Trade-offs among the elements of flexibility: a comparison from the automotive industry
Introduction
The strategic goals of an organization determine the manufacturing capabilities on which it will compete in the marketplace. These capabilities may include cost, quality, delivery reliability/speed, or flexibility. The competitive strengths provided by these capabilities are then assessed relative to competitors’ positions. The organization that outperforms others in providing attributes sought by the market is considered to be more competitive [3]. Manufacturing capabilities which surpass those of competitors and which customers desire allow the firm to win orders [4]. While several different types of capabilities enhance performance, in this paper we primarily focus on the capability provided by flexibility. We further try to understand how this capability can be developed in manufacturing organizations.
Skinner [5], [6] proposed that trade-offs exist between manufacturing capabilities. An organization cannot master all manufacturing capabilities simultaneously, since a manufacturing system cannot perform equally well on all capabilities. The design of a manufacturing system involves “taking into consideration the physical, technical, informational, and human realities that exist and limit the performance of the system” ([6], p. 8). These limiting factors create trade-offs that must eventually be made between capabilities.
To date, Skinner’s framework has been used primarily to explore the relationships among several manufacturing capabilities, such as quality, cost and speed. But this framework also provides the opportunity to explore a single manufacturing capability such as flexibility more fully. Flexibility is a complex concept, in part because of its multi-dimensional nature [7], [8], [9]. Many types, or dimensions, of flexibility (e.g., machine, routing, mix, and new product) have been identified in prior research [7], [8], [9]. Skinner [6] noted that trade-offs may occur between these different types of flexibility. He stated that flexibility “carries with it its own set of investments, costs, and benefits, and thus tradeoffs. First is the question of “be flexible for what?”. To be flexible for producing many products, for example, requires a very different set of manufacturing policies than being flexible for handling severe fluctuations in volume” ([6], p. 11). Thus, Skinner addressed the possibility that trade-offs could occur between the various dimensions of flexibility.
An examination of these trade-offs can be extended beyond the dimensional level. Each dimension of flexibility consists of four constituent elements [10]. The relationship between these elements must be more fully explored if flexibility is to be well understood. Skinner’s framework can be used to explore trade-offs at the elemental level of each dimension of flexibility. The application of this framework to elements of different dimensions of manufacturing flexibility can reveal how firms acquire and develop their flexibility capabilities.
Our examination of flexibility is conducted within the automotive industry, and focuses on the practices of American and Japanese producers. The use of a single industry increases the likelihood of similar production processes and competitive priorities across individual firms, thereby reducing possible sources of variation. This level of analysis also allows an examination of general trends in the automotive industry with respect to flexibility. Moreover, an understanding of the industry in which a firm competes should enhance our understanding of the flexibility capabilities of individual firms within that industry. Subsequently, we use this understanding and framework to explore, in detail, differences between specific US and Japanese firms for one specific dimension of manufacturing flexibility.
In order to explore flexibility in the automotive industry while simultaneously proceeding in a logical fashion, the paper is organized as follows. First, the elements that comprise flexibility are discussed, and then the flexibility dimensions included in this study are defined. We subsequently return to a discussion of possible trade-offs among the four elements of flexibility. The paper continues with a discussion of our industry choice and study data before proceeding to comparisons of flexibility capabilities among American and Japanese automobile producers. The study concludes with a discussion of the insights gleaned from the automotive industry and future research directions.
Section snippets
Flexibility and its elements
Although many different types of flexibility have been identified in the literature, they share a common basis or domain amongst themselves. Prior research indicates that the domain of any flexibility dimension is comprised of four elements: range–number (R–N), range–heterogeneity (R–H), mobility (M) and uniformity (U) [10]. These four elements can be used to define any dimension of flexibility and thereby provide the basis for our discussion.
The first element of flexibility is R–N. This
Dimensions of flexibility
This study explores five dimensions of flexibility: machine flexibility, labor flexibility, mix flexibility, new product flexibility, and modification flexibility. These dimensions were chosen for two primary reasons. First, these flexibility dimensions are frequently discussed in flexibility research (e.g., [8], [9], [12], [20]). Second, these flexibility dimensions appear to be most relevant to the automotive industry. As an example, the new product flexibility achieved by various automobile
The nature of flexibility capability
Thus far, the focus has been on the individual contributions of the four elements to flexibility. Greater flexibility is attributed to the entity (resource or system) with larger R–N, larger R–H, greater M, and greater U. Therefore, increasing the capability of an organization with respect to flexibility entails the ability to improve one or more of these elements. However, the means by which this capability development occurs must first be considered.
The automotive industry
The automotive industry was chosen for several reasons. First, the automotive industry is the “world’s largest manufacturing activity” ([22], p. 11). It uses more raw materials and employs more people than any other industry sector [23], and is of economic significance to many countries. Second, the history of this industry is fairly well disseminated (e.g., [22], [24]). This historical background facilitates a general understanding and knowledge of the industry. Third, the automotive industry
Study data
As discussed, each flexibility dimension is comprised of four elements. To date, however, these four elements have not been directly measured or compared in a single study. Fortunately, other studies have addressed aspects of these elements, albeit under different guises and within different contexts. A careful examination of the data in these studies, however, revealed measures that could be used to represent many of the elements for the five flexibility dimensions included in this study. An
Flexibility comparisons of American and Japanese producers (industry wide)
While the full domain of flexibility is not addressed per se by Womack et al. [22] or MacDuffie et al. [27], their data provides insight into machine flexibility, labor flexibility, mix flexibility, new product flexibility, and modification flexibility. Each of these dimensions can be examined through the four elements of flexibility and comparisons made regarding the respective levels of flexibility for American and Japanese producers. In the process, we would also attempt to answer the
Flexibility comparisons of American and Japanese firms
We now focus our attention on illustrating our framework with firm-specific comparisons for one specific dimension — new product flexibility. The need for new product flexibility has increased in recent years as the number of time-based competitors has grown. A faster rate of innovation has allowed these competitors to become market leaders. Consequently, automobile producers are striving to continuously reduce new product development time. Top level managers have issued development time goals
Insights gleaned from the automotive industry
Our industry wide analysis demonstrates the relative performance of American and Japanese producers with respect to each of the four elements of five flexibility dimensions. These comprehensive comparisons, in conjunction with some qualitative information, have allowed us to address the questions we had posed earlier. We use the insights created from this analysis to further some conclusions that not only reflect our understanding of the elements of flexibility and the individual flexibility
Conclusions and future research directions
This study sought to increase the level of knowledge and understanding which exists regarding flexibility. The elements that comprise the dimensions of flexibility were used in the definition of five flexibility dimensions. The development of flexibility capability was considered with respect to trade-offs that may occur between elements. A compilation of the relevant secondary data for a single industry was undertaken. This data provided detailed comparisons between American and Japanese
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