Global Journal of Flexible Systems Management

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Sushil

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Department of Management Studies

Indian Institute of Technology Delhi

Hauz Khas, New Delhi-110016

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Global Journal of

Flexible Systems Management

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Flexible Systems Management)

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Editorial Board

Rakesh Kumar Agrawal

School of Management

University of Western Sydney

Sydney, Australia

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University of Victoria

Victoria, Canada

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University of Hull, UK

Editor-in-Chief,

Systems Research and

Behavioral Science

Jatinder N.D. (Jeet) Gupta

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Department of Accounting &

Information Systems

College of Administrative Science

The University of Alabama in

Huntsville, USA

Associate Editor, Decision Sciences

Anthony Michell

Visiting Prof. (Strategy & Global Mgt.)

School of Public Policy and

Management, KDI, Korea

H. Paul

Professor and Dean

School of Management

Asian Institute of Technology

Pathumthani, Thailand

Daniel Rouach

Professor

School of Management

ESCP-EAP, Paris, France

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Management & Organization

Faculty of Business Admn.

National University of Singapore

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Asia Pacific Journal of Management

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IIT, Delhi

P.K. Jain

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IIT, Delhi

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Managing Committee

Deputy Editors

K. Momaya

Dept. of Management Studies

IIT, Delhi.

O.P. Sharma

Delhi College of Engineering,

Delhi

Regional Editor-North America Region

Prabir K. Bagchi

Dir.-Logistics & Operations Management

School of Business & Public Management

The George Washington University

Washington – DC, USA

Associate Editors

James H. Perry

The George Washington University

Washington – DC, USA

Susan White

The George Washington University

Washington – DC, USA

Srinivas Prasad

The George Washington University

Washington – DC, USA

Thomas Corsi

University of Maryland-College Park, USA

Herbert Kotzab

Copenhagen Business School

Denmark

Tage Skjoett-Larsen

Copenhagen Business School

Denmark

Helge Virum

Norwegian School of Management

Nanua Singh

Professor and Director of Integrated

Product Development Laboratory,

Wayne State University, USA

Associate Editor-in-Chief

International Journal of Robotics and CIM

Editor : Product and Process Development

Kathryn E. Stecke

The University of Texas at Dallas

School of Management

Richardson, USA

Editor-in-Chief

Intl. Journal of Flexible Mfg. Systems

Ushio Sumita

Professor

Graduate School of International Management

International University of Japan, Japan

Shashi Ullal

Ex. Vice-Chairman

Hughes Escorts Communications Limited

Gurgaon, India

Henk W. Volberda

Professor of Strategic Management &

Business Policy

Rotterdam School of Management

Erasmus University, The Netherlands

Global Journal of

Flexible Systems Management

giftjourn@l

ISSN 0972-2696 Vol. 3 No. 4, December 2002

Contents

Editorial iii

Research Papers

Understanding Flexibility in Supply Chains :

A Conceptual Framework and Models 1

K. S. Rao and S. Wadhwa

Managing Change for Competitiveness 13

Rajiv Kumar Garg and T. P. Singh

Sustainable Competitive Advantage with Core Competence : A Review 23

Anjana Kak and Sushil

Dispute Prone Contract Clauses – A Basis for Operational Flexibility

in Contract Administration 39

K. Chandrashekhar Iyer, Satyanarayana N. Kalidindi and L. S. Ganesh

giftjourn@l

Global Journal of

Flexible Systems Management

2002, Vol. 3, No. 4, pp iii

Editorial

The trajectory of

technological growth is cycle

of myth–reality–myth.

It wasn’t long ago that the

myths of telephone,

radio, and television

(originating mostly

in science fictions)

metamorphosed

into realities.

What we witness today in

abundance is almost similar

looking instruments called

cellphones being used

on a scale never observed

before, thus annihilating

time and space.

Human body is precious

and it has the highest

evolutionary value because

of unique brain and

spinal nerves.

Human body is the most

flexible machine in existence

on the earth till now

Flexible Systems Management

The ‘Myth–Reality–Myth’ Syndrome

Around 1600 AD, Giornado Bruno was burnt alive on stakes on the charges of heresy

because he had the ‘temerity’ to profess the ideas based on Coprenicus’s view of the Universe,

which at that point of time, appeared to be a ‘myth’; the ‘reality’ of those times being that the

Earth was the centre of the Universe and, therefore, stationary! And the Church of this time

took upon itself the role of a prolocutor for any and every matter, including the astronomical

and the scientific knowledge.

But gradually, the ‘myths’ propounded by Copernicus and Galileo, advocating the existence

of an open Universe, of which the Earth was but a small part, shattered the then prevalent

‘truth’ of a closed Universe created and maintained in motion by God! This is one classical

example of a ‘myth’ shattering an established ‘truth’ and becoming a reality in due course of

time.

However, a closer look at history of mankind and technological advancements (both are

closely intertwined anyway) reveals that the two are mutually sustaining and that the growth

trajectory of both is a cycle of myth–reality–myth. For example, it wasn’t long that the myths

of telephone, radio, and television (mostly originating in science fictions) metamorphosed into

realities, but the latest advancements in the information technology are stark landmarks

epitomising this never ending itinerary.

