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An empirical investigation of the relationships

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26 Int. J. Modelling in Operations Management, Vol. 2, No. 1, 2012

An empirical investigation of the relationships

between manufacturing flexibility and product quality

Narayan C. Nayak* and Pradip K. Ray

Department of Industrial Engineering and Management,
Indian Institute of Technology Kharagpur,
West Bengal 721 302, India
E-mail: nayak.iem@gmail.com
E-mail: pkr@vgsom.iitkgp.ernet.in
*Corresponding author
Abstract: The purpose of this research paper is to investigate the relationships
between production system flexibility and product quality. The impetus for this
study was initiated by an argument that flexibility and quality are two elements
that compete with each other, and that firms need to make a trade-off decision
between the two. The relationships between the two operational measures are
based on various dimensions of flexibility and different indicators of product
quality. This research identified certain gaps in the literature and formulated
hypotheses. Using a case study data drawn from a leading automobile engine
manufacturing firm in India, the hypothesised relationships are validated
developing path models. There exists much theoretical work and case studies
on flexibility and quality control, while this research provides basic knowledge
for developing a formal process for identifying, implementing and monitoring
manufacturing flexibility to achieve acceptable product quality. The
relationship between flexibility and quality is relatively limited, especially with
respect to specific measures. The study reports the critical findings that have
implications for both manufacturers as well as researchers.
Keywords: manufacturing flexibility; product quality; structural equation
modelling; India.
Reference to this paper should be made as follows: Nayak, N.C. and Ray, P.K.
(2012) ‘An empirical investigation of the relationships between manufacturing
flexibility and product quality’, Int. J. Modelling in Operations Management,
Vol. 2, No. 1, pp.26–44.
Biographical notes: Narayan C. Nayak is a Research Scholar currently
pursuing his PhD in the Department of Industrial Engineering and Management
at Indian Institute of Technology Kharagpur, India. He obtained his Master’s
degree in Mechanical Engineering from Indian Institute of Technology
Kharagpur. He has over 16 years of teaching, research and industry experience
in India. He is a member of ISTE. He has published a number of research
papers in international and national journals and conferences. His research
interests include flexible manufacturing, operations management, finite element
analysis and management information system.
Pradip K. Ray is a Professor in Industrial Engineering and Management
Department at Indian Institute of Technology Kharagpur, India. He has over 30
years of teaching, research, consultancy and industry experience in India and
abroad. He is associated with many organisations such as INFORMS and
WAPS. He has published many research papers in international, national level
journals and conferences. His research interests include operations
management, quality design and control, and ergonomics.

Copyright © 2012 Inderscience Enterprises Ltd.

 An empirical investigation of the relationships 27

1 Introduction

Globalisation of markets, rapid technological innovations and intense competition have

generated new pressures for the manufacturing firms for producing customised products
with on-time delivery, acceptable quality and competitive cost (Li et al., 2010).
Nowadays due to mass customisation and necessity to adapt requirements in
environments, manufacturing systems requires flexibility and agility (Alsafi and Vyatkin,
2010). With the manufacturing environment becoming different to the needs of the mass
production period, mass customisation leads to a need to manufacture a product and
volume mix effectively (Chan et al., 2007). The growth in demand for the increasing
variety in products coupled with the vast capabilities has devised flexible manufacturing
where the concept of flexible manufacturing is supposed to help regain competitiveness
through improvements in productivity and quality (Camison and Lopez, 2010).
Various views of flexibility have been acquired while discussing its literature in
general and the manufacturing firms in particular. One view of flexibility is its ability to
adapt intentional changes, the other to continuously respond to unanticipated changes,
and the third to adjust to unexpected consequences of anticipated changes (Hallgren and
Olhager, 2009). This array of different interpretation of the concept of flexibility creates
significant terminological overlap and confusion, particularly within international
research literatures. Flexibility has brought about significant advantages by reducing the
work-in-process levels of inventory and improving utilisation of resources (Jaikumar,
1986). Production systems that are flexible, offer make-to-order, rather than
make-to-stock manufacturing facilities for a large variety of components (Ranky, 1983).
Other benefits of flexibility include: reduction of space, reduction of scrap/rework and
reduction of cycle time/throughput. In addition, flexibility may contribute toward gaining
a competitive edge by reducing openness due to demand variations, part mix variations,
and technological improvements (Gunasekaran et al., 1993). Many studies (O’Grady and
Menon, 1986; Davis et al., 1986) confirm the importance of flexibility in the success of a
manufacturing firm.
Quality is discussed in literature in two basic dimensions:
1 good or services specification
2 delivery specification by its producer.

