Process Flexibility

Abstract

For many manufacturing firms, the ability to match demand and supply is key to their success. Failure to do so could lead to loss of revenue, reduced service levels, negative impact on reputation, and decline in the company’s market share. Unfortunately, recent developments, such as intense market competition, product proliferation, and the increase in the number of products with a short life cycle, have created an environment where customer demand is volatile and unpredictable. In such an environment, traditional operations strategies such as building inventory, investing in capacity buffers, or increasing committed response time to consumers do not offer manufacturers a competitive advantage. Therefore, many manufacturers have started to adopt an operations strategy known as process flexibility to better respond to market changes without significantly increasing cost, inventory, or response time (see Simchi-Levi 2010).