Many of us (and this includes the author too) may be recollecting the TV serial Startrack

aired some 25 years ago wherein the characters carried ‘phones’ they could use anytime and

anywhere. Although it appeared as a fictional myth at that time but what we witness today in

abundance is almost similar looking instruments called cellphones being used on a scale never

observed before, thus annihilating both: the time and space. And the human mind is the precursor

and the ultimate impeller of this cycle of progress.

But this is not to suggest that the human body has been a recluse in this journey. On the

contrary, the human body is precious and it has the highest evolutionary value because of

unique brain and spinal nerves; no other living form is so equipped. The mind is the wielder of

muscles. As the force of a hammer depends on the energy applied, the power expressed by the

human’s bodily instrument depends upon his will and courage because the body is literally

manufactured and sustained by mind and it is through this synergetic arrangement that the man

has been able to conceive, design, and operate space and time annihilators.

But the duo of human mind and the instrument of body is the ultimate primogenitor of

all that is stated above. And it does not need much sagacity to appreciate that flexibility is the

vehicle carrying all these, since the human body is the most flexible machine in existence on

the Earth till now. All other shades of flexibility we witness in the management of systems,

machines, organisations, practices, and technologies etc. are concomitant with the inherent

flexibility in the human thoughts and actions.

But would this myth–reality–myth syndrome continue forever? Would there be a time

when the human and technological evolution have conquered the highest peak? We have no

answers.

O.P. Sharma

Deputy Editor

1

Flexible Systems Management

Understanding Flexibility in Supply Chains:

A Conceptual Framework and Models

K. S. Rao

Research Scholar

Indian Institute of Technology Delhi

Hauz Khas, New Delhi, India

S. Wadhwa

Professor

Indian Institute of Technology Delhi

Hauz Khas, New Delhi, India

Abstract

This paper presents the results of a conceptual study and literature review aimed at understanding flexibility in the context of

supply chains. The study indicated that several types of feasible in supply chains. Identification and exploitation of flexibilities

of these flexibility types is important for enhancing the competitive performance of supply chains. Practicing managers would

benefit from understanding the nature of flexibility in supply chains and how it can be exploited to meet the customer requirements.

Towards this, the paper proposes a conceptual framework and conceptual models that could help researchers and practitioners

to understand supply chain flexibility in a more intuitive manner. The approach adopted is to systematically explore the underlying

concepts of flexibility in the internal chains (manufacturing systems) and to extend them into the domain of external chains

(supply chains). The proposed conceptual framework is based on resource-transformation-process-product interdependencies and,

using this, various types of flexibility possible in supply chains have been identified. These flexibility types are discussed in

relation to the manufacturing systems and the ideas are extended to the domain of supply chains. The paper is motivated by the

view of Wadhwa and Browne (1989) where flexibility is seen as a means to provide alternative options for the flow of entities

(material, resources, information etc) through various interacting processes in any system.

Keywords : flexibility, manufacturing systems, supply chains, conceptual framework

giftjourn@l

Global Journal of

Flexible Systems Management

2002, Vol. 3, No. 4, pp 1-12

Introduction

The concept of supply chain was introduced in early 1980s

and ever since it has been receiving increasing attention

from both practitioners as well as researchers (Ulrika Persson,

1997). The dictionary meaning of a chain represents a series

of connected things. In the case of a supply chain, the term

chain is used as a metaphor to represent a series of

connected business entities. This view has been widely

supported in the literature. For instance, Svenssion (2002)

views the supply chain as a network of organizations that

are involved, through upstream and downstream linkages,

in different processes and activities that produce value in

the form of products and services in the hands of the

ultimate consumer. Similarly, Jan van Dorp (2002) views a

supply chain as a network consisting of two or more

enterprises which are each for itself and not a constituent

of one or more of other enterprises, or which are separated

by market forces. Nigel (1998) observes that the supply

chain consists of the links between a firm and its suppliers,

through to its distribution organization and on to its

customers. Similar views are expressed by number of other

authors. One question that follows this observation would

be what is it that chains the entities in a supply chain. In

our view, it is the materials, product(s)/family of products/

services, and the information that flow through these entities

which chains them as a supply chain. This view is also

widely supported in the literature. For instance, Milgate

(2001) observes that supply chains include all activities

associated to the flow and transformation of goods from the

raw material through the end customer. Towill (1996) and

Gunasekaran et al. (2001) cite a definition of supply chain

as a system whose constituent parts include material

suppliers, production facilities, distribution services, and

customers linked together via the feedforward flow of

materials and the feedback flow of information.

