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Flexibility and Agility For Enterprise Synchronization:

Knowledge and Innovation Management Towards Flexagility

Prof. S. Wadhwa

Mr K.S. Rao

Indian Institute of Technology New Delhi INDIA E-mail: swadhwa@mech.iitd.ernet.in

Abstract: This paper examines two important concepts of the modern business environment, viz., flexibility and agility, with a view to seek the essence of the concepts and to understand their similarities and differences at a conceptual level. We examined various perceptions, notions and definitions of flexibility and agility found in the manufacturing and supply chain literature, and compared the stated objectives, articulated needs and fundamental beliefs underlying the concepts, from a decision-information- synchronization perspective. Based on this, we attempted to relate flexibility and agility with a view to highlight certain commonalities and differences and also suggested a possible vision for future evolution these two important concepts. Using demo models of a supply chain and manufacturing system operating under a decision-information-synchronization environment, the key results are discussed. Judicious use of flexibility and effective decision system are suggested towards improving the agility (specifically the lead time performance) of the supply chains. A novel approach of flexagility is proposed for modern enterprises that are seeking IT facilitated long term competitiveness. The need to innovate synergy with flexibility and agility is highlighted. Based on this a vision of flexagility towards mass customization and beyond is presented.

Keywords: Flexibility, Agility, Decision-Information-Synchronization, Flexagility. Synergy

Professor Subhash Wadhawa (Eur. Ing., C. Emg.) received his PhD from NUI, Ireland, while working on an ESPRIT project at CIM Research Unit., Galwai. He extensively contributed to the development of generalized simulators and expert systems for flexible systems. He is currently Professor and Group In-charge (P&I) at Indian Institute of Technology, New Delhi (IITD). He has originated novel research themes: decision and information delays involving Decision-Information Synchronization (DIS) applications in CIM, Supply Chain, e-Business; DRIS architecture for Agile Manufacturing; SAMIN architecture in IMS context, etc. He is an active contributor to EC projects in the IT&C domain and has coordinated several EU workshops. He has been a Consultant/Contributor/National-Expert to many International bodies EC, UNIDO, CW, APO (Tokyo), etc. He is dedicated to the goal of bringing synergy between Academics, Industry and Research.

What is Flexibility?

Flexibility is a multi-dimensional and polymorphous concept with several definitions and interpretations. Browne et al (1984) described several types of flexibility in the context of manufacturing systems. Carlsson (1988) cited three definition of flexibility from literature: (a) as those attributes of a production technology which accommodate greater output variation, (b) as the firm’s response to uncertainty, especially in the form of fluctuations in demand, but also market imperfection, (c) as a property of initial positions. Wadhwa and Browne (1989) viewed flexibility, in a generic way, as a means towards the control on flow of entities through a system. DeGroote (1994) defines flexibility as a hedge against the diversity of the environment. Nilsson & Nordahl (1995) cites a definition of flexibility as the ability to respond effectively to changing circumstances. Upton (1995) defines flexibility as the ability to change with little penalty in time, effort, cost or performance.

Benjaafar & Ramakrishnan (1996) cites five definitions of flexibility from literature as: (a) the capacity of a system to assume different positions or to assume a certain number of different states, (b) the ability of a manufacturing plant of being usable for different production tasks, (c) the ability to reconfigure manufacturing resources so as to produce efficiently different products of acceptable quality, (d) the ability to respond effectively to changing circumstances and (e) a measure of its capacity to adopt to changing environmental conditions. Das (1996) defines flexibility as the ability of a system or a facility to adjust to changes in its internal or external environment. Wadhwa and Rao (2000) defined flexibility as the ability to deal with change by judiciously providing and exploiting controllable options dynamically. Golden and Powell (2001) defines flexibility as the capacity to adapt across four dimensions; temporal, range, intention and focus. Thus the concept of flexibility encompasses several notions. Some of the key notions of flexibility found in the literature are summarized in Figure-1 and discussed below.

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Flexagility Flexagility Agility Agility Proactive Flexibility Management Proactive Flexibility Management
Flexagility
Flexagility
Agility
Agility
Proactive Flexibility Management
Proactive Flexibility Management
Flexibility can be used
Flexibility can be used
to enhance the lead-time performance
to enhance the lead-time performance
Information
Information
Knowledge Mgt. &
Knowledge Mgt. &
Knowledge Mgt. &
Technology Support
Technology Support
Decision Support
Decision Support
Decision Support
Mobility
Mobility
Type-I Flexibility
Type-I Flexibility
Wadhwa and
Wadhwa and
Upton (1995),
Upton (1995),
Wadhwa and Rao (2002)
Wadhwa and Rao (2002)
Burton Klein (1984),
Burton Klein (1984),
Aggarwal (2000)
Aggarwal (2000)
Koste and
Koste and
Wadhwa et al (2001)
Wadhwa et al (2001)
Carlsson (1988)
Carlsson (1988)
Malhotra (1999)
Malhotra (1999)
Decision-Information
Decision-Information
Dynamic Control
Dynamic Control
Browne et al
Browne et al
Synchronization (DIS)
Synchronization (DIS)
Greater Flexibility entails
Greater Flexibility entails
(1984),
(1984),
Uniformity
Uniformity
Deterministic
Deterministic
Wadhwa
Wadhwa
lesser Transition Penalties
lesser Transition Penalties
DIS D
DIS D
elay
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Golden and
Golden and
Upton (1995),
Upton (1995),
and Rao
and Rao
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(2000)
(2000)
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Malhotra (1999)
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Information
Information
Ability to
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Browne et al
Change
Change
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(1984),
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Range
Range
Gerwin (1993),
Gerwin (1993),
External
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enables more
Heterogeneity
Heterogeneity
Golden and
Golden and
Entity Flow Sync.
Entity Flow Sync.
heterogeneous change
heterogeneous change
Koste and
Koste and
Decision Points
Decision Points
Powell (2001)
Powell (2001)
Stochastic
Stochastic
Wadhwa,
Wadhwa,
Greater Flexibility
Greater Flexibility
Malhotra (1999)
Malhotra (1999)
Wadhwa and
Wadhwa and
Maguire and
Maguire and
enables greater change
enables greater change
Browne (1989)
Browne (1989)
Browne (1986)
Browne (1986)
Type-II Flexibility
Type-II Flexibility
Range
Range
Burton Klein (1984),
Burton Klein (1984),
Flexibility
Flexibility
Upton (1995)
Upton (1995)
Carlsson (1988)
Carlsson (1988)
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Change
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(1996)
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of Change
of Flexibility
of Flexibility
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Browne et al (1984),
Browne et al (1984),
(reactive or proactive)
(reactive or proactive)
Sethi and Sethi (1990),
Sethi and Sethi (1990),
Benjaafar and
Benjaafar and
Wadhwa and
Wadhwa and
Ramakrishnan (1996)
Ramakrishnan (1996)
Rao (2003)
Rao (2003)

