Manufacturing flexibility: defining and analyzing relationships among competence, capability, and customer satisfaction

Abstract Fast and dramatic changes in customer expectations, competition, and technology are creating an increasingly uncertain environment. To respond, manufacturers are seeking to enhance flexibility across the value chain. Manufacturing flexibility, a critical dimension of value chain flexibility, is the ability to produce a variety of products in the quantities that customers demand while maintaining high performance. It is strategically important for enhancing competitive position and winning customer orders. This research organizes literature on manufacturing flexibility and classifies it according to competence and capability theory. It describes a framework to explore the relationships among flexible competence (machine, labor, material handling, and routing flexibilities), flexible capability (volume flexibility and mix flexibility), and customer satisfaction. It develops valid and reliable instruments to measure the sub‐dimensions of manufacturing flexibility, and it applies structural equation modeling to a large‐scale sample ( n =273). The results indicate strong, positive, and direct relationships between flexible manufacturing competence and volume flexibility and between flexible manufacturing competence and mix flexibility. Volume flexibility and mix flexibility have strong, positive, and direct relationships with customer satisfaction.