Similarly, Perry and Sohal (1999) cite a definition of

supply chain management as the integration of business

processes from end user through original suppliers that

provide products, services and information that add value

for customers. Cox (1999) describes the current orthodoxy

in supply chain management thinking as a way of thinking

that is devoted to discovering tools and techniques that

provide for increased operational effectiveness and efficiency

throughout the delivery channels that must be created

internally and externally to support and supply existing

corporate product and service offerings to customers. Walters

and Lancaster (2000) view supply chain management as the

management of the interface relationships among key

stakeholders and enterprise functions that occur in the

maximization of value creation which is driven by customer

needs satisfaction and facilitated by efficient logistics

management. Lau and Lee (2000) observe that the supply

chain concept is based on the formation of a value chain

network consisting of individual functional entities

committed to provide resources and information to achieve

the objectives of efficient management of suppliers as well

as the flow of parts. Chandra and Kumar (2000) define

Framework

and

Models

2

giftjourn@l

Towill (1996) and Gunasekaran et al. (2001) cite a

definition of supply chain as a system whose

constituent parts include material suppliers,

production facilities, distribution services, and

customers linked together via the feedforward flow

of materials and the feedback flow of information.

K.S. Rao and S. Wadhwa

supply chain as a network (group) of entities (members)

formed to solve a common logistics problem. Alshawi (2001)

observes that the supply chain takes an integrated approach

to logistics management. It covers the flow of goods from

the suppliers through manufacturing and distribution chains

to end consumer.

The above observations indicate that a supply chain is

a way of looking at a group of entities from materials,

services, logistics and information flow perspective.

Therefore, the concept of supply chain is generic in nature

and can be applied in several contexts. Two such contexts

are the case of internal and external chains. When the entities

of a supply chain are inside the organizational boundary, it

is called an internal chain and when the entities are owned

by multiple organizations, it is called an external chain.

From this perspective, a manufacturing system can be viewed

as a kind of internal supply chain and the commonly used

word ‘supply chain’ can be viewed as an external supply

chain. The conceptual framework proposed in this paper is

based on certain underlying commonalties between the

internal and external chains. It may be noted that internal

and external supply chains we are looking at are the

elements at different levels of aggregation. In both chains,

a set of products that flow through are the supply chain,

chains these entities to form the supply chain and each of

the products that flows through the supply chain is

associated with a process comprising of a sequence of process

steps. In some cases, it may be possible to interchange the

sequence of performing these process steps without affecting

the process (for example,

sequencing flexibility as in

the case of manufacturing

systems). Each of the process

steps may require one or

more resources to complete

the process step and in this

process they consume certain

time and cost and add certain value. In both the internal as

well as the external chains, each of the resource may be

characterized in terms of their ability to perform different

process steps, also called the process capabilities. Some of

the resources may have overlapped process capabilities.

Under such circumstances, certain process steps can be

performed using alternative resources (for example, routing

flexibility as in the case of manufacturing systems). Finally,

in both types of chains, the existence of flexibility

(sequencing flexibility, routing flexibility) increases the

control complexity and the associated information/decision

flows. Thus the functioning of both types of chains and the

underlying flexibility concepts remains the same. One such

commonality explored in this paper is the product-

transformation-process-resource interactions, as discussed in

the next section. Based on this we have proposed the

conceptual framework and models for understanding

flexibility in supply chains.

It is interesting to note that the notion of a chain reflects

two aspects: first, it comprises of a certain number of links

connected to each other and second, the relationship

between these links is inherently flexible, i.e. flexibility is

an inherent property of a chain. Probably the chain is the

best possible combination of connectivity and flexibility.

This idea motivated our study on the supply chain

flexibility. While the concept of flexibility is well developed

in the manufacturing domain (internal chains), in the domain

of supply chains (external chains), this concept needs to be

enriched both at conceptual as well as operational levels.

This paper is a step in the former direction as it proposes a

conceptual framework and conceptual models that could help

researchers and practitioners to understand supply chain

flexibility in a more intuitive manner. The approach adopted

is to systematically explore the underlying concepts of

flexibility in the internal chains (manufacturing systems) and

to extend them to the domain of external chains (supply

chains). Accordingly, the paper is organized into three parts:

Part-1 presents the key notions underlying the proposed

conceptual framework in the form of a series of propositions;

Part-2 presents multiple views of the proposed conceptual

model to emphasize its generic nature and its applicability

in several contexts; and part-3 presents various conceptual

models to represent some possible types of flexibility in the

supply chains.

Part-1: The Conceptual Framework

and the Underlying Key Notions

As discussed above, the proposed conceptual framework of

supply chain flexibility is based on the interdependencies

between products, transformations, processes, and resources

flowing in a supply chain.

This idea is depicted in

Figure-1. The key notions

of the proposed framework,

viz. products, transforma-

tions, processes, and

resources are well known in

the domain of internal

chains (manufacturing systems). However, to provide greater

clarity, we discuss these underlying notions in this part of

the paper with the help of a series of propositions. The

propositions are very generic in nature and commonly

known. The objective is to discuss the key notions in a

known domain (internal chains) and clarify their intended

meaning in the new domain (external chains). The

discussions will be leading towards identification of

flexibility.

Why do Manufacturing Systems and Supply Chains Exist?

