The Internet Encyclopedia (Volume 3)

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400 SUPPLYNETWORKS:DEVELOPING ANDMAINTAININGRELATIONSHIPS ANDSTRATEGIES

Stage I

Stage II

Stage III

Vendor

Processes

Operations

Processes

Sales

Processes

Operations

Processes

Vendor

Processes

Sales

Processes

Vendor

Processes EDI EDI

Operations

Processes

Sales

Processes

Figure 1: Supply system evolution.

function or throughout the organization, a concern for

whether the operations activities are capable of sufficient

product/service flexibility; and (c) at an individual, re-

source, process, and structure level—a concern for

whether human resources, other resources (machinery,

etc.). processes (stages or activities necessary to com-

plete a task), and structures (how the system is orga-

nized and governed) are sufficiently flexible to match the

variety of tasks required to support levels (a) and (b)?

The strategic nature of flexibility applies at total sup-

ply network, organizational, and operational levels [lev-

els (a) and (b) above]. Thus, we can conceptually think

of flexibility as having demands that elicit a particular

organizational responses These can have both external

and internal implications for providing customer value

needs.

An External Response to Customer Value Needs

How the firm initiates changes that have an external im-

pact on demands for flexibility. The organization will be

concerned with its ability to offer the following:

Product or service flexibility: The ability to introduce and

modify products and services according to demand va-

riety.

Mix flexibility: An ability to change the range of products

or services produced over a given time period.

Volume flexibility: Being able to change the level of output

over time.

Logistics flexibility: An ability to provide the flexibility that

determines when, where, and how a product or service

is provided.

Monetary flexibility: A flexibility over when, where, and

how payment is made for goods and services (including

interests rates, installments, etc).

Contact flexibility: The degree of direct contact with cus-

tomers and the influence this has on value and cus-

tomer satisfaction.

Flexibility also requires a firm’s internal boundaries

to be redrawn. Atkinson (1984), using the flexible-firm

model, debated the implications for manpower, work, and

employment. He identified three types of internal flexibil-

ity, to which a further two have been added.

An Internal Response to Customer Value Needs

We can think of flexibility as also having an internal

impact.

Functional flexibility: Redeployment of workers as pro-

duction tasks require.

Numerical flexibility: The capacity to make changes in em-

ployment levels to match demand.

Financial flexibility: Pay and other employment costs re-

flecting the objectives of numerical and functional flex-

ibility.

To these we add the following: