Manufacturing Strategy MGSC 602 Prof' Saibal Ray

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Manufacturing StrategyMGSC 602Prof. Saibal Ray

• Module 1 - Designing, Managing and Improving
  Operations Processes
• Management of Operations Flexibility
• Handout 3
• Session 4

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Operations Flexibility

• Key Revenue generating performance feature
• Increasingly important in operations
• Cited more and more frequently by operations
  managers
• Response to heightened competition
• Services and Manufacturing
• A vague term akin to Quality

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Taxonomies of Flexibility

• Machine Flexibility
• Process Flexibility
• Product Flexibility
• Volume Flexibility
• Routing Flexibility
• Problem with this taxonomy

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What do we mean by Flexibility in Operations?
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A Definition

• Flexibility is the ability to initiate or adapt
  to change with little effort, time or penalty

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Help Wanted

• Flexible interpreters
• What changes?
• How often?
• What kind of flexibility is important?
• Range?
• Uniformity across the range?
• Mobility?

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Flexibility can be both

• Internal inside the firm
• Capabilities (Quick Changeovers, Rapid Ramp Up)
• External the markets view
• Competitive advantage perceived (Quick Response,
  Broad Product Range)

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Matching Flexibility to Competitive Advantage

• Internal Flexibility can provide other forms of
  competitive advantage
• e.g. flexibility to select from lowest cost
  source material
• External flexibility can be provided through
  methods other than internal flexibility
• e.g. multiple focused plants to provide full range

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Matching Internal Flexibility and Competitive
Advantage

• Competitive
• Edge (external)
• Customized
• Product
• Quick
• Response
• Broad Product
• Range

• Method used
• Modular design
• Or a flexible manufacturing system
• Inventory, channel management
• Or a flexible manufacturing system
• Multiple, focused cells, plants
• Or a flexible manufacturing system

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Key Questions

• Each of these manufacturing systems is
  flexible
• How do they differ from one another?
• How can one define a type of internal flexibility
  in general

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Framework for Flexibility

• Need to answer three fundamental questions
• Change or adapt to what?
• How often?
• What form of flexibility?

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A Framework

• What changes? e.g.
• Product
• Volume
• Size
• How often?
• By the minute, within a day (operational)
• Seasonal, monthly (tactical)
• Yearly, multi-year (strategic)

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What form of flexibility?

• Range
• Uniformity
• Mobility

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Range

• Paper from 24 lb to 32 lb
• May need to increase to 20 lb to 40 lb
• can be distance or number of options

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Uniformity

• Every plant has a sweet-spot
• Performance across the Range

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Uniform implies more flexible

• Flatter performance profile, more flexible

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Mobility

• Average Color Change Time 30 minutes
• Reducing it to 15 minutes would increase mobility
  within the range

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Matching Internal Flexibilities to Competitive
Priorities

• Operational, Product Flexibility
• Customization - Range/Mobility
• Quick Response - Mobility
• Broad Product Line - Range/Uniformity of
  Performance

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An example Paper

• Dimension Product
• Frequency Hourly
• Kind of Flexibility Range, Mobility

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Two-year Study

• Fine paper industry
• Process-based
• Severe recession
• 2-5 plants (machines) associated with a pulp mill
• Almost everyone needs to be more flexible
• Cant compete on cost anymore

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Increasing Scale
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Study of Sixty Plants Capabilities

• Used company records, interviews and observation
  to measure
• RANGE of the plants (basis weight range)
• MOBILITY of the plants (changeover times)
• (both operational forms of flexibility on the
  product dimension)
• Basic process is the same, pressures are similar
  on each company
• What determines the plants flexibility?

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Large Differences in Flexibility

• Mobility
• Between 1 minute and 4 hours
• No one aware of where they stood relative to
  competitors
• Range
• Some plants could make 30 times the range of
  process variation than others

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What might cause these differences?

• Scale
• Speed, Width
• Output Rate (Tons)
• Age
• Of installation
• Of last major rebuild
• Computer Integration
• For process control
• For flexibility (e.g. auto changeovers)

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What might cause these differences?

• Workforce
• Experience
• Degree of cross-training
• Managerial Emphasis
• On uniformity (making all grades well)
• On quick-changeovers
• On producing a large range of products

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Computer Integration Automation

• What we found
• No positive relationship between any form of
  Computer Integration and Operational Flexibility
• Often a quick-fix to the problem - we are
  doing something
• Reasons for limiting RANGE
• Reasons for limiting MOBILITY
• Even CIM aimed at improving flexibility didnt
  (though no plant could tell they didnt have
  measures)

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Example FMS Technology

• Many companies found FMS gave disappointing
  results
• Bought the wrong type of flexibility
• Bought Ability to change within an existing
  group of products
• Needed Ability to change the group of products
  made

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The Effect of Scale

• Scale of a process generally limited the range of
  things it could do
• BUT weak relationship between scale and
  mobility
• Small-scale processes often just as difficult to
  changeover AFTER controlling for other things
• No reason to assume that even a large-scale
  process cannot produce Just-In-Time if it
  gets practice

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Age of Equipment

• New equipment often focused on a small range of
  products
• Old equipment tends to be used more flexibly
• BUT its worse at the job!
• OLD equipment is less flexible after you take
  other things into account (such as scale)

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Experience of the Workforce

• More experienced crews are able to make a broader
  range of things experience counts
• BUT
• Experience is associated with much worse mobility
• More experienced crews much slower at switching
  between products
• Less likely to come up with mobility innovations

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The most important factor

• Managerial Emphasis
• Flexible plants were those in which management
  had emphasized the importance of flexibility
• Through improvement schemes
• By measuring flexibility
• By encouraging people to find new ways of doing
  things
• Applied to both range and mobility

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Flexibility A self-fulfilling prophecy

• Flexible plants are those that get the practice
• Managers assign quick-response jobs and
  broad-range work to flexible plants
• So, they get the practice
• Because they get the practice