Proposition-1:

Manufacturing systems and supply chains

exist to meet the perceived market demand for products.

Manufacturing systems and supply chains are a set of

interdependent entities that exist to meet the perceived

market demand for products. Boubekri (2001) observes that

supply chain management involves operations that deal with

how the customer orders are processed through the system

and ultimately filled. The purpose of a manufacturing system

is to manufacture products in the required quantity and

quality at a minimum cost. The purpose of a supply chains

3

Flexible Systems Management

Understanding Flexibility in Supply Chains: A Conceptual Framework and Models

is to ensure that these products are distributed in time and

space so that the right products are available at the right

place, at the right time and at the lowest possible cost. Thus,

the realization of products and their distribution to meet the

market demands is the main purpose of manufacturing

systems and supply chains. Then the next question would

be to examine how products are realized.

How are Products Realized?

Preposition-2:

Products are realized from materials through

a series of transformations in their states, brought about by

performing certain processes on

them, with the help of certain

resources, and in this process,

certain time, cost and effort are

consumed.

This is the core idea depicted in the conceptual

framework shown in Figure-1. In the context of this

framework, the key notions of product, transformation,

process, and resource may be interpreted as follows.

The concept of supply chain is generic in

nature and can be applied in several contexts.

Figure 1 : A Conceptual Framework of a Supply Chain

What is a Product?

Lemma 2.1:

A product is anything that can be sold to a

market and that might satisfy a want or need. It is a bundle

of physical, service, and symbolic attributes designed to

enhance buyers’ want satisfaction.

Lemma-2.2:

Products include goods (the tangible

components of a product) and services (the intangible

components of a product). All the real life products can

be placed on a goods-services continuum, as shown in

Figure-2.

Figure 2: Goods-Services Continuum

In this paper, we are mainly concerned with the tangible

components of a product, i.e. goods flowing through the

supply chain. The next important notion is the

transformation.

What is a Transformation?

Lemma 2.3:

A transformation is something that happens to

the product when it undergoes a process.

The idea of transformation refers to something that

happens to a product, as it passes through a manufacturing

system or a supply chain. In the case of manufacturing

systems, transformations involve changing the form and

dimensions of the materials as they pass through various

manufacturing processes. In the case of a supply chain, some

examples of transformations may include: (a) after a

conventional manufacturing

process a raw material gets

transformed into a semi-finished

or a finished product, (b) after

assembly, two or more products join to form one or more

new products, (c) after disassembly, one product may get

separated into two or more products, (d) after packaging, a

product may get transformed into a form that is more suitable

for distribution, (e) after storage, there will be a change in

the temporal position (the product moves in time) of the

product, (f) after transportation, there will be change in the

spatial position (the product moves in space) of the product,

(g) after aggregation, the product will move from a smaller

lot to a bigger lot, (h) after disaggregating, the product will

move from a bigger lot to a smaller lot.

Lemma 2.4 :

Transformation of materials into products

require a set of partially ordered transformations

Transformation of materials into products requires a set

of partially ordered transformations to be carried out on the

materials. This set of transformations is something that

guides the development of process plans or process maps

discussed subsequently. The size of the transformation set

may vary, depending upon the kind of process and

transformation. For instance, in the case of operations such

as punching, stamping etc., the transformation set may

include only one transformation. On the other hand, the

transformation set for a complex machined component may

include several transformations. These transformations will

have to be performed in a particular order or sequence,

which may be interchangeable under some circumstances.

This will give rise to an important type of flexibility called

sequencing flexibility which is discussed below.

Lemma 2.5:

Under some circumstances it is possible to alter

the order/sequence in which the transformations are to be

performed to transform materials into products.

The idea of an order or sequence is important to

understand a type of flexibility called the sequencing

flexibility in manufacturing systems. Sequencing Flexibility

refers to the possibility of interchanging the order in which

the required transformations are performed on a product.

This sequence is generally represented through the process

plan, which is an abstract form of transformation sequence

in the process plane. In general, each type of product can

be associated with many sequences of transformations as

determined by the technological constraints in realizing the

4

giftjourn@l

Manufacturing systems and supply chains are a set

of interdependent entities that exist to meet the

perceived market demand for products.

product type. However, in most of the cases, a single process

plan is followed as a matter of convenience or due to an

established practice. Depending upon the design of the

product, it is possible to alter the sequence of

transformations to be performed. This gives rise to the

sequencing flexibility. The importance of the sequencing

flexibility lies in the fact that this can be built into the

product design, thereby avoiding much costlier option of

building flexibility into the manufacturing systems.

