Flexible Factory: Adapting to volatile market

Every market changes rapidly today. Customers’ preference is volatile and a market surges and shrinks in a short time. Manufacturers must adapt to the rapid change to survive in the harsh competition. Flexibility should be... [ view full abstract ]

Every market changes rapidly today. Customers’ preference is volatile and a market surges and shrinks in a short time. Manufacturers must adapt to the rapid change to survive in the harsh competition. Flexibility should be the prime capability for any manufacturing plant (Jain et al., 2013). Kim et al. (2014) claimed that manufacturing flexibility creates positive effect on supply chain responsiveness. Many factors influence plant flexibility. Among them, Just-in-time (JIT) strategy is important. It includes some tactics, such as machine setup time reduction, Kanban, and close equipment layout. For example, if a plant reduces machine setup time, adaptation to market change becomes easy. Therefore, it is an important JIT tactics. However, some other related factors or tactics are necessary to achieve machine setup time reduction. At first, equipment layout should be close to each other for smooth machine setup. Second, labor force must be flexible. Multi-functional capability of employees is necessary for flexible machine setup and production. Kanban, a JIT tactics, play an important role too. Work-in-process inventory should be small to allow frequent machine setup, and Kanban system enables it. These JIT tactics relate to each other and some are antecedents to others. Therefore, managers should design JIT strategy after considering the cause-and-effect relationship among JIT tactics as well as human resource management (HRM). In this study, we developed a structural equation model (SEM) with JIT tactics and HRM, and applied our international data. Many empirical studies have been published about both JIT and HRM. However, few studies have considered both of the factors at the same time or the interaction between the factors.