Flexibility is a key strategic tool in logistics to ensure customer satisfaction and thus the competitiveness of companies in markets with volatile conditions and demand. Companies seem to be caught between flexibility requirements and sought stability in form of a long-term predictable resource allocation. In fact, companies require an adequate degree of flexibility to make processes manageable and to be less prone to bottle necks and exceptional situations. Today, successful flexibility management is a key challenge for many businesses, because they depend heavily on a high market transparency and planning quality when developing successful flexibility concepts. The determination of the appropriate degree of flexibility and the related cost-benefit analysis still pose barriers to the implementation of flexible logistics. Creating flexibility causes cost and can be only of interest when the effort in creating flexibility is also creating corresponding value or excess flexibility can be eliminated elsewhere.
Fields of action
Holistic flexibility management in logistics goes beyond the operational flexibility of logistics resources and processes. Flexibility begins with the definition of strategic goals and the role of flexibility in the planning process in contrast to forecasting and order planning methods. Integrated methods of flexibility management include analytical concepts of demand-side flexibility requirements, the determination of flexibility for suppliers, production and logistics capacities as well as possibilities to provide information required for a flexibility-based planning process.
Range of services
Defining strategic flexibility goals and functions as well as designing the application process of flexibility management represent the central fields of action of flexibility management. In addition, it requires the development of analytical instruments for the determination of flexibility demand and potential. The design of decision support tools for the determination of an adequate degree of flexibility and the assessment of costs and benefits makes flexibility viable and controllable.
Approach and methods
ITCL supports, methodically sound, the analytical determination of flexibility demand analytical determination of flexibility demand of products, product features, production capacities and suppliers. The determination of the relevant influence factors of flexibility is performed by using a standardized list of criteria in the areas of customer demand, planning and customer order process, product and technology as well as supply network. To analyze the impact of influence factors on the flexibility demand statistical methods like factor and variance analysis (e.g. height of the volatility depending on the number of product variants) are deployed. Often one of the modeling and calculation methodologies refined by ITCL is applied to transfer flexibility demand from the product level to the supply network.
Likewise, a systematic assessment of flexibility potentials of suppliers, production and transport and logistics capacities is conducted. To assess the flexibility potential of each resource and capacity of the value creation process a comprehensive set of criteria is used. Based on this result, an instrument of flexibility matching, developed by ITCL, is deployed to match the flexibility demand and potential, to assess the value of flexibility and to determine action strategies.
In accordance with the design and implementation of action strategies the organizational and procedural implementation of the application concept of flexibility takes place (e.g. in the context of demand and capacity management or supplier management). For this purpose, defined decision-making and evaluation criteria to choose of the most efficient action strategy of flexibility management are used (flexibility setup, removal of flexibility demands through communication of sales restrictions etc.). Furthermore, the implementation in purchasing, logistics and sales will be supported.