Figure 1: Some of the Key Notions of Flexibility Found in Literature and our Background Research

It is expedient to view the research and practicing efforts in flexibility in relation to change. Since change affects

the performance, the enterprise must be able provide an adaptive response. In this context, flexibility is generally considered as a capability to counter the effect of change. There are several types of change such as the known change, unknown change, internal change, and external change, short term, medium term and long term change, and so on. The nature of change can be stochastic (uncertainty related) or deterministic (certainty related). This has resulted in the development of many types of flexibility. For example Carlson (1988) discusses about Type-I and Type-II flexibility to counter the effects of known uncertainty and unknown uncertainty respectively. Similarly, the framework of Gerwin (1993) is based on identification of uncertainty and associated flexibility types. The framework of Correa and Slack (1996) is also based on certain stimuli resulting from the environmental uncertainties. On the other hand it is also important to appreciate the deterministic change. The deterministic nature of change occurs when variety ( a cause for change) is known both in terms of the product and the manufacturing system entities. The totality of change and the system boundary is certain. However the system is quite complex because of flexibility that offers several alternatives at each point in time (discrete events) through which the system evolves Wadhwa and Browne (1989). The challenge is how to exploit flexibility through effective decision systems within the manufacturing system constraints for a given objective. For instance the Flexible Manufacturing Systems are often modeled as such discrete event dynamic systems in deterministic environments as they reflect complex entity flows. Some of our background research in this direction includes Wadhwa, Maguire and Browne (1986), Wadhwa, Felix and Browne (1987), Caprihan and Wadhwa (1997), Wadhwa and Bhagwat (1998), Wadhwa and Rao (2000), Wadhwa and Aggarwal (2000), Wadhwa, Amin and Rao (2001), Wadhwa and Rao (2002). Large number of flexibility types can be found in the literature and several attempts are being made to relate all the flexibility types in a unified framework.

As regarding the delivery of flexibility, there is a broad agreement in the literature that delivery of

flexibility requires ability to change from an optimum state in a reversible manner. This is considered as

a fundamental requirement for flexibility. Several other notions are built around this theme. The first one

is that the greater flexibility would enable greater change. This idea was represented by Upton (1995) in

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terms of Range. Koste and Malhotra (2000) extended this idea into two notions called the Range Number and Range Heterogeneity, which represents the range in terms of number of options available, and the degree of heterogeneity among these options. The next important notion is that greater flexibility entails lesser transition penalties. Upton (1995) called this notion as Mobility. Any change entails transition penalties. These may include time, cost, and quality. Greater the flexibility, lesser will be the transition penalties. The next important notion is concerning the ability of the system to perform during the change. Any change from optimum state will deteriorate the performance. The objective of flexibility is to minimize this deterioration. This notion is called by Upton (1995) as Uniformity. This idea is also referred in the earlier works of Stigler (1939) and Carlsson (1988) but no name was given to the notion. Another important notion is introduced by Gerwin (1993) that the flexibility can be banked and used to redefine uncertainty in the environment. Wadhwa and Rao (2000) summarized that the role of flexibility in a system is to enable the system to cope with change (certain or uncertain), in an effective and efficient manner. Change in the environment includes change in both the internal environment (for example, resource bottlenecks) as well as the external environment (for example, customer preferences) An effective manner refers to the extent to which the effect of change has been successfully countered and efficiency refers to the time, cost and effort required to do this. It was further observed that the flexibility of different systems might be measured relatively. A system is more flexible, if it can handle a wider range of change, if it has a grater number of options to counter the effect of change / uncertainty, if it can attain a new state (within the range), in a shorter time, at a lesser cost, with lesser effort, with lesser disturbance / imbalance, etc., if the effect of an unpredictable change (such as machine breakdown) on the performance of the system (such as drop in production rate) is less, and if it can change its flexibility based on specific needs, in an easier manner (flexibility of flexibility)

What is Agility?

The concept of agile enterprise originated in 1991, based on a realization that the pace of change in business environment was accelerating and already outpacing the abilities of many established organizations (Dove, 1999). Accordingly, agility was defined as “the ability of an organization to thrive in a continuously changing, unpredictable business environment”. Technology and globalism were perceived as the principle drivers of this changing environment and subsequently knowledge explosion was added to this list.

