Process Flexibility in Supply Chains

Stephen C. Graves () and Brian T. Tomlin ()
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Stephen C. Graves: Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139-4307
Brian T. Tomlin: Kenan-Flagler Business School, University of North Carolina at Chapel Hill, Chapel Hill, North Carolina 27599-3490

Management Science, 2003, vol. 49, issue 7, 907-919

Abstract: 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 cost-effective 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, stage-spanning bottlenecks and floating bottlenecks, neither of which are present in single-stage 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 supply-chain inefficiencies. We also identify flexibility guidelines that perform very well for multistage supply chains. These guidelines employ and adapt the single-stage chaining strategy of Jordan and Graves (1995) to multistage supply chains.

Keywords: Supply Chain; Flexibility; Capacity; Product Allocation (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (73)

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