Evaluation of enterprise-level benefits of manufacturing flexibility

Abstract

An enterprise-level flexible manufacturing approach for a multi-product manufacturer like an automotive company requires a cost-effective mix of many key enablers, including flexible assembly plants, part commonality between products, and supply base flexibility. This paper develops a strategic planning model that determines the overall business value of flexible 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 influencing manufacturing flexibility and capacity requirements in the presence of these factors. The model is applied to study a flexibility evaluation problem faced by a major automotive company. The experimental results show that flexibility enablers such as flexible product to manufacturing facility assignments and part commonality can lead to improved profitability. Increases in profitability of up to 17% (>$300 M/ year) are seen in the modeled system. Increased commonality and/or flexibility 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 profits from improved flexibility and commonality are reduced by approximately 25% when fuel economy standards are included.