The potential of sequencing flexibility in enhancing the

manufacturing system performance has been recognized by

the researchers and efforts have been made to understand the

underlying mechanisms with a view to exploit this type of

flexibility. For instance, Rachamadugu et al. (1990) studied

the effects of sequencing flexibility on the performance of

various scheduling rules in environments such as job shops

and flexible manufacturing systems. They have found that

relative differences in performance of various scheduling

rules diminish and the relative rankings change as

sequencing flexibility increases. They have noted that since

sequencing flexibility is product specific, it exists in

conventional manufacturing systems as well as in flexible

manufacturing systems. In the past, organizational control

issues and the high cost of information systems precluded

the exploitation of sequencing flexibility even when it was

available in the product structure. However, recent advances

in information technology and the declining cost of

information systems make it

possible to use sequencing

flexibility at the operational

level. They further noted

that if the benefits of

sequencing flexibility in

terms of reduced flow times and inventories are sufficiently

great, this has implications for designing products in such a

way as to maximize the potential sequencing flexibility in

manufacturing the products. Rachamadugu and Schriber

(1991) proposed an approach for modeling of perfect

sequencing flexibility in a scheduling environment.

Benjaafar and Ramakrishna (1996) introduced several

representation and measurement schemes for sequencing

flexibility and studied the relationship between sequencing

flexibility and system performance under a variety of design

assumptions and operating conditions. Wadhwa and Rao

(2000) discussed about the determinants for process

sequence in the context of Process Concurrency. They

observed that, two processes ‘A’ & ‘B’ are carried out

sequentially due to any of the following reasons: (a) done

as a matter of established practice, habit or for convenience,

(b) due to functional boundaries, (c) ‘B’ requires certain

information from ‘A’, (d) ‘B’ requires certain decision from

‘A’, (e) ‘B’ requires certain materials from ‘A’, (f) ‘B’ requires

certain resource(s) which are currently being used by ‘A’, or

(g) there is a need for synchronization of certain event(s) of

‘A’ & ‘B’, which may result in certain lead-lag precedence

relationships between ‘A’ & ‘B’

In the case of a supply chains, the process sequence may

be mainly as a result of information and material

dependencies. The information in the form of customer

orders flows upstream through the chain and materials in the

form of products flows downstream through the chain.

Under some circumstances, it may be possible to alter the

sequence in which the information and materials flow. This

will give rise to certain types of flexibility in supply chains.

Whatever may be sequence, every transformation requires

one or more processes to be performed. Hence, the next

question to be addresses would be to understand what a

process is.

What is a Process?

Lemma 2.6:

A process is any operation through which a

set of inputs go through one or more steps resulting in a

more valuable set of outputs.

A process can be viewed as a series of interrelated

operations, which add value to its inputs resulting in outputs

that are more valuable. A process comprises of a set of

partially ordered steps intended to achieve the desired

output. These steps may be called operations. Sometimes

these steps are also referred to as processes themselves, and

a process is viewed as a set of partially ordered processes.

It is important to note that alternative processes can

substitute processes.

Lemma 2.7:

Under some circumstances a process can be

substituted by an alternative

process with or without

some kind of penalty in

terms of time, cost and

effort.

This idea is important to

understand certain types of flexibility. For instance, Benjaafar

and Ramakrishna (1996) used this idea to describe certain

types of flexibility originating from the product designs.

They observed that the mechanisms that enable flexibility

can be traced to specific physical and logical characteristics

of a manufacturing system and suggested that flexibility in

a manufacturing system can be classified as being either

product related or process related. They further observed

that, in general, three types of flexibility could be associated

with the manufacturing of a product. The first, operation

flexibility, relates to the possibility of performing an

operation on more than one machine. The second,

sequencing flexibility, refers to the possibility of

interchanging the sequence in which required manufacturing

operations are performed. The third, processing flexibility,

which is determined by the possibility of producing the

same manufacturing feature with alternative operations, or

sequences of operations. Lemma 2.5 proposed above refers

to the above-mentioned sequencing flexibility.

Whatever may be the type of process, every

process requires one or more resources to perform it.

Hence the next important question is to understand what a

resource is.

K.S. Rao and S. Wadhwa

5

Flexible Systems Management

It is useful to extend the idea of flexibility from a

manufacturing domain (internal chains) to the supply

chain domain (external chains).

emphasize the applicability of the framework to a wide

variety of contexts.

The Resource View

Figure-3 presents the resource view of the framework. In

the resource view, any system is visualized as a set of

interconnected resources through which the products flow.

Typical examples of resource view are various types of

manufacturing systems such as, flow shop, batch shop, job

shop, and flexible manufacturing system, and the

conventional supply chain also is a kind of resource view.

The resource view is more useful to represent situations

where same the processes are repeatedly performed by the

the same resources. Hence, it is commonly used in

manufacturing and supply chain environments.

The Process View

Figure-4 presents the process view of the framework. In the

process view, any system is visualized as a set of

interconnected processes through which the products flow.

Typical examples of process view are process plan, project

plan and process map. The process view is more useful in

process-focused systems.

For instance, in the case of

project management, each

project has a unique start

and a unique end and all

the intermediate process are mapped with the help of a

project plan. The case of one-of-a-kind manufacturing is also

similar with a unique process plan. Recently there has been

considerable focus on process mapping and process

improvement. The business process re-engineering, the

continuous process improvement, are some of the initiatives

in this direction. In a supply chain environment, process

Figure 4: The Process View of the Conceptual Framework

Understanding Flexibility in Supply Chains: A Conceptual Framework and Models

What is a Resource?

