Development of production
strategy with focus on flexibility
Marco Semini, SINTEF
1
Production strategy
Business
environment
Complementors
Technology
Business
strategy
Cost
Quality
Availability
Features/innovativeness
Environmental performance
Production
strategy
Vertical Integration
Process technology
Capacity
Facilities
Sourcing
Business processes
Supply chain coordination
Information technology
Organisational capabilities
(Beckman and
Rosenfield 2008)
Business
environment
Competitors
Products
Customers
Suppliers
Production system
2
Product-process matrix
Product
Low
Volume
High
High
Variety
Low
Project
Process
Jobbing
Batch
Mass
Continuous
(Hayes and Wheelwright 1979)
3
Internal and external variability
Business
environment
Complementors
Technology
Supply
variability
Business
strategy
Cost
Quality
Availability
Features/innovativeness
Environmental performance
Production
strategy
Vertical Integration
Process technology
Capacity
Facilities
Sourcing
Business processes
Supply chain coordination
Information technology
Organisational capabilities
(Beckman and
Rosenfield 2008)
Business
environment
Competitors
Product
variability
Products
Demand
variability
Customers
Suppliers
Process
Production system
Workforce and
equipment
variability
4
variability
How to respond to variability
Reduce variability itself
Buffer against variability
Develop flexible operations
5
How to respond to variability
Business
environment
Complementors
Technology
Supply
variability
Business
strategy
Cost
Quality
Availability
Features/innovativeness
Environmental performance
Production
strategy
Vertical Integration
Process technology
Capacity
Facilities
Sourcing
Business processes
Supply chain coordination
Information technology
Organisational capabilities
(Beckman and
Rosenfield 2008)
Business
environment
Competitors
Product
variability
Products
Demand
variability
Customers
Suppliers
Process
Production system
Workforce and
equipment
variability
6
variability
Flexibility in manufacturing
Capability to be responsive or
readily-adjustable to changing
conditions
Product flexibility
Ability to introduce new or modified products
Mix flexibility
Ability to produce a wide range or mix of products
Volume flexibility
Ability to change the level of output
Delivery flexibility
Ability to change the delivery dates
7
(Slack 2010)
How to develop flexible operations
•
•
•
•
•
•
•
•
•
Flexible process type
Flexible process technology, such as FMS
Short setup and cycle times
Postponement (Upstream position of the
CODP)
Extra capacity
Flat organizational structure, with high level
of autonomy and individual responsibility,
team work
Cross-trained workforce
Accounting and information systems
Appropriate supplier and customer
relationships
8
Mass
customization
Quick response
manufacturing
Fisher's (1997)
responsiveness
Agility
Lean
Total quality
management
Product-process matrix
Product
Low
Volume
High
High
Variety
Low
Project
Process
Jobbing
Batch
Mass
Continuous
(Hayes and Wheelwright 1979)
9
How to develop flexible operations
•
•
•
•
•
•
•
•
•
Flexible process type
Flexible process technology, such as FMS
Short setup and cycle times
Postponement (Upstream position of the
CODP)
Extra capacity
Flat organizational structure, with high level
of autonomy and individual responsibility,
team work
Cross-trained workforce
Accounting and information systems
Appropriate supplier and customer
relationships
10
Mass
customization
Quick response
manufacturing
Fisher's (1997)
responsiveness
Agility
Lean
Total quality
management
How to develop flexible operations
•
•
•
•
•
•
•
•
•
Flexible process type
Flexible process technology, such as FMS
Short setup and cycle times
Postponement (Upstream position of the
CODP)
Extra capacity
Flat organizational structure, with high level
of autonomy and individual responsibility,
team work
Cross-trained workforce
Accounting and information systems
Appropriate supplier and customer
relationships
11
Mass
customization
Quick response
manufacturing
Fisher's (1997)
responsiveness
Agility
Lean
Total quality
management
How to develop flexible operations
•
•
•
•
•
•
•
•
•
Flexible process type
Flexible process technology, such as FMS
Short setup and cycle times
Postponement (Upstream position of the
CODP)
Extra capacity
Flat organizational structure, with high
level of autonomy and individual
responsibility, team work
Cross-trained workforce
Accounting and information systems
Appropriate supplier and customer
relationships
12
Mass
customization
Quick response
manufacturing
Fisher's (1997)
responsiveness
Agility
Lean
Total quality
management
How to respond to variability
5S
Supplier development
Flow and takttime
Supermarkets
Reduce variability itself
LEAN
Buffer against variability
SMED
Lead time reduction
Quality circles
Supplier integration
Develop flexible operations
13
Flexibility: Why, what and how?
WHY
WHAT
HOW
Variability
Flexibility types
Flexible production strategy
Demand variability
Product flexibility
Supply variability
Mix flexibility
Product variability
Volume flexibility
Process variability
Delivery flexibility
Equipment and
workforce variability
14
Flexible process type
Flexible process
technology
Short lead times
Postponement
Extra capacity
Flat organization and
team work
Cross-trained work
force
Activity-based costing
Effective use of IT
Appropriate supplier
and customer
relationships
Company
Type(s) of flexibility (what)
Volume flexibility
Case studies
Volvo
Response mechanisms (how)
Employee contracting
Flexible, problem-solving work force
Glen Dimplex
Volume flexibility
Mix flexibility
Team organization
Flexible lines
Process and lead time control
Benteler (spare
parts business)
Mix flexibility
Delivery flexibility
Lead-time reductions
Focus
Cost control
Market understanding
Ulstein
Volume flexibility
Product flexibility
Modularization and standardization
Reduce investments in fixed assets
Reduced planning efforts
Individual and team responsibility
Enter new segments
Tine
Volume flexibility (demand and
supply)
Mix flexibility
Product flexibility
Lead time flexibility
Differentiated production planning
Assessment of uncertainty
15