza company is a great example of differentiation strategies.

3) Pricing

The rules of the economy state that if the price goes up, the demand goes down. In that principle, companies slashed their product price to increase the demand and stop the consumers from making a purchase somewhere else.

4) Quality

There is no match to the quality strategies, and most branded companies rely on this principle. Companies smartly invest in innovative and modern technologies and keep their competitors at bay. Apple is an excellent example of these strategies that are growing stronger and stronger day by day.

5) Market Diversification

Market diversification or segmentation is a way to divide the market based on customer needs and other aspects. Organizations produce products based on customer preference, and that is why it is also called a focus strategy.

6) Delivery

What if, despite having a quality product, customers are facing issues in getting that product? All the work will not succeed unless the delivery roadblocks are cleared. Under this strategy, organizations elaborate on creating a robust delivery network from the manufacturing site to the end consumers. Proper supply is ensured to dealers, wholesalers, and retailers that make the business stand apart from the cut-throat competition.

7) Mix or flexible

This practice is one of the sought-after strategies for FMCG or companies selling more than one product. Here, companies start offering more benefits to the customer when they opt for more than a variety of products from the same company. You must have seen companies selling shampoos, giving soaps as freebies or at a low price to the customer. Large companies with huge production capacity generally opt for this way of maximums the production line.

8) Excellent pre and post-sales service

Organizations assure customers about better and quicker services like round-the-clock availability of customer services. These tactics are the best strategy for companies involves in electronics, digital and other types of devices. Customer opts companies with more number of service centers at their city.

9) Environment-friendly products delivery

Environment plays a vital role in all of our lives, making the companies target us through eco-friendly or green products. Animal cruelty-free clothes, high star rated electronics products, mercury-free television, recyclable packaging material, Etc., and some examples of eco-friendly production strategies.

10) Emerging technology-based

Here an organization gives more importance to speed, reliability, modern technology, advanced features, and other emerging aspects. Organizations make quick changes into the straggles to tap the market. When the covid-19 struck the world at the end of 2019 and early 2020, many companies changed their production line to make demand products. Many companies from the Clothes industry started making masks overnight, which is called the flexible or emerging changes based strategies.

Importance of Production Strategies

You must be thinking that why is the need for making these sorts of strategies for any organizations? The simple answer is about serving valuable business purposes. Besides that, it serves the following purposes.

  1. It brings clarity for your staff to deliver their best foot forward, which takes your business to great heights. A clear and well-thought strategy serves the purpose of understanding organizational goals. All the various teams work with a single frame of mind, and it being integration and great synergy among staffs.
  1. Defined strategies generate good business vibes that leave behind any pessimistic approach and other negative aspects of production. Sales and marketing teams get better insights from the documents and work on achieving them with the endeavor.
  2. Ideally, every organization should start with the strategy drafting stage and then jump on to making the product map. If there are no strategies or road maps, the team will probably prioritize the wrong items. That will lead to misuse of resources, time, and efforts— production strategies helping in having a clear picture of what you are gone achieve through the organization.
  3. It is pretty challenging to deliver the desired results without making tactical decisions. The strategy gets a precise reference point that saves time and energy in decision making.

Final words –

Production strategies are a multi-faceted process that varies from sector or sector and company to company. It leads to better customer satisfaction, increased product placement, upselling new products/services, reducing churn, and more. It also directs companies to great heights, the fast and widespread adaptation of production strategies.

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