Interplay between uncertainty and flexibility across the value‐chain: Towards a transformation model of manufacturing flexibility

Abstract Traditionally, flexibility, in its reactive application, has been viewed as a coping mechanism against uncertainty in an organization's internal or external environment. It has also been shown that flexibility can be utilized proactively to create a competitive advantage for a company. Despite the recognition that it serves a dual purpose, little work has been done to synthesize these competing uses of flexibility. This study proposes a model that not only articulates an effective use of flexibility concurrently for both proactive and reactive purposes, it also allows a simultaneous view of the opportunities and uncertainties along the value‐chain. By embracing the entire value‐chain, this model considers the implications of the inter‐relating feedback loops within the supply‐chain, which to‐date has been overlooked in the flexibility literature. Such an approach provides managers with a tool that allows them to consider more options in configuring flexibility between its two competing uses. Within the model, eleven dimensions of flexibility are identified and then classified into three levels comprising a transformation process. This model is grounded in observations from a field study of 10 printed circuit board (PCB) fabrication companies.