Process Flexibility
TermiKnowledge - Supply Chain, Procurement and Inventory Terminologies
Process flexibility is a key concept used in manufacturing that refers to the way an operation responds to external variables, usually fluctuations in demand or supply. The concept of process flexibility can be applied to many different manufacturing processes. One example is product development, where a company develops and tests new products before putting them into production. One way a company might use process flexibility is to make inventory more flexible. Using process flexibility to cut down on inventory costs can either reduce or completely eliminate the need for storing excess inventory, depending upon how it is used.
There are two major ways that inventory is handled in most manufacturing environments today. First, there is the traditional method of keeping track of stock by manually recording sales, product levels, and average inventory times. Second, most modern computer systems now incorporate process flexibility, where software takes stock information and produces a dynamic report, showing a company the current state of its inventory based on real time data from several different sources. By using this method, a company can see what it has stored and when, as well as being able to change its methods when it is under excess or unused inventory, increasing the chance of obtaining the maximum efficiency in its operations. However, keeping track of real time stock requires an accurate process evaluation and analysis that can be very difficult for even large companies to do manually, especially if there are many different sources of information.
To make matters worse, maintaining accuracy in internal organizational design is complicated by the fact that many companies are trying to improve their profit margins by getting rid of over-stocked products. This presents a challenge in terms of finding the right balance between order filler and lean manufacturing principles. In a nutshell, lean manufacturing is a value stream design discipline that is based on the assumption that every activity in an organization should have a direct benefit to an eventual customer. It then works to reduce waste by following a series of steps that progressively eliminate non-value added tasks and work processes until the job is done entirely with the final product in optimal condition and ready to be sold. It is not enough to use process flexibility to improve inventory count; the company must also be aware of the impact that eliminating waste will have on profitability. This means that no matter how accurate internal organizational design data may be, the impact of process improvements will need to be understood and managed through the employment of appropriate metrics based on external environment and market conditions.
CIOP Webinar Series
Learn the Global Best Practices in Supply Chain Management, Procurement, and Inventory Management.
60 Minutes of Learning + PDU Letter