Ever since its inception, agility caught the attention of researchers as well as practitioners alike. This resulted in the development of multiple perceptions and perspectives on agility. In their well-cited work, Goldman et al (1995), describe agility as being “dynamic, context specific, aggressively change embracing, and growth oriented”. Vokurka and Fliedner (1998) describes agility as the ability to produce and market successfully a broad range of low cost, high quality products with short lead times in varying lot sizes, which provide enhanced value to individual customers through customization. Shari and Zhang (1999) observe that, responding to changes, and taking advantage of them through strategic utilisation of managerial and manufacturing methods and tools, are the pivotal concepts of agile manufacturing. Rigby et al (2000) define agility as ``the ability of an organization to thrive in a constantly changing, unpredictable business environment''. Bajgoric (2000) observes that Agility an enterprise-wide response to any competitive and changing environment, based on four cardinal principles of (a) enrich the customer (b) master change and uncertainty (c) leverage resources, and (d) co-operate to compete. Zhang and H. Sharifi (2000) observe that agility is primarily concerned with the ability of enterprises to cope with unexpected changes, to survive unprecedented threats from the business environment, and to take advantage of changes as opportunities.

Meredith and Francis (2000) view agility as ``the organisation's capacity to gain competitive advantage by intelligently, rapidly and proactively seizing opportunities and reacting to threats''. Ramasesh et al (2001) cites a definition of Agility as the successful exploration of competitive bases (speed, flexibility, innovation- proactivity, quality, and profitability) through the integration of reconfigurable resources, and best practices in a knowledge-rich environment to provide customer-driven products and services in a fast changing market environment. Sharifi and Zhang (2001) observes that the concept of agility comprises two main factors: (a) responding to changes (anticipated or unexpected) in proper ways and due time (b) exploiting changes and taking advantage of changes as opportunities. van Hoek (2001) observes that three characteristics of supply chain operations can be earmarked as directly related to becoming agile; that of mastering and benefiting from variance, that of rapid responsiveness and that of unique or small volume responsiveness.

One important perception of agility is to view it essentially as a property of a group of collaborating systems. For instance, Huang et al (2000) defines agility as a measure that indicates how well a system can adjust itself while also seeking help from other system enterprises. Similarly, Hooper et al (2001)

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observes that the term agility refers to the ability of an enterprise to develop and exploit its inter and intra- organisational capabilities to successfully compete in an uncertain and unpredictable business environment. Ramasesh et al (2001) observes that agility is a multi-dimensional attribute of the manufacturing system, where different subsystems or segments of the manufacturing system may possess different degrees of agility along different dimensions. Also, these may interact in a variety of ways depending on the configuration of the system and the changing dynamics of its operating environment.

Agility as a Combination of Speed and Flexibility

One of the important perception of agility is that it is a combination of speed and flexibility. For instance, Vastag et al (1994) observes that time-based competition and flexibility converge in agile manufacturing. Ashok Kumar and Jaideep Motwani (1995) perceive agility as a firm’s ability to accelerate the activities on critical path, and is, therefore, a direct indicator of a firm’s time-based competitiveness. Willis (1998) observes that the implementation of an agile manufacturing philosophy can result in a significant reduction in the time required to get products to market, and from a manufacturing perspective this is accomplished through speed and flexibility. McGaughey (1999) views agility as the ability of an enterprise to respond quickly and successfully to change. Sohal (1999) cites the description of agile manufacturing as ``a manufacturing system with extraordinary capability to meet the rapidly changing needs of the marketplace. A system that can shift rapidly amongst product models or between product lines, ideally in real-time response to customer demands''.

Gunasekaran (1999) defines agile manufacturing as the capability of surviving and prospering in the competitive environment of continuous and unpredictable change by reacting quickly and effectively to changing markets, driven by customer-designed products and services. Zhang et al (1999) views agile manufacturing as an emerging concept in industry that aims at achieving flexibility and responsiveness to the changing market needs. Vernadat (1999) observes that agile manufacturing aims at achieving manufacturing flexibility and responsiveness to the new market needs. Meredith and Francis (2000) observe that the concept of agility has roots in other approaches such as time-based competition, fast- cycle innovation and intrapreneuring. Prater et al (2001) observes that an agile firm has designed its organization, processes and products such that it can respond to changes in a useful time frame, and the two concepts inherent to the definition of agility are speed and flexibility.

Agility as an Extension of Flexibility

Several authors view agility as an extension of flexibility. For instance, Vokurka Fliedner (1998) view agility as a capability of responding to change in a dimension beyond flexibility. In their view : flexibility refers to the capability of an organization to move from one task to another quickly and as a routine procedure, with each situation defined ahead of time so that the procedures needed to manage it are in place. Traditional dimensions of flexibility include, for example, those that are product or service related (e.g. volume, product mix, and specification flexibility), or process related (e.g. machine changeover, scheduling and innovation flexibility). To be agile, a firm needs to be able to deal with unpredictable changes in market or customer demands. Agility can refer to any of the dimensions of flexibility. However, the key difference is the ability to respond quickly to unanticipated marketplace changes. The major distinctions between flexibility and agility is the difference in situations requiring change. Flexible changes are responses to known situations where the procedures are already in place to manage the change. Agility extends the capability of flexibility by requiring the ability to respond to unpredictable changes in the market or customer demands. A company must be sufficiently competent at being able to manage changes to well defined conditions before it can extend its capabilities to responding to unforeseen changes. From this perspective flexibility is a prerequisite to become agile.

Similarly, Tan (1998) observes that agility and flexibility are closely related. In its most restricted form, flexibility refers to adaptability and versatility while agility is related to the speed that a system adapts. Therefore flexibility is a necessary condition for agility. Tan (1998) refers to Upton’s (1994) definition of flexibility as the ability to change or react with little penalty in time, effort, cost or performance, and observes that. although this definition includes some notions of agility, the agility term stresses the importance of time- based competition and flexibility, and therefore agile manufacturing is a new paradigm in manufacturing strategy. Backhouse and Burns (1999) define agility as the ability of an enterprise to adapt to unpredicted changes in the external environment, in contrast to flexibility, which is taken to mean the ability of companies to respond to a variety of customer requirements which exist within defined constraints. They further observed that the boundary between flexibility and agility is naturally blurred.

