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Process Flexibility in Supply Chains
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Journal Article
Process Flexibility in Supply Chains
2003
Overview
Process flexibility, whereby a production facility can produce multiple products, is a critical design consideration in multiproduct supply chains facing uncertain demand. The challenge is to determine a costeffective flexibility configuration that is able to meet the demand with high likelihood. In this paper, we present a framework for analyzing the benefits from flexibility in multistage supply chains. We find two phenomena, stagespanning bottlenecks and floating bottlenecks, neither of which are present in singlestage supply chains, which reduce the effectiveness of a flexibility configuration. We develop a flexibility measure g and show that increasing this measure results in greater protection from these supplychain inefficiencies. We also identify flexibility guidelines that perform very well for multistage supply chains. These guidelines employ and adapt the singlestage chaining strategy of Jordan and Graves (1995) to multistage supply chains.