Delivery to specification encompasses many things, for example, reliability and

robustness, ease of purchase or access, ability to deal with complaints, after-sales service.
A good or service embodying relatively few characteristics considered to be low
specification. The more it acquires specific characteristics, the more it meets the different
customised need of purchasers and the more frequently it alters the characteristics by
producers (Saleh et al., 2001). Thus, quality is easier to define in respect of manufactured
goods than it is for services where many of the aspects of service delivery that are taken
to constitute high quality are intangible (Juran and Gryna, 1970).
Flexibility as well as quality is in the research literature since many decades. Most of
the research tries to maintain and improve product quality while ignoring the production
system configurations. Again, the research work in production system tries to maintain
the desired production quantity while neglecting the improvements in product quality.
The interrelationship between various dimensions of flexibility and other basic
28 N.C. Nayak and P.K. Ray

characteristics of product quality is complex and dependent on the expected production

composition (Ettlie, 1997). However, sufficient attention has not been provided to
investigate the relationship between flexibility and quality in manufacturing. As there
is a constant need of producing products with acceptable level of quality in a
production system, the influence of flexibility on quality of such products need to be
modelled (Jitpaiboon and Rao, 2007). Due to the lack of empirical research on
flexibility and quality relationships, we are motivated for development of models
between the two.
The outline of the research paper is as follows: Section 2 discusses about the existing
literature on manufacturing flexibility and quality followed by the development of
hypotheses. Research methodology for exploratory case study is discussed in Section 3.
Brief description about the firm is provided in Section 4. Section 5 discusses on
data collection, and Section 6 on data analysis and results. Discussions on data analysis
are presented in Section 7. Finally, the paper concludes with certain future areas of
research.

2 Literature review and hypotheses

In this section, we provide an extensive review of literature of production system

flexibility and product quality.

2.1 Production system flexibility

Unlike some of the industrial countries in Asia (such as Japan and China), India has
basically relied on its manufacturing firms to compete in international market since
globalisation (Sharma et al., 2008). Over the years, Indian firms found themselves facing
technological advancement and high competition from their counterparts. Continuous
change in technology provides customers with wide variety of choices and manufacturers
a many number of ways to compete thus emphasising product and process innovation
along with shorter product life cycles. Manufacturing flexibility has been suggested in the
literature as a new strategic imperative to deal with a more dynamic and competitive
market (Chang et al., 2003).
Production systems in manufacturing firm ranges from totally automated through
partially automated to completely manual. Production system flexibility is a firm’s
capability to identify changes in the environment, to quickly commit resources to new
courses of action in response to changes, and to act promptly when it is time to halt or
reverse such resource commitments (Hallgren and Olhager, 2009). Level of flexibility
incorporated in a production system determines the part types that can be produced in an
arbitrary sequence (Groover, 1987). Olivella et al. (2010) provided an entropy-based
measurement of working time flexibility. Walter et al. (2010) evaluated volume
flexibility using design-of-experiment methods. Boyle and Rathje (2009) identified best
practices that managers use to improve manufacturing flexibility, enlisted the tools and
techniques for flexibility improvement. Wilson and Platts (2010) provided a unique
methodology to achieve mix flexibility. Classification of flexibility types varies
according to the approach/logic adopted by each particular author (Abdel-Malek and
Wolf, 1991). Flexibility can also be classified according to interpretation, such as
manufacturing, supply and customer (Collins et al., 1998). Among the flexibility types,
 An empirical investigation of the relationships 29