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Christopher (2001) views agility as a business-wide capability that embraces organizational structures, information systems, logistics processes and in particular, mindsets. He observes that a key characteristic of an agile organization is flexibility, and in that respect, the origins of agility as a business concept lie partially in flexible manufacturing systems. He further observes that, initially it was thought that the route to manufacturing flexibility was through automation to enable rapid changeovers (i.e. reduced set-up times) and thus enable a greater responsiveness to changes in product mix or volume. Later this idea of manufacturing flexibility was extended into the wider business context and the concept of agility as an organizational orientation was born. Sarkis (2001) observes that the linkage and roles of agility, flexibility and lean, may provide a partial definition to agility. Accordingly he cites the Department of Defense summary of these principles in a relative context to each other as: (a) Lean manufacturing as a set of practices intended to remove all waste from the system, striving to minimize usage of resources, (b) Flexible manufacturing as a structure as opposed to a strategy and addresses a production line that can be easily reconfigured or customized for producing different products, (c) Agile manufacturing as a strategy that contains lean manufacturing and flexible manufacturing and addresses the business enterprise world.

Burgess et al (2002) observes that, in some respects agility can be interpreted as a return to emphasizing flexibility, but in a more dynamic sense than hitherto, by privileging new product or new supply capability introduction, with emphasis on the design of a complete enterprise that is flexible, adaptable, and has the ability to thrive in a continuously changing business environment where markets consist of rapidly changing ``niches'' serving increasingly sophisticated customer demand.

Flexibility and Agility: Some Propositions

In our view, one good way of understanding an unknown concept is to express it in terms of a known concept. Extending this logic further, we can also say that a good way of understanding a more unknown concept is to express it in terms of a less unknown concept. This is what we are trying to do by expressing agility in terms of flexibility. Also, it is more intuitive to understand anything in a comparative sense rather than an absolute sense. Keeping this in view, we propose to summarize the above perceptions of agility in terms of the following four propositions.

of agility in terms of the following four propositions. Mass Production era Mass Production era 1980s
Mass Production era Mass Production era 1980s 1980s 1990s 1990s 21 21 st st Century
Mass Production era
Mass Production era
1980s
1980s
1990s
1990s
21 21
st
st
Century
Century
+ +
Rate of Change Focus
Rate of Change Focus
Agility
Agility
+ +
Change Focus
Change Focus
Flexibility &
Flexibility &
+ +
Variety Focus
Variety Focus
Economies of scope
Economies of scope
+ +
Quality Focus
Quality Focus
Time & Cost Focus
Time & Cost Focus
Economies of Scale
Economies of Scale

Figure-2 : Evolving Competitive Priorities

Figure-2 : Evolving Competitive Priorities

Proposition-1: Both flexibility as well as agility are the functions of evolving competitive priorities

As shown in Figure-2, the competitive priorities are evolving towards greater change and accelerated change. Flexibility originated as an ability to manage change in an efficient and effective manner, where as agility is intended to addresses the accelerated change in the same manner.

The emerging environment is leading towards an Engineer-To-Order (ETO) situation where new products are engineered to order by modifying the existing designs. The fundamental assumption of this approach is that the designs are readily available and variety can be accomplished simply by building flexibility into the manufacturing systems. However, the real competence for customization lies beyond this, that is, in the ability to quickly and efficiently design new products using available competencies and development of new competencies wherever required. We call this as an Innovate-To-Order (ITO) environment. The future organizations are required to operate and compete in this new environment. As we move from make-to-stock situation towards the innovate-to-order level, the requirements for flexibility increases and there will be greater

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need for flexibility management. This is coupled with the new challenge of responsiveness. Thus future competitiveness is likely to involve both variety and responsiveness challenges. This will require increasing focus on proactive knowledge and innovation management in future enterprises. Thus Wadhwa and Rao (2000) have emphasized upon the new topology of Innovate To Order (ITO) to focus on Innovation management as a strategy. Similarly Wadhwa and Rao (2002) have explained the role of proactive knowledge management towards achieving both flexibility and agility. Here again the need for innovation is emphasized. There is a growing need for innovating concepts that enrich the notion of flexibility, as shown in Figure 3.

MARKET MARKET DEMANDS DEMANDS STANDARD PRODUCTS STANDARD PRODUCTS CUSTOMIZED PRODUCTS CUSTOMIZED PRODUCTS NO NO
MARKET
MARKET
DEMANDS
DEMANDS
STANDARD PRODUCTS
STANDARD PRODUCTS
CUSTOMIZED PRODUCTS
CUSTOMIZED PRODUCTS
NO
NO
AVAILABLE
AVAILABLE
IN STOCK
IN STOCK
CAN BE
CAN BE
NO
NO
YES
YES
ASSEMBLED
ASSEMBLED
FROMSTOCK
FROMSTOCK
HIGH
HIGH
TECHNOLOGY
TECHNOLOGY
CAN BE
CAN BE
NO
NO
PRODUCTS /
PRODUCTS /
YES
YES
PRODUCED
PRODUCED
SERVICES
SERVICES
USING AVAILABLE
USING AVAILABLE
DESIGN
DESIGN
EXISTING
EXISTING
NO
NO
YES
YES
DESIGNS CAN BE
DESIGNS CAN BE
MODIFIED
MODIFIED
CAN BE
CAN BE
DESIGNED
DESIGNED
NO
NO
YES
YES
USING AVAILABLE
USING AVAILABLE
COMPETENCE
COMPETENCE
ENGINEER-TO-ORDER
ENGINEER-TO-ORDER
INNOVATE-TO-ORDER
INNOVATE-TO-ORDER
YES
YES
1
1
2
2
3
3
4
4
5
5
6
6
NEW PRODUCT /
NEW PRODUCT /
DESIGN
DESIGN
DEVELOPMENTOF
DEVELOPMENTOF
SERVICE DESIGN
SERVICE DESIGN
ASSEMBLY
ASSEMBLY
PRODUCTION
PRODUCTION
DELIVERY
DELIVERY
MODIFICATIONS &
MODIFICATIONS &
NEW
NEW
USING AVAILABLE
USING AVAILABLE
VARIANTS
VARIANTS
COMPETENCIES
COMPETENCIES
COMPETENCIES
COMPETENCIES
MAKE-TO-ORDER
MAKE-TO-ORDER
ASSEMBLE-TO-ORDER
ASSEMBLE-TO-ORDER
MAKE-TO-STOCK
MAKE-TO-STOCK