Lemma 2.8:

A resource is a means to perform a process on

a product.

In the context of this paper, we propose to view a

resource as a means to perform a process on a product. Each

resource will have certain capabilities to perform these

processes. These capabilities are sometimes referred to

as process capability. The term process capability is

often used in a statistical sense to represent the relationship

between the allowed and actual spread of a controlled

process. In the context of this paper, we use the term

process capability to represent the ability of a resource to

perform operations required for one or more processes.

Process capability is a key idea behind resource related

flexibility.

A process requires one or more resources to perform the

required operations. The converse also may be true. A

resource may be able to perform operations required for one

or more processes. It follows from this that resources with

overlapped/identical process capabilities will be able to

substitute for each other.

Under some circumstances it is possible to substitute a

resource with one or more alternative resources, to perform

a given process.

This idea is key to understand resource related flexibility.

In general, when there are two or more resources with their

process capabilities overlapped, they give rise to a type of

flexibility called the routing flexibility in manufacturing

systems. Routing flexibility of a manufacturing system is its

ability to produce a part by alternative routes through

the system. In the case of supply chain an analogous

situation can be found with multiple suppliers, multiple

manufacturers, multiple modes of transportation, etc. This

gives rise to a type of flexibility where the materials will

flow through alternative

channels. Several such ideas

from manufacturing domain

can be extended into the

domain of supply chains.

Some directions for this could be found in literature. For

instance Milgate (2001) observed that each supplier in a

supply chain is similar to a machine processing in a

production system. This paper intends it is useful to extend

the idea of flexibility from a manufacturing domain (internal

chains) to the supply chain domain (external chains).

Wadhwa and Rao (2002) have suggested this important

insight along with the need to explicitly model

simultaneously the chain elements of the supply chain along

with those of the manufacturing system (internal chain). The

proposed conceptual framework is a step in this direction.

Part-2: Multiple Views of

the Conceptual Framework

The conceptual framework proposed above can be viewed

from multiple perspectives to understand different aspects

of the manufacturing systems and supply chains. Three

important views are: the Resource the View, the Process

View and the Transformation View. These three views further

Figure 3: Resource View of the Conceptual Framework

6

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With the growing turbulence in the business

environment and competition shifting to the supply

chain level, the supply chain flexibility is emerging

as one of the key competitive priorities for the future.

view is useful for the overall improvement of the supply

chain efficiency and effectiveness. In the context of this

paper, we have used process view to identify various

flexibility types originating from the process improvement.

The Transformation View

Figure-5 presents the transformation view of the framework.

In transformation view the focus will be on the state

transition of the materials from one state to another as they

pass through different processes at different resources. The

transformation view is the most fundamental view based on

which the process view is developed. In the domain of

discrete part manufacturing, this is called methods

engineering, where specialized manufacturing engineers

study the product designs and develop a transformation view

and the corresponding resource view for manufacturing of

the products. Understanding the transformation view is

useful in identifying the opportunities for improvement in

the process.

Figure 5: The Transformation View of Conceptual Framework

Thus we talk about the

same system with different

names and notation in

different views. Whatever

may be the view, the

underlying structure and

mechanisms may remain the same. This idea motivated us

to develop the proposed conceptual framework for flexibility

in supply chains, as discussed below:

Part-3: Understanding Flexibility

in the Supply Chains

With the growing turbulence in the business environment

and competition shifting to the supply chain level, the

supply chain flexibility is emerging as one of the key

competitive priorities for the future. Developing a core

competence in this area is expected to have a long-term

impact on the supply chain competitiveness and business

performance. Realizing this fact, recently a number of

authors have started discussing flexibility from a supply

chain perspective. For example, Koste and Malhotra (1999),

while presenting a perspective on research opportunities in

manufacturing flexibility, emphasized that the presence or

absence of flexibility in supply chains and its relationship

with performance should be explored and the effect of

supply chain integration on the development of flexibility

in supply chains should be examined. They observed that,

the competitive priorities of the supply chain might impact

flexibility, as efficient supply chains may emphasize certain

flexibility dimensions, while responsive supply chains focus

on the other. An understanding of these differences, if any,

would enhance the management of supply chains. Vickery

et al. (1999) view supply chain flexibility to encompass

those flexibilities that directly impact a firm’s customers (i.e.,

flexibilities that add value in the customer’s eyes) and are

the shared responsibilities of two or more functions along

the supply chain, whether internal (e.g., marketing,

manufacturing) or external (e.g., suppliers, channel members)

to the firm. They defined five supply chain flexibilities viz.,

production flexibility (customization), volume flexibility,

new product introduction (launch flexibility), widespread

distribution (access flexibility) and responsiveness to target

markets. Adrian (2001) views supply-chain flexibility as the

ability to restructure the system quickly and inexpensively.

He observes that after the Sept. 11 terrorist attacks on the

USA, many businesses were forced to wonder just how

vulnerable their supply chains are to unforeseen disruptions.

