Evaluation of enterprise-level benefits of manufacturing flexibility

Abstract

An enterprise-level #exible manufacturing approach for a multi-product manufacturer like an automotive company requires a cost-e4ective mix of many key enablers, including #exible assembly plants, part commonality between products, and supply base #exibility. This paper develops a strategic planning model that determines the overall business value of #exible manufacturing systems. The model is designed to be capable of dealing with problems of realistic size and scope. Interpretation of results of the model gives important strategic insights on factors in#uencing manufacturing #exibility and capacity requirements in the presence of these factors. The model is applied to study a #exibility evaluation problem faced by a major automotive company. The experimental results show that #exibility enablers such as #exible product to manufacturing facility assignments and part commonality can lead to improved protability. Increases in protability of up to 17% (? $300 M=year) are seen in the modeled system. Increased commonality and/or #exibility also result in a reduction of the optimal capacity for the assembly system while simultaneously slightly improving sales. These results are robust with respect to introduction of the regulatory compliance issue of fuel economy standards, although the incremental prots from improved #exibility and commonality are reduced by approximately 25% when fuel economy standards are included. ? 2004 Elsevier Ltd. All rights reserved.