this study focused on eight basic dimensions and the definitions below are provided by
Browne et al. (1984). However, refinement of the definitions provided by Browne et al. is
made by other researchers (Sethi and Sethi, 1990; Sarkar et al., 1994; Toni and Tonicha,
2001) in subsequent years.
Machine flexibility: ‘the ability of the system to make the changes producing a given
set of parts’. Machine flexibility allows small batch sizes, resulting savings in inventory
costs and higher machine utilisation.
Material handling flexibility: ‘the ability of the system to move different part types’.
The ability of the material handling system is to accommodate different parts of different
shapes and sizes for proper positioning and processing and the readjustment of paths in
case of machine breakdown and material unavailability.
Process flexibility: ‘the ability of the system to produce different parts without major
setups’. Process flexibility reduces batch sizes thus reducing inventory costs.
Routing flexibility: ‘the ability of the system to produce different parts in alternative
routes’. This depends on characteristics of product and equipment. It is desirable in the
event of unexpected machine breakdown. Routing flexibility differs from operation
flexibility in the sense that the former is the property of a system while the latter is that of
a part.
Volume flexibility: ‘the ability of the system to operate profitably without change in
production costs’. It can be measured by the volume increase/decrease which causes the
average costs to reach the maximum acceptable value.
Operation flexibility: ‘the ability of the system to introduce/interchange ordering of
operations to produce part’. Operation flexibility contributes to various system
flexibilities, especially the routing flexibility.
Part mix flexibility: ‘the ability of the system to process a universe of part types’. It is
the ability to manufacture a variety of parts without major modification of existing
facilities. Part mix flexibility depends on machine flexibility, operation flexibility, and
material handling flexibility.
Expansion flexibility: ‘the ability of the system to expand the production capacity’.
This type of flexibility can also be determined by the dimensions in terms of capacity that
the system can reach.

2.2 Product quality

Product quality is the appropriateness of design specifications to function and use as well
as the degree to which the product conforms to the design specifications (Kim and
Arnold, 1996). Quality includes the goodness of the design in meeting market
expectations and it includes the goodness of the actual output compared to the design
specifications. There appears two general approaches to quality issues in organisations
(Ettlie, 1997). Total quality control and total quality management (TQM) are often
claimed to have their wellsprings as far as the scientific management movement began by
Frederick Winston Taylor. The first approach separated planning and execution of tasks,
which is essential to total quality philosophies. Statistical quality control that is based on
statistical principles is the second widely accepted approach to quality.
The most successful firms follow a systematic quality improvement strategy to
achieve a competitive edge (Youssef, 1994). According to Park and Son (1988),
improved product quality is the key factor in advanced manufacturing systems and plays
an important role in improving the market share and profit margin of a manufacturing
30 N.C. Nayak and P.K. Ray

firm by decreasing the total manufacturing cost. Product quality has its effect on the
complexity of product type and in turn on the production system. The complexity
increases in the following aspects: nature and composition of the input material, shape
and size of the part, number of operations needed, skill of operator, and production and
assembly systems. Product quality may be characterised with certain functions, such as
performance, feature, reliability, conformance, durability and serviceability. Definitions
of quality functions provided by Garvin (1984) are mentioned below:
Performance refers to the primary operating characteristics of a part/product.
Performance of a product would correspond to its objective characteristics while the
relationship between performance and quality would reflect individual reactions.
Feature refers to the secondary characteristics that supplement the product’s basic
functioning. Features, like product performance, involve objective and measurable
attributes; their translation into quality differences is equally affected by individual
preferences.
Reliability refers to the probability that a product fails within a specified time period.
Reliability requires a product to be in use for some period, they are more relevant to
durable goods than they are to products and services that are consumed instantly.
Conformance refers to the degree to which a product’s design and operating
characteristics match pre-established standards. Two common measures are the incidence
of service calls for a product and the frequency of repairs under warranty.
Durability is a measure of product life, has both economic and technical dimensions.
This can also be measured as the usage of the product before its physical deterioration.
Serviceability refers to the speed, courtesy, and competence of repair. This can be
defined as the elapsed time before service is restored, the timeliness with which service
appointments are kept, and the frequency with which service calls or repairs fail to
resolve outstanding problems.