These unforeseen events can all have devastating effects on

manufacturing and distribution operations and result in

millions of lost dollars. He argues that the business must

bulletproof their operations by building in supply-chain

flexibility. Duclos et al. (2001) propose a conceptual model

of supply chain flexibility and identified six components

of the supply chain flexibility, viz., production flexibility,

market flexibility, logistics flexibility, supply flexibility,

organizational flexibility, and information systems

flexibility. They observe that as the basis of competition

is extending to supply chains and time becoming

increasingly important, supply chain flexibility will be a

critical issue for

competitiveness. They argue

that if manufacturing

flexibility improves

performance, supply chain

flexibility, which would

include the manufacturing flexibility of firms within the

supply chain, should further improve performance when

measured across the entire supply chain. Another closely

related work to supply chain flexibility is in the domain of

lean and agile supply chains (Naylor et al. 1999, Mason et

al. 2000, Christopher and Towill 2000).

The supply chain flexibility will manifest in the nature

and type of supply chains. Hence there is a close

relationship between the supply chain flexibility and its

typology. For instance, Belussi and Arcangeli (1998)

propose a typology of networks for flexible and

evolutionary firms based on two dimensions: on one axis

the operational flexibility (retractility and reversibility) is

measured; on the other, static and dynamic (capability-

building) forms of learning are bared. Based on this, they

proposed three types of networks: those where static learning

occurs, those with adaptive learning, and those characterized

by creative learning. They observed that these emerging new

organizational forms allow for more coordination among

quasi-independent actors, and, at the same time, more

flexibility and autonomy in planning, production, and

K.S. Rao and S. Wadhwa

7

Flexible Systems Management

Under some circumstances, it may be possible to

alter the sequence in which the information and

materials flow, towards supply chain benefits.

distribution, may represent the evolutionary genotype of a

new phase of development induced by the application of

new technologies. Similarly, Pfohl and Buse (2000) propose

a typology of production networks. They identified four

types of networks viz., strategic network, virtual enterprise,

regional network and operative network. The strategic

networks are guided by a large core firm, whereas the virtual

enterprise is a temporary project to exploit a particular

business opportunity. Regional networks are formed by small

highly specialized firms situated in spatial proximity and

the operative networks use pooled resources they can access

quickly at a short notice. They defined inter-firm network

as a complex arrangement of reciprocal, cooperative rather

than competitive, relationships between legally independent

but economically interdependent firms, with potential to

achieve both efficiency and flexibility at the same time due

to loose coupling. They observed that the supply chain

concept in its traditional

form does not sufficiently

address all relevant aspects

of the organization of

logistics in production

networks, and the potential for improvements which can

result from (a) horizontal relationships (two suppliers

cooperate in fulfilling logistics requirements e.g they bundle

their delivery volume or one of the suppliers acts as

logistical service provider for the other supplier) (b) lateral

relationships (a supplier supplies to one customer and at the

same time supplies to another supplier of that customer) (c)

circular relationships (in which the customer at the same

time acts as a supplier to his supplier) or (d) general

reciprocal dependencies (the performance of a supplier

depends directly on the activities of other suppliers: the

customer might change his production plan because of

delivery problems of one supplier which in turn can result

in problems for other suppliers). Some of the flexibility types

proposed in this paper address the above issues.

The first two parts of the paper presented the conceptual

framework and the key notions of products, transformations,

processes and resources. Flexibility originates from the

interdependencies of these four elements. Several examples

can be found from the domain of manufacturing. For

example, the ability to interchange the sequence of

transformations will give raise to sequencing flexibility, the

ability to perform a given transformation using more than

one type of process, or the ability to perform a given process

type using more than one type of resource, or having

multiple resources of the same type, will give raise to

routing flexibility. In a similar way, the supply chain

flexibility may be considered as having originated from the

interdependencies among products, transformations,

processes and resources. Based on this idea, we identify

several possible models for supply chain flexibility as

described below.

The transformations that happen to materials as they pass

through a supply chain may include ‘being procured as a

raw material’, ‘being transformed into a finished product’,

‘being moved in space’, ‘being moved in time’, ‘being

distributed to an intermediary’ and ‘being delivered to the

end customer’. The corresponding process types are called

as ‘raw material supply’, ‘manufacturing’, ‘transportation’,

‘storage’, ‘distribution’ and ‘retailing’, respectively. The

resource types that perform these processes are called ‘raw

material suppliers’, ‘manufacturers’, ‘transporters’,

‘warehouses’, ‘distributors’ and ‘retailers’. In general, a given

type of transformation requires a particular type of process

to be performed by a particular type of resource. Having

alternatives in these interdependencies will give raise to

flexibility. Some such scenarios are discussed below.

Case-1 Traditional Supply Chain

Figure-6 depicts the representation of a traditional supply

chain using the proposed conceptual framework. It can be

seen that each state transition of the material is associated

with one process and one resource. In the case of

manufacturing systems, this

kind of a chain represents the

flow shops and transfer lines.