INCREASING RICHNESS IN FLEXIBILITY REQUIREMENTS

INCREASING RICHNESS IN FLEXIBILITY REQUIREMENTS

REQUIREMENTS INCREASING RICHNESS IN FLEXIBILITY REQUIREMENTS INCREASING NEED FOR MANAGEMENT OF FLEXIBILITY INCREASING

INCREASING NEED FOR MANAGEMENT OF FLEXIBILITY

INCREASING NEED FOR MANAGEMENT OF FLEXIBILITY

Figure 3: Increasing Need For Flexibility (Adapted from Wadhwa, Rao (2000) )

Proposition-2: The distinctive focus of flexibility and agility differ mainly in terms of addressing the predictable change and unpredictable change, respectively. Agility thus should focus more on external environment (more unpredictable) and view flexibility as an internal capability (more predictable) to deal with change/

As shown in Figure-4, flexibility and agility have a lot in common in terms of managing the change. However, the distinctive focus of flexibility is on managing the predictable change with the help of both predetermined as well as innovative response, where as agility focuses on managing the unpredictable change using more of an innovative response supported by certain predetermined strategies and technologies. Another dimension of the unpredictable change is the accelerated change where the change is so fast that, it overwhelms the ability to respond. Managing such an accelerated change requires a paradigm change. An example of this phenomenon can be found in is aeronautics, where many of the design paradigms that are good in subsonic regime do not hold good for the supersonic regime. Agility strives for such a paradigm shift in the approach to manage change.

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May not be May not be Agility Agility Unpredictable Unpredictable feasible feasible Change Change May
May not be
May not be
Agility
Agility
Unpredictable
Unpredictable
feasible
feasible
Change
Change
May not be
May not be
Predictable
Predictable
Flexibility
Flexibility
required
required
Predetermined
Predetermined
Innovative
Innovative
Response
Response

Figure 4: Distinctive Focus of Flexibility vis-a-vis Agility in Managing Change

Proposition-3: The distinctive focus of flexibility and agility differ in terms of addressing the individual systems facing a medium rate of change and a group of systems facing a high rate of change, respectively.

As shown in Figure-5, flexibility and agility differ in terms of their scope. While the distinctive focus of flexibility is on individual systems, agility focuses on a group of systems. Some authors expressed that at the individual system level, both agility and flexibility are same, and the agility of a group of systems is a function of the flexibility of constituent systems. In our opinion, at this stage, it is really difficult to distinguish agility and flexibility in this manner, as both the concepts are still evolving. However, proposition-3 and figure-5 reflects some of the perception found in the literature. Further, there is a rate of change element also. Literature indicates that there is a greater focus of agility on higher rate of change as compared to flexibility. Combining the above two perceptions, we may indicate that the distinctive focus of flexibility and agility differ in terms of addressing the individual systems facing a medium rate of change and a group of systems facing a high rate of change, respectively

Agility Agility High High Rate of Rate of Change Change Medium Medium Flexibility Flexibility Single
Agility
Agility
High
High
Rate of
Rate of
Change
Change
Medium
Medium
Flexibility
Flexibility
Single system
Single system
Group of Systems
Group of Systems
(Eg: Manufacturing System)
(Eg: Manufacturing System)
(Eg: Supply Chain)
(Eg: Supply Chain)

Level

Level

Figure 5: Distinctive Focus of Flexibility vis-a-vis Agility in Their Scope

Proposition-4: The distinctive focus of flexibility and agility differ in terms of addressing the constituent elements required to attain flexibility / agility.

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As a sequel to proposition-3, we also observed that flexibility and agility differ in their focus on the constituent elements. While flexibility literature is more concerned about the equipment flexibility and process flexibility, agility is more concerned about structure, relationships and manpower. This is understandable because, as stated in proposition-2, flexibility is more concerned with managing predictable change with the help of predetermined response. This predetermined response is embodied in the equipment and process. Where as agility focuses on the unpredictable change for which it is always not feasible to have predetermined capabilities. Such an ill structured situations require more of a human centered approach, and hence the focus on manpower is understandable. Similarly, since agility is more concerned with the groups of systems, their structural relationships are more important, and hence more focus on structure is understandable. Figure 6 shows distinctive focus of flexibility and agility.

Focus of Focus of Focus of Literature on Literature on Literature on Agility Agility Agility
Focus of
Focus of
Focus of
Literature on
Literature on
Literature on
Agility
Agility
Agility
Focus of
Focus of
Focus of
Literature on
Literature on
Literature on
Flexibility
Flexibility
Flexibility
Equipment
Equipment
Equipment
Process
Process
Process
Manpower
Manpower
Manpower
Structure
Structure
Structure

Figure 6: Distinctive Focus of Flexibility vis-a-vis Agility in Terms of Constituent Elements

Proposition-5: The distinctive focus of flexibility and agility differs in terms of their relative emphasis on variety and responsiveness.