2.3 Flexibility and quality relationships

The concept of flexible manufacturing represents a strategy to improve quality (Chen and
Adam, 1991). From an extensive search and analysis of empirical studies, propositions
relating flexibility and quality are worth mentioned.
Ettlie (1997) investigated the effects of technology and performance on quality. Their
study empirically supported the association between market share, R&D intensity, TQM.
Son and Park (1987) provided an economic measure of productivity, quality and
flexibility in advanced manufacturing systems. Crowe et al. (1991) identified
manufacturing priorities among flexibility, cost, quality and service using explicit plots.
Kovacs et al. (1994) applied expert systems to assist in quality control, simulation
problems in advanced manufacturing systems for acceptable solutions. Maani et al.
(1994) carried out an empirical study and established the relationships between
productivity, quality, and performance using structural equation modelling. Mandal et al.
(1999) carried out an empirical research among Australian manufacturing firms and
identified the effect of adoption of quality initiatives on its benefits. Garg et al. (2003)
carried out a survey and studied the relationships between flexibility and quality in Indian
manufacturing organisations. Using Markovian approach, Li and Huang (2007) studied
the impact of flexible lines on product quality, derived expressions to produce high
product quality. The results of their study suggest a possible approach to investigate the
impact of flexibility on product quality. Barso et al. (2009) developed hypothesised
 An empirical investigation of the relationships 31

relationships between manufacturing flexibility, new product type and new product
performance. Zhou et al. (2009) studied the impact of AMT investment and
manufacturing infrastructure investment on firm profit and growth in Sweden and
Singapore manufacturing firms. Nayak and Ray (2010) identified the relationship
between flexibility and performance carrying out a case study at a bearing manufacturing
firm in India. According to Tan and Wang (2010), efficiency as well as flexibility has a
positive impact on firm performance only within a certain range and beyond that range
performance declines.

2.4 Hypotheses
Product quality enables a firm for competition, create entry barriers, establish a
leadership position, open up new distribution channels, and create new customers to
increase market share (Garg et al., 2003). Many studies have indicated the significant
performance implications of product quality. Considering the multidimensionality and
complex dimension of flexibility, Youssef and Ahmady (2002) noted that the relationship
should be analysed on a dimensional basis since each dimension of flexibility might have
different impact on quality improvement. As the literature review of both conceptual
studies and empirical studies suggest that the interaction effect between manufacturing
flexibility has a significant impact on product quality, we propose a set of hypotheses as
follows:
H1 The manufacturing flexibility has a positive impact on product quality in case of
many-machines-many-parts production system.
H2 The manufacturing flexibility has a positive impact on product quality in case of
many-machines-one-part production system.
H3 The manufacturing flexibility has a positive impact on product quality in case of
one-machine-one-part production system.
H4 The manufacturing flexibility has a positive impact on product quality in case of
one-machine-many-parts production system.

3 Research methodology

The logic behind the research methodology is to investigate the relationships between
flexibility and product quality. To test the hypotheses developed in this study, we utilised
the questionnaire survey method to seek responses from top executives of the concerned
firm. Initially, a questionnaire was assembled that utilises measurement items from
several previous studies. Through the review of the extant literature mainly reported in
international journals, key measurement items from several sources were identified. It
was believed that utilisation of previously validated measurement items might increase
the effectiveness of the research and help in comparing the findings across the different
firms.
Various researchers (Mohanty and Venkataraman, 1993; Koste and Malhotra, 2000;
Dangayach and Deshmukh, 2004; Georgoulias et al., 2009) used case study approach for
their empirical research work. As described by Yin (2009), case study is a relevant
32 N.C. Nayak and P.K. Ray

research method when investigators seek to know how or why a phenomenon occurs,
have little control over actual behavioural events, and are concerned with contemporary
issues. Case study approach is likely to be much more convincing and accurate if it is
based on several different sources of information, following a corroborating mode. In a
given research problem, data from multiple sources provides a multidimensional profile
of composing activities for cross checking.
This research aims to highlight the processes and products that help a firm to achieve
larger market share in four wheeler engine manufacturing. Sample in this study includes
various sections/departments within the firm, namely, machining, heat treatment,
inspection, assembly, etc. The sections are chosen carefully to represent the entire firm.
Table 1 provides an overview of the firm.
Table 1 An overview of firm under study

Attributes Response
Year of establishment 1945
Nature of product Engines (four wheeler automobiles)
Sales turnover ($ million) 90
Number of employees 700
Domestic market share 22%
Export as % of total sales 15

Flexibility as well as quality parameter values are collected from the concerned firm
using the nominal group technique. Data pertaining to each of these dimensions are
collected from the group of experts, such as production, quality control, sales and
marketing, procurement and logistics. Multi-method may help maintain both the validity
and reliability of the field data, where one aspect is discussed with more than one
respondent for collection of data. This study further confirmed in a follow-up interview
with the managers of concerned departments. Numerous foreman and workers are also
randomly chosen to discuss the issues during data collection. Departmental managers
provided more reliable information and the supplementary information from foreman
help enrich the data sources. The interviews coupled with process mapping,
department/section visits, and document verification form the basis of data validation for
reducing the data bias to the minimum (Stuart et al., 2002). Details about the informants
are provided in Table 2.
Table 2 Details of informants

Position Percentage
Department heads 10%
Department managers 45%
Foreman and others 45%

4 Case study

XYZ Ltd. is one of the largest automobile manufacturing companies in India. Its
manufacturing units are located at Jamshedpur, Pune, Lucknow, and other places as well.
 An empirical investigation of the relationships 33

The company began with a single unit in 1905 and now it has units in different parts in
India and abroad. The company produces variety of automobile engines for four-wheeled
vehicles along with its body and chassis to make business in domestic as well as
international market. The firm considered in this study is located at Jamshedpur, India. It
produces four-wheeler engines and its components. This division produces three major
products viz.,
1 engine block
2 cylinder liner
3 connecting rod.
The focus of this case study is on engine blocks in which the company has maximum
number of product models and variants.

4.1 Reasons for selection of the firm

The automotive industry is chosen for several reasons. First, it is the world’s largest
manufacturing activity. It produces a number of distinct parts on a job shop or batch
environment where opportunities for production variability exist. Second, its goal is to
increase system productivity while maintaining production flexibility. Third, the
automotive industry is explored within the context of specific countries, thereby
providing a basis for comparing flexibility trends among aggregate groups of producers.
Finally, this industry offered the potential to simultaneously examine various dimensions
of flexibility and quality considered in this research work.
In a typical engine-manufacturing firm, maintaining flexibility in volume as well as
variety is a serious concern. For high production volume and high variety, whether the
quality of product would be maintained? Thus, the objectives set in this research are
examined and the effect of flexibility on product quality is documented.

4.2 Operations at the firm

The firm is equipped with many production modules (automated as well as manual) to
accommodate a large customer base and it practices make-to-order as the production
strategy. Each module whether automated or conventional, requires setup time/tool
changing time for every variety change in operations. The firm produces engine
components using any of the modules, keeping variability or scrap rate almost zero. Each
module consists of a CNC head changing machining centre, a flexible system transfer
line and work holding systems. Production systems are capable of cylinder boring and
other machining operations for different size engine blocks with common locating and
clamping points. Engine blocks get machined on a turnkey engine block manufacturing
system supplied by Heller machine tools. The manufacturing system is automated and
gantry-loaded to machine special-grade, CI blocks of around 500 kg in various machining
operations. After the machining operations such as milling, boring, drilling is over the
heavy blocks are ready for assembly. During assembly, a thorough inspection is carried
out to check the defects if any. Detailed operations at the manufacturing firm are
provided in Figure 1.
34 N.C. Nayak and P.K. Ray

Figure 1 Operating sequence of engine block manufacturing process

Unfinished
casting Turning Drilling Milling Grinding
block

Boring

Assembly Inspection Honing and Heat treatment

polishing

5 Data collection

The data were collected in two phases. In the first phase, various departments were
selected to carry out the survey. In the second phase, a brief outline of the research was
provided and various departments were requested for participation. The executive and
senior managers directly in charge of each individual section were identified and
contacted by making special efforts. In order to minimise the possibility of
misinterpretation of the questions, the procedure for completing the questionnaire has
been thoroughly explained to the respondents. Data required to compute the variables
considered under various factors was drawn from different sources:
1 daily production report files (product-wise)
2 strategic plans for new part/products
3 review committee meeting reports

4 company presentations for customers and suppliers

5 bill-of-materials and financial statements
6 list of hired personnel and their sources.
Due to the confidentiality requirement, the names and the identification data of the
sample are not provided.
In order to validate the hypotheses, pertaining data for a period of five years
(month-wise) on flexibility and quality is collected and the data represent the average
figures for corresponding variables during a particular month on 0–1 scale. Non-response
bias is a common issue concerning survey methodology. The possible non-response bias
for comparing the respondents of different categories (Armstrong and Overton, 1977), the
final sample had been split into two according to the dates they were collected, and then
compared the two groups along major department attributes such as employee strength,
production/sales, and age using the t-tests. The t-tests yielded no statistically significant
differences on any department characteristics.
 An empirical investigation of the relationships 35

Cronbach’s alpha is estimated to assess the inter-item consistency to check composite

reliability (CR). All the constructs (variables) of flexibility and quality possess Cronbach
alpha values more than 0.6, which Nunnally (1978) identified as the boundary for
reliability and is provided in Table 3. Construct validity measures the abstract or
theoretical construct of the items on a scale. Of the14 items, 13 are above 0.6 (Nunnally,
1978) and one is 0.58. Because flexibilities are relatively new constructs used in the
Indian context, our results demonstrate the statistical significance of the relationships
between the items and constructs and the reliability of individual items.
Table 3 Standard estimates and coefficient alpha

Loading Alpha
Production system flexibility 0.78
Machine flexibility 0.90
Material handling flexibility 0.58
Process flexibility 0.84
Routing Flexibility 0.85
Volume flexibility 0.82
Operation flexibility 0.83
Part mix flexibility 0.83
Expansion flexibility 0.68
Product quality 0.85
Performance 0.87
Feature 0.88
Reliability 0.79
Conformance 0.80
Durability 0.79
Serviceability 0.89

Additionally, we carried out confirmatory factor analyses (CFA) for each set of focal
constructs to further test the CR and construct validity. At 0.732 or higher, the CR for
each construct exceeds the 0.7 bench mark (Fornell and Larcker, 1981). Further, the
average variance extracted (AVE) for each construct is 0.512 or higher, exceeding the 0.5
benchmark (Fornell and Larcker, 1981). Thus, CR and construct validity are also
supported by the CFA results.

6 Analysis and results

This section exclusively describes testing of hypotheses using structural equation

modelling. Following the recommendations of Gupta and Somers (1996), the variables
are entered into the model in three steps: control variables, main effects variables, and
moderating variables. Flexibility (FLX) of production system is characterised with eight
36 N.C. Nayak and P.K. Ray

dimensions: machine (MC), material handling (MH), volume (VO), process (PR),
product mix (PD), routing (RO), expansion (EX), and operation (OP) flexibility; and
quality characterised by: performance (PE), feature (FE), reliability (RE), conformance
(CO), durability (DU) and serviceability (SE). In a multi-product manufacturing firm,
there exist four situations: one machine produces one part type, many machines produce
one part type (M-M-1-P), one machine produces many part types (1-M-M-P), and many
machines produces many part types (M-M-M-P). Pertinent data on above four situations
are collected, various path diagrams to observe the effect of flexibility on quality are
developed and path coefficients are computed. The details of the model and the
corresponding path values are explained in the following sub-sections.

6.1 Many-machines-many-parts production system

These types of production system consist of finite number of machines in series to
produce finite number of part/products. The relationship between flexibility and product
quality in case of many-machines-many-part type is shown in Figure 2. The diagram
illustrates the hypothesised relationships between flexibility and quality. The coefficients
indicating the association between the variables of flexibility and quality are provided in
Table 4. It is concluded from the p-values that some of the relationships are quite
significant (bold entries with p-value < 0.025), while other relationships, although they
exist, are statistically insignificant at 95% confidence interval.

