Distributed Use Models to Expand Small Batch Manufacturing Flexibility

Abstract

Small-batch manufacturing flexibility and agility are addressed with regard to operational possibilities to maintain financial stability and keep-up with the value creation in case of the market’s positive fluctuations: excessive demand which can be responded by output expansion. If a small-batch manufacturer faces capacity constraints, traditional patterns to invest in fixed assets can be value-consuming thus leaving many manufacturers aside from the competitive market opportunities. We argue that the sharing economy phenomenon can contribute to the problem resolution. To prove our hypothesis, we distinguish between sharing and other known outsourcing-based models of production, determine the key factors that influence decision-making and decompose a business valuation model to enable simulation modeling of value response to sharing-based practices introduction. Our finding indicate that sharing can be treated as “on-call” employment of an outsource supplier’s underutilized production capacity that leads to revenue growth followed by value factors proportional and non-proportional changes. The imitation model shows that sharing-driven output expansion provides a four-percent increase of business value in the assumed conditions; the traditional approach to support the growing demand with fixed assets expansion can be effective only in the long-term perspective given the new level of sales will be maintained without a subsequent rollback. Further increase of the model precision can be achieved by employing the survey-based estimates of a business’s individual extent of sharing perception.