In a broad sense, flexibility has relatively more emphasis on variety, while the literature on agility indicates greater emphasis on responsiveness to change. In other words, agility is focused on increasing responsiveness without loosing flexibility where as flexibility is focused on increasing variety without sacrificing the responsiveness. But what is ideally needed is a simultaneous improvement in both flexibility and agility. We refer to this as “flexagility” (or FlexAgility). The term flexagility may stress towards achieving simultaneously greater variety with greater responsiveness to change. This vision is reflected in Figure-7. This will help us to move towards mass customization systems that ideally will be as flexible as one of a kind (OAK) systems and as efficient as mass production systems (Flow Lines). The challenge is how to move the conventional batch manufacturing systems towards mass customization systems.

In fact the scope should not be just the physical systems but the enterprise level systems. This implies the judicious structuring of various decision systems and the information systems across the enterprise, integrating several business processes and physical systems. In our opinion, IT will play a major role towards flexagility in manufacturing enterprises. Moving from conventional batch manufacturing to mass customization manufacturing enterprises, using IT, will go through several stages. The concepts of decision information synchronization (DIS) for Semi-Computerized Flexible Systems (SCFM) as proposed by Wadhwa and Bhagwat (1998) will be very important in defining these stages. The dynamic reconfiguration based on effective decision systems in a DIS environment as suggested by Wadhwa and Chopra (2000) for Agile Manufacturing Systems can be seen as a flexagility capability here. Here Dynamic Re-configurability capability (i.e same ability of efficient flow lines for a changed volume- variety demand) offers Agility and Integrated Dynamic Scheduling (which variety to be scheduled on which efficient line) offers means to deal with increasing variety. We therefore propose that we view the manufacturing enterprises on the DIS continuum evolving with their flexagility capabilities as FAME (Flex-Agility focused Manufacturing Enterprises) systems. The main enterprise in this could be a manufacturing system or a supply chain or a combination. It is important to discuss and model these enterprises from a DIS perspective.

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Rapidly Rapidly Mass Mass Reconfigurable Reconfigurable Customization Customization Systems Systems High High
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iety
iety
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FAME)
FAME)
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Figure 7: A vision for Future Evolution of Flexagility.

Flexagility: A Decision Information Synchronization (DIS) Perspective

Let us use the Dynamic Reconfiguration with Integrated Scheduling (DRIS) architecture proposed by Wadhwa and Chopra (2000) to discuss the DIS perspective. Now one of the important requirements for effective DRIS is that Decision Making is close to real time. The information availability need to be fully synchronized with the Decision Making. Any DIS delays will render the DRIS benefits less effective. When these delays are significant, it may become counter productive to use DRIS. In fact as described by Wadhwa, Magure and Browne (1986) through a decision point framework, the decision points need to synchronize the entity flow processes. At an enterprise level the role of DIS is more challenging to synchronize entity flow processes because often they are under the control of multiple autonomous agents (i.e supply chain members). It is therefore important to study the flexagility at the enterprise level – FAME. Since it is the decision system and the available flexibility that fundamentally offers control on entity flows, it is important to focus on their role. A DIS perspective on flexible systems provides such a focus. The agile systems need a higher level of decision- information synchronization and are thus less tolerant to DIS delays (see Figure 8).

Group of Group of Dynamic & Dynamic & Less tolerance Less tolerance Responsiveness Responsiveness Systems
Group of
Group of
Dynamic &
Dynamic &
Less tolerance
Less tolerance
Responsiveness
Responsiveness
Systems
Systems
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Systems
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Figure 8: A comparison of Flexibility and Agility: DIS Perspective

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Flexibility Models in SCM: Key Results

In order to gain some insights into the interrelations between flexibility, responsiveness and decision-information-synchronization, we have developed number of demonstration models of manufacturing systems and supply chains with flexibility, operating under various decision- information-synchronization scenarios and carried out simulation studies. For the purpose of the above studies, we have developed a hierarchical simulation model of a flexible supply chain system as shown in Figure-9. At the highest level, the model comprises of a flexible supply chain system connected to the customers and the suppliers. The flexible supply chain system accepts orders from the customers, source the required materials from the suppliers and fulfill the customer orders in the best possible way. The flexible supply chain system comprises of a number of supply chains interconnected in parallel through an order management system. The order management system accepts the orders for the entire supply chain system and depending upon the level of flexibility and the supplier selection criteria, allocates the orders to different supply chains in a dynamic manner. When the supply chain system operates under no-supply chain-flexibility conditions, each supply chain will be able to handle only one type of product and accordingly the order management system does not have any role to play. However, as flexibility increases, each supply chain will handle more than one product type and the order management system will have to take a decision on the allocation of orders to the supply chains. For this purpose we have incorporated a protocol as follows; (a) upon receiving a customer order, the order management system sends a request for bid to all the supply chains indicating the product type and quantity required. (b) all supply chains respond to this call and submit their bids for supplying the above quantity. In case any supply chain is not in a position to supply a particular product type, it will send a regret message. In their bids, each supply chain will indicate how many orders it has pending with it, (c) based on the bids received from different supply chains, the order management system selects the most appropriate supplier and issues a supply request on that supply chain. In this model, the criteria for selection of a supplier is set to be the minimum number of orders waiting i.e. a supply chain with lowest number of orders waiting to be fulfilled will be selected for issuing the supply request, (d) upon receiving the supply request, the supply chain will backlog the order and initiate necessary action to source the materials from its supplier and this process will continue up to the end of the chain, (e) the supply chain node at the end of the chain is called the end supplier and is modeled to deliver any kind of materials immediately. The materials thus originated travel through the chain back to the customer who placed the order and the time elapsed between the placements of an order the receipt of products is measured as supply chain lead-time performance. In these studies, six supply chains have been modeled and the manufacturing flexibility of all these chains have been simultaneously changed to study their combined effect on the supply chain performance. These levels are referred to as MSFL-1 to MSFL-6. MSFL-1 refers to all the manufacturing systems having a flexibility level of 1. MSFL-2 refers to all the manufacturing systems having flexibility level of 2, and so on.

