Elastic Manufacturing: Provisioning and deprovisioning production capacity to vary product volume and mix

Abstract

Responsive manufacturing has been supporting firms over the last few decades. However, manufacturers now operate in a context of continuous uncertainty. This research explores a mechanism where firms can ‘elastically’ provision and deprovision their production capacity, to enable them to cope with repeated disruptions. Such a mechanism is facilitated by the imitability and substitutability of production resources. An inductive study was conducted using Gioia methodology for this theory generation research. Respondents from twenty UK manufacturing firms across multiple industrial sectors reflected on their experience through COVID-19. Resource-Based View and Resource Dependence Theory were employed to analyse the manufacturers’ use of internal and external production resources. The study identifies elastic responses at four operational levels: production-line, factory, firm, and supply chain. Elastic responses that imposed variable-costs were particularly well-suited for coping with unforeseen disruptions. Further, the imitability and substitutability of manufacturers helped others produce alternate goods during the crisis. While uniqueness of production capability helps manufacturers sustain competitive advantage against competitors during stable operations, imitability and substitutability are beneficial during a crisis. Successful manufacturing firms need to combine these two approaches to respond effectively to repeated disruptions in a context of ongoing uncertainties. The theoretical contribution is in characterising responsive manufacturing in terms of resource heterogeneity and resource homogeneity, with elastic resourcing as the underlying mechanism