Strategic decisions in manufacturing-On the choice of investments in flexible production organizations

The striving for market-oriented production has resulted in increased needs for flexibility in the production process. In many cases it is the final value-adding component (i.e., assembly) in the manufacturing chain that has the largest pressures for flexibility. However, the internal and external vendors can restrict the flexibility of a nominally flexible assembly plant. Without the necessary flexibility in earlier production stages a total flexibility will only be achieved through large inventories and other trade-offs. In this paper based on an empirical study carried out in cooperation with a large Swedish manufacturer, the authors show that total flexibility in a multi-stage production chain primarily depends on capacity levels and work organization. It is concluded in the case presented here that large investments must be made in labour education and organizational adaptation in order to exploit the full potentials of a highly mechanized final assembly department.