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Supplier(s) SSuupppplliier(ser(s))
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Chain CCuuststomomer(s)er(s) Customer(s) System System Supply Chain 1 Supply Chain 1 Supply Chain 2 Supply Chain
Chain CCuuststomomer(s)er(s) Customer(s) System System Supply Chain 1 Supply Chain 1 Supply Chain 2 Supply Chain
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Unloading
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Machine n
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Machine Machine Machine Machine n Machine n Machine n Figure-9: A Hierarchical Simulation Model In the

Figure-9: A Hierarchical Simulation Model

In the next level of the model each supply chain comprises of a number of supply chain nodes. A supply chain node is a generic entity developed based on the Supply Chain Operations Reference (SCOR) model of the supply-chain council (www.supply-chain.org). Supply chain node is comprised of a number of functional entities such as plan, source, make, deliver and return in accordance with the Supply Chain Operations Reference (SCOR) model. Among these entities, the entity called “make” refers to the manufacturing system. Accordingly, we have embedded a model of the flexible manufacturing system into the supply chain node to function as “make”. In the last level of the model, the manufacturing system (make) comprises of a number of machines, a loading station and an unloading station. The loading station receives all the customer orders and depending upon the level of flexibility and the machine selection logic, allocates the orders to the machines. In this model the machine selection logic is implemented as minimum waiting time. The required manufacturing flexibility is built into this manufacturing system such that under the conditions of no flexibility (MSFL-1) each machine will be able to manufacture only one product type. As the flexibility level increases to the first level (MSFL-2) each machine will be able to manufacture two types of products, as the flexibility increases to the next level (MSFL-3) each machine will be able to three types of products, and so on up to six levels of flexibility. The results of the simulation studies carried out with the help of these models are briefly presented below.

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Influence of Manufacturing Flexibility on the Manufacturing Lead-time

From the results the following observations may be noted: (a) The manufacturing lead-time monotonously decreases with increasing levels of manufacturing flexibility. This indicates that manufacturing flexibility negatively influences manufacturing lead-time. (b) The influence of manufacturing flexibility on the manufacturing lead-time appears to be strong (F=770.40) and highly significant (p<0.000). (c) The influence is not uniform at all the levels of flexibility. The results indicate a lead-time reduction of 62.82%, for a change in the flexibility levels from a condition of no-flexibility (PFL=1) to a condition of full-flexibility (PFL=6), in a diminishing manner (see Figure 10).

Plot of Means PFL Main Effect F(5,12954)=770.40; p<0.000 22000 20000 18000 16000 14000 12000 10000
Plot of Means
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F(5,12954)=770.40; p<0.000
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PFL
Variable: LTIME

Figure-10: Pattern of Lead-time Variation with Manufacturing Flexibility

The above observations imply that: (a) Manufacturing systems that use manufacturing flexibility are likely to achieve shorter lead-times as compared to those that do not use it. (b) Manufacturing systems that use greater levels of manufacturing flexibility are likely to achieve shorter lead-times, but the benefit diminishes with increasing levels of flexibility. (c) The first level of manufacturing flexibility (PFL=2) provides the greatest benefit, followed by lesser and lesser benefits at subsequent levels. (d) The lead-time accomplished with the first level of flexibility (PFL=2) is closer to the lead-time accomplished with full- flexibility (PFL=6) rather than to the lead-time under the conditions of no-flexibility (PFL=1). Similarly, the lead-time accomplished with the second level of flexibility (PFL=3) is closer to the lead-time accomplished with the full-flexibility (PFL=6) rather than to the lead-time accomplished with the first level of flexibility (PFL=2). This pattern continued throughout. (d) Since it is generally expected that the levels of investment, magnitude of transition penalties and the performance penalty of having and using flexibility increase with increasing levels of flexibility, the above pattern of lead-time reduction has two implications. Firstly, at lower levels of flexibility the benefits due to flexibility may always outweigh the penalty of using flexibility. Secondly, at higher levels of flexibility the penalty of using flexibility may outweigh the benefits due to flexibility. Hence, there is a need to arrive at judicious levels of flexibility to balance the penalties and benefits.

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Impact of information cycle period on the flexibility enabled responsiveness improvement

Plot of Means 2-way interaction F(25,12924)=10.83; p<0.000 9000 8500 IP 1 8000 IP 20 7500
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Figure 11: Interaction Between Varying Levels of IP & MF

Wadhwa and Bhagwat (1999) studied the performance of control strategies for flexible systems operating under a periodic status monitoring. This motivated our studies on the effect of information cycle period. Figure-11 shows the interactions between varying levels of information period and the manufacturing flexibility. It is observed that manufacturing flexibility reduces lead-time at lower levels of information period. However when the information period is high, flexibility becomes counter productive and increase in the levels of flexibility will result in increase in lead-time. This observation has two implications, first is that to derive the benefit of flexibility we need adequate IT support which will ensure that DIS delays are within certain limit, the second is that, up to certain levels of DIS delays can be tolerated by flexibility without becoming counter productive. This brings out the importance of using judicious combination of flexibility & IT levels.