Figure 2 Path diagram relating flexibility and product quality (M-M-M-P)

In many-machines-many-parts model, dimensions such as part mix, process, routing,

expansion, operation and machine flexibility affects significantly the system flexibility,
while feature, serviceability, durability and performance factors significant affect part
quality. An increase in coefficients of these dimensions increases the system flexibility
and to product quality. The error values for all the variables are within the acceptable
range, indicating that a good amount of variance of these variables is explained through
the model. The model provides the support for Hypothesis 1.
 An empirical investigation of the relationships 37

Table 4 Path estimates of M-M-M-P production system

Parameter Estimation Std. error p-Value

QUA-FLX 1.01 0.125 0.008
CO-QUA 0.37 0.092 0.018
DU-QUA 0.81 0.065 0.002
SE-QUA 0.87 0.121 0.002
RE-QUA 0.19 0.025 0.245
FE-QUA 0.95 0.113 0.001
PE-QUA 0.95 0.066 0.102
PD-FLX 0.94 0.105 0.009
PR-FLX 0.40 0.125 0.025
RO-FLX 0.85 0.032 0.010
EX-FLX 0.93 0.210 0.009
OP-FLX 0.72 0.107 0.014
VO-FLX 0.24 0.182 0.198
MH-FLX 0.11 0.223 0.503
MC-FLX 0.94 0.102 0.009

6.2 Many-machines-one-part production system

In many-machines-one-part category, finite numbers of machines are installed in series to
produce a particular type of part/product. Path diagram relating flexibility and quality is
drawn (similar to Figure 2, while loadings are different). Corresponding path coefficients,
indicating the association between the variables of flexibility and quality are provided in
Table 5.
Table 5 Path estimates of M-M-1-P production system

Parameter Estimation Std. error p-Value

QUA-FLX 1.12 0.098 0.002
CO-QUA 0.45 0.048 0.024
DU-QUA 0.05 0.063 0.760
SE-QUA 0.66 0.123 0.019
RE-QUA 0.14 0.078 0.376
FE-QUA 0.44 0.086 0.024
PE-QUA 0.56 0.046 0.022
PD-FLX 0.74 0.094 0.020
PR-FLX 0.41 0.084 0.025
RO-FLX 0.84 0.106 0.012
EX-FLX 0.14 0.097 0.450
OP-FLX 0.72 0.102 0.016
VO-FLX 0.91 0.112 0.010
MH-FLX 0.10 0.225 0.566
MC-FLX 0.83 0.078 0.012
38 N.C. Nayak and P.K. Ray

In many-machines-one-part model it is observed that process, routing, operation, volume,

part mix and machine flexibility significantly affects system flexibility, while
performance, feature, serviceability and conformance factors significantly affect product
quality. Error values associated with all the variables are low indicating a good amount
of variance is explained through the model. The model provides the support for
Hypothesis 2.

6.3 One-machine-one-part production system

In this category, one machine produces one particular type of part/product. The
relationship between flexibility and quality for this production system is modelled with
the help of a path diagram (similar to Figure 2, while loadings are different). Respective
path coefficients indicating the association between the variables of flexibility and quality
are provided in Table 6.
Table 6 Path estimates of 1-M-1-P production system

Parameter Estimation Std. error p-Value

QUA-FLX 1.03 0.173 0.019
CO-QUA 0.50 0.102 0.023
DU-QUA 0.82 0.196 0.010
SE-QUA 0.19 0.125 0.310
RE-QUA 0.12 0.107 0.510
FE-QUA 0.70 0.060 0.017
PE-QUA 0.67 0.272 0.022
PD-FLX 0.59 0.113 0.037
PR-FLX 0.37 0.108 0.025
RO-FLX 0.91 0.242 0.009
EX-FLX 0.63 0.051 0.029
OP-FLX 0.86 0.121 0.010
VO-FLX 0.80 0.098 0.011
MH-FLX 0.25 0.221 0.192
MC-FLX 0.43 0.134 0.171

From one-machine-one-part model, it is observed that process, routing, operation, and

volume flexibility significantly affects system flexibility, while performance, feature,
durability and conformance factors significantly affect product quality. Errors associated
with all the variables are low. The model provides the support for Hypothesis 3.

