If production flexibility is so desirable, why have manufacturers like the Chrysler Group (See Chrysler's Winning Formula) waited so long? What is now rendering obsolete high-volume, rigid automation plants? Answer: "A new cost structure of improved technology is accelerating the switch," says Jay Baron, president, Center for Automotive Research (CAR), Ann Arbor, Mich. He notes that manufacturing flexibility was always desirable, but in the past such systems were traditionally premium priced. "Today with the falling prices of higher accuracy, more capable robots, applications such as body assembly are compelling costwise."
Impact? "An increasing product model mix, better plant utilization and the fading away of partially utilized plants," adds Baron. (CAR studies show that plant profitability is hard to achieve below 80% to 90% utilization.) Baron says flexibility also boosts profitability via faster product launches. That helps fill orders when demand is highest.
Heightened competitiveness is the decisive payback. He thinks flexible manufacturing in the U.S. has become a critical necessity as producers compete via the low-volume strategy.