Effect of Manufacturing Flexibility on a Single Supply Chain

Plot of Means (unweighted) PFL Main Effect F(5,270)=196.67; p<0.000 56000 54000 52000 50000 48000 46000
Plot of Means (unweighted)
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F(5,270)=196.67; p<0.000
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Figure 12: Influence of Manufacturing Flexibility on Supply Chain Lead-time

This part presents the results of the studies addressing two research questions. The first question is – how does the flexibility of a manufacturing system influence the lead-time performance of a supply chain system that encompasses it? The second question is - how does the transportation delays modify the influence of manufacturing flexibility on the performance of a supply chain system?

The results of the simulation study on the above questions are shown in Figure-12 and Figure-13. From the results, the following observations may be noted: (a) the supply chain lead-time monotonously decreases with increasing levels of manufacturing flexibility. This indicates that manufacturing flexibility negatively influences the supply chain lead-time. The influence of manufacturing flexibility on the supply

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chain lead-time appears to be strong (F=196.67) and highly significant (p<0.000). The influence is not uniform at all the flexibility levels. The results indicate a lead-time reduction of 31.12%, for a change in the flexibility levels from a condition of no-flexibility (MSFL=1) to a condition of full-flexibility (MSFL=6), in a diminishing manner. It is observed that 76.80% of this benefit is realised with increase in the first level of flexibility. With the subsequent levels of flexibility the benefit of lead-time reduction is found to be 14.65%, 7.75%, 0.67% and 0.13% for MSFL=3 to MSFL=6, respectively. These observations imply that manufacturing systems that use flexibility are likely to contribute more for shorter supply chain lead-times as compared to those that do not use it. The results also indicate that the first level of manufacturing flexibility (MSFL=2) provides the greatest benefit, followed by diminishing benefits at subsequent levels. It is also observed in these studies that, as the transportation times of the supply chain increases, the influence of manufacturing flexibility on the supply chain lead-time decreases. These results indicate that investments in flexible manufacturing technologies and associated information technology elements may give significant benefits through lead-time reduction at the manufacturing system level but their contribution to the overall supply chain lead-time performance depends on the transportation times and several other such delays in a supply chain environment. This observation is important for the designers and manager of manufacturing supply chains to arrive at appropriate types and judicious levels of flexibility and IT requirements in a supply chain environment.

Plot of Means (unweighted) 2-way interaction F(10,270)=2.21; p<.0175

55000 TTIME=10 TTIME=50 50000 TTIME=70 45000 40000 35000 30000 Variable: LTIME
55000
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MSFL

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Figure 13: Interactions Between Transport Delays, Flexibility and Lead-time

Proactive Knowledge and Innovation Management Towards Flexagility

We have proposed a flexibility maturity model (Wadhwa and Rao (2002)) to highlight the evolution of proactive flexibility management in enterprises (Fig 14, Fig 15). The concept of flexagility is suggested as a proactive knowledge management approach to manage flexibility towards agility improvements. One important test for the success of flexagility approach is that it must result in improvements towards enterprise synchronization. This is possible if the new decision opportunities offered by available flexibility and agility are well synchronized with other entity flows. A good IT infrastructure, for instance ensures good synchronization between the decision and information entity flows with respect to the other entity flows (i.e. material, resources, money etc).

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Figure 14: Towards Proactive Flexibility Management (Wadhwa and Rao (2002)) Managing Managing Flexibility Flexibility
Figure 14: Towards Proactive Flexibility Management (Wadhwa and Rao (2002))
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Figure 15: Flexibility Maturity Model (Wadhwa and Rao (2002))

In our experience, the organizations require an increasing level of knowledge and innovation management while moving towards the higher levels of flexibility in the Flexibility Maturity Model. For instance at the flexagility level, the enterprise must proactively manage its flexibility to increase the agility (responsiveness or lead times). As suggested by Wadhwa and Rao (2000), one strategy here could be to minimize the internal variety while maximizing the external variety. This is possible by modular and flexible designs. Further one can innovate ways by which the manufacturing flexibility and design flexibility can be combined effectively and used towards enterprise synchronization. A good example is the DRIS architecture described before. In order to promote knowledge and innovation management in these directions there is a need for development of

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demo models, covering enterprises as single units as well as parts of the supply chains. The flexibility focused demo models aimed at the lead-time reduction at the supply chain level (as described in this paper) offer a good platform to further develop the flexagility theme. There is also a need to have flexagility models to study the agile changes in variety and volumes. This implies development of reconfiguration strategies for the flexible systems and their integrated and dynamic scheduling, to deal with the volume and mix changes. This is an important direction for our research.

Conclusion

In this paper, we made an attempt to develop an understanding of agility from a practitioner’s point of view, by relating it with the other important concept of flexibility. Our study indicated that both flexibility as well as agility are evolved in response to the evolving competitive priorities. While the focus of flexibility is on managing the predictable change with the help of a predetermined response, agility focuses on managing the unpredictable change in an innovative manner. The capability for predetermined response of flexibility is embodied in the equipment and processes, where as the response ability of agility resides mainly in the structural relationships. Accordingly, the focus of these concepts slightly differ. It is important to combine the flexibility and agility concepts to evolve a paradigm where flexibility (alternatives) becomes a platform to increase the system agility (responsiveness). Our vision is that the theme of flexagility can promote these ideas at the enterprise synchronization levels. This implies simultaneous increase in variety and responsiveness, by increasing the levels of decision information synchronization in flexible enterprises. In order to effectively implement flexagility, there is a need for developing enterprise level models where the impact of flexibility on responsiveness may be studied. This will encourage proactive management of knowledge and innovations to evolve more “agile friendly” forms of flexibility. We discussed some supply chain models with manufacturing and supply chain flexibility and showed how the inherent flexibility is useful towards increasing the system responsiveness (i.e. lead time reductions). We also suggested the directions of evolution in these models to promote future research in the flexagility domain.

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