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Process Flexibility in Supply Chains

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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)

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.

Suggested Citation

  • Stephen C. Graves & Brian T. Tomlin, 2003. "Process Flexibility in Supply Chains," Management Science, INFORMS, vol. 49(7), pages 907-919, July.
    • Handle: RePEc:inm:ormnsc:v:49:y:2003:i:7:p:907-919
    DOI: 10.1287/mnsc.49.7.907.16381
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    References listed on IDEAS

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