Why do plant managers struggle to synchronize production capacity and costs with demand in face of volatility and uncertainty?: Obstacles within strategizing volume-oriented changeability in practice

Abstract

Production plants are currently facing an increase in volatility and uncertainty of demand volumes. This environmental condition comes with highly fixed costs and capacity structures, which are mostly planned on the basis of forecasts and demand projections. Thereby, changing demand causes variances in manufacturing unit costs, endangering production plants’ profitability, competitiveness and liquidity. Hence, synchronizing capacities and costs with demand volumes becomes an essential target for plant managers in the face of demand volatility and uncertainty. Approaching this target in practice entails various obstacles due to dynamic and interdependent target conflicts as well as a lack of a dedicated and applicable strategizing approach. In this paper, these obstacles are disclosed and evaluated based on action research cases.