This structure also represents

many of the traditional

supply chains based on single products. These types of

chains may have limited or no flexibility.

Case-2 Supply Chain with Process Based Flexibility

Figure-7 depicts the representation of supply chain with

process based flexibility using the proposed conceptual

framework. It can be seen that each state transition of the

material is associated with more than one process and thus

with more than one resource. In the case of manufacturing

systems, this kind of chain represents the flow shop with

Figure 6: Traditional Supply Chain with Limited Flexibility

Figure 7: Supply Chain with Process based Flexibility

Understanding Flexibility in Supply Chains: A Conceptual Framework and Models

8

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flexible operations and flexible processing as defined by

Benjafaar and Ramakrishnan (1996). This structure also

represents some situations of the traditional supply chains

based on single products. For instance, this may represent

a situation where a product is delivered to the end customer

by both the retailer as well as distributor.

Case-3 Supply Chain with Resource Based Flexibility

Figure-8 depicts the representation of supply chain with

resource based flexibility using the above defined

conceptual framework. It can be seen that each state

transition of the material is associated with one process but

with more than one resource.

In the case of manufacturing

systems, this kind of chain

represents the idea of machine

flexibility as defined by

Browne et.al. (1984). This

structure also represents some of the traditional supply

chains based on single products. For instance, this may

represent a situation where a manufacturer performs both

manufacturing as well as distribution, or a warehousing

company handles both the storage as well as transportation.

Case-4 Supply Chain with Process as well as Resource

Based Flexibility

Figure-9 depicts the representation of Supply Chain with

both process as well as resource based flexibility, using the

above defined conceptual framework. It can be seen that

each state transition of the material is associated with more

than one type of process as well as more than one type of

resource. This kind of flexibility will be a combination of

Case-2 and Case-3, mentioned above.

Figure 8 : Supply Chain with Resource Based Flexibility

Case-5 Supply Chain with Process as well as Product

Based Flexibility

In the area of supply chain flexibility, one of the important

concepts found to be useful is the concept of chaining. This

concept is concerned with the ability of a plant to

manufacture more than one product at the same time. The

concept of ‘chaining’ has been introduced by Jordan and

Graves (1995) as an effective flexibility strategy. They

define a chain as a group of products or plants which are

all connected, directly or indirectly by product assignment

decisions. In terms of graph theory, a chain is a connected

graph. Within a chain, a path can be traced from any product

or plant to any other product

or plant via the product

assignment links. No product

in a chain is built by a plant

from outside the chain; no

plant in a chain builds a

product outside that chain. Figure.10 shows three different

configuration for 6-product, 6-plant chain, as discussed by

Tomlin (2000).

Figure 9 : Supply Chain with Process as well as

Resource based Flexibility

In Figure-10, the circles represent products and the

squares represent plants/machines. The graph indicates the

allocation of products to the plants. In the case of

specialisation, each plant manufactures only one type of

product and hence there is no flexibility. The condition of

chaining introduces certain amount of flexibility without

much investment, but still captures most of the benefits of

the total flexibility. Sheikhzadeh et al. (1998) extended the

idea of chaining to study the operational performance of

machine sharing configurations involving flexibility and

chaining. They observed that chaining captures most of the

benefits of total flexibility. In our opinion, this idea can

be extended to the supply chains and this will give rise to

certain product-based flexibility.

Figure-11 depicts the representation of supply chain with

product based flexibility at process level, using the above

defined conceptual framework. It can be seen that the state

transitions of two products may share common processes and

thus the common resources. This kind of a supply chain

represents the job shop environment in a manufacturing

system where multiple products share common processes and

resources. It is also common in supply chains dealing with

multiple products. For instance, a wholesaler or a retailer

dealing with more than one type of product will perform

the same type of processes on all the product types.

K.S. Rao and S. Wadhwa

Whatever may be the type of process, every

process requires one or more resources to

perform it. Thus routing flexibility concept can

be applied to supply chain processes

Figure 10 : The Concept of Chaining

9

Case-6 Supply Chain with Product Based Flexibility at

Resource Level

Figure-12 depicts the representation of supply chain with

product based flexibility at resource level, using the above

defined conceptual framework. It can be seen that the state

transitions of two products may share common resources

through respective processes. This kind of a supply chain

represents the job shop environment in a manufacturing

system where multiple products

share common resources. It is

also common in supply chains

Figure 11 : Supply Chain with Product Based Flexibility

at Process Level

Different types of flexibility can be mapped

to the supply chain domain.

Understanding Flexibility in Supply Chains: A Conceptual Framework and Models

Figure-13: Supply Chain with Product Based Flexibility at

Process as well as Resource Level

environment in a manufacturing system where multiple

products share common resources. It is also common in

supply chains dealing with multiple products. This may be

considered as a combination of flexibility types mentioned

at Case-5 and Case-6 above.

Case-8 – Supply Chain with Total Flexibility

Fig-14 depicts the representation of supply chain with

total flexibility at product, process as well as resource

level, using the above defined

conceptual framework. It

can be seen that the state

transitions of two products