Posted in Operations and Supply Chain Terms, Total Reads: 345
Definition: Upside Production Flexibility
Upside Production Flexibility is one of the 4 metrics to measure supply chain agility. As the name implies, it tells us the number of days it takes to achieve a sustainable increase in production (complete manufacturing and delivery/end product supply) which is unplanned too. Basically, it tells us how fast we can adapt to a sudden change in our supply chain operations.
The one problem/constraint to a sustainable increase in production is Upside flexibility which can affect 3 areas:
1. Internal manufacturing capacity – Whether machines are working up to their full potential or not
2. Material availability – Raw materials needed is in excess or not
3. Direct labor availability – Labor is ready to work or available when required
Flexibility is to analyze how many days it will take to see a demand change.
E.g.: ABC Company produces 1000 pieces in the month of January. Suddenly, the demand rises and now they need to produce 1200 pieces which will ask for more labor, more raw materials and more machines, equipment’s, trucks, warehouse spaces, etc. If the company has all these things, it is fine but most of the companies work on very lean, i.e. they don’t have such kind of capacity. So, to produce the extra 2000, they need 5 more days which is their upside production flexibility.