Production function and knowledge: a strategic perspective

Production companies are facing a variety of challenges raised by the current complex production environment. The resulting complex production targets and tasks, together with the inherently complex physical production systems, greatly increase the difficulties of managing production strategically. Different from the traditional principle of using production targets and tasks as bases for strategically managing production, this paper presents a new approach for configuring new strategic foundations with two key factors. Firstly, the application of the production function largely reduces the complexity and in turn provides a stable strategic orientation for production. Secondly, the specification of production knowledge and the building up of function-oriented knowledge cells identify the key production resources with strategic importance. The strategic management of production thus is able to focus on the unique strategic resources that provide sustainable production capabilities and long-term competitive advantages.