Sources of volume flexibility and their impact on performance

Abstract This research uses three in‐depth case studies to establish the drivers and sources of volume flexibility. We find that in all three firms, there is significant concern among managers for gaining competitiveness through volume flexibility. We also find that there are several avenues for developing a volume flexible response and that deployment of these tactics is dependent on the availability of resources and systems. To verify some of these propositions we report on the outcomes of a field survey that measures the importance firms place on volume flexibility as well as the corresponding actions they take to remain volume flexible. Our critical finding is that short‐ and long‐term sources of volume flexibility have a positive, albeit differential, impact on a firm’s performance.