6.4 One-machine-many-parts production system

In this category of production system, one particular machine produces variety of part
types. The relationship between flexibility and quality is explored with the help of a path
diagram (similar to Figure 2, while loadings are different). The coefficients indicating the
association between the variables of flexibility and quality are provided in Table 7. From
one-machine-many-parts model, it is seen that dimensions such as part mix, routing,
 An empirical investigation of the relationships 39

volume and operation flexibility significantly affects system flexibility, while

performance, feature, durability and serviceability factors significantly affect quality.
However, the value of p for process flexibility approaches to be significant. Error
values associated with all the variables are low. The model provides the support for
Hypothesis 4.
Table 7 Path estimates of 1-M-M-P production system

Parameter Estimation Std. error p-Value

QUA-FLX 0.93 0.109 0.011
CO-QUA 0.41 0.281 0.052
DU-QUA 0.84 0.056 0.014
SE-QUA 0.98 0.045 0.002
RE-QUA 0.14 0.215 0.394
FE-QUA 0.78 0.054 0.013
PE-QUA 0.95 0.074 0.001
PD-FLX 0.79 0.165 0.014
PR-FLX 0.28 0.198 0.026
RO-FLX 0.76 0.121 0.024
EX-FLX 0.73 0.124 0.030
OP-FLX 0.71 0.128 0.023
VO-FLX 0.84 0.106 0.020
MH-FLX 0.15 0.224 0.575
MC-FLX 0.34 0.201 0.225

Path diagrams in all four situations illustrate the hypothesised relationships between the
variables of production system flexibility and product quality. Error associated with all
the variables in Tables 4–7 are quite low, indicating that a good amount of variance of
these variables is explained through the model. All the four estimated models show a
good fit with the data. The χ2/dof value is below 3.0. Fit indices for the structural models
combining machine and part are provided in Table 8. For all the models it is to be noted
that the goodness-of-fit index (GFI) is greater than 0.9, showing that the model is
saturated due to hypothesised relationships between flexibility and quality parameters.
For all the models the critical ratio (CR) is greater than 1.96, indicating that the path is
significant at the .05 level (i.e., its estimated path parameter is significant). Other fit
indices such as NFI, IFI, CFI for the models are also greater than 0.9. RMSEA is below
0.08. The values in Table 8 indicate fair amount of model fit, thus obtaining a satisfactory
relationship between flexibility and quality.
Table 8 Fit indices for the relationships between flexibility and quality

Model χ2 dof p GFI NFI IFI CFI RMSEA

M-M-M-P 118.62 76 0.001 0.924 0.928 0.912 0.954 0.076
M-M-1-P 216.16 76 0.002 0.933 0.917 0.947 0.934 0.059
1-M-1-P 224.67 76 0.001 0.925 0.902 0.927 0.932 0.051
1-M- M-P 166.28 76 0.001 0.901 0.936 0.923 0.927 0.078
40 N.C. Nayak and P.K. Ray

7 Discussion

7.1 Contribution
This study focuses on the relationship between flexibility and product quality to address
an important but previously unexplored question: Can manufacturing flexibility help
firms profit from product quality? Using a case study data of engine manufacturing firm
in India, we find that certain flexibility dimensions bear a significant relationship with
quality, while that of other functions is not significant. Further, the relationships are
situation specific. It changes its nature and effectiveness from one particular type of
production system to another.
Several contributions emerge. First, our research makes certain contributions to the
research on production system flexibility. The contradictory empirical results on the
relationship between production flexibility and quality argue that it is necessary to
identify the factors that moderate this linkage (Youssef and Ahmady, 2002). Through
providing a more nuanced and in-depth understanding on the role of flexibility during the
process of quality improvement, especially in different production system model
contexts, we find certain specific conclusions:
• In many-machines-many-parts model, material handling and volume flexibility are
not making any significant contributions to system flexibility. Factors such as
conformance and reliability do not make any significant contribution to quality. An
increase in coefficients of these dimensions will not increase system flexibility as
well as quality.
• In many-machines-one-part model, material handling and expansion flexibility are
not making significant contributions to flexibility. Factors such as durability and
reliability do not make any significant contribution to quality. An increase in
coefficients of these dimensions will neither increase system flexibility nor quality.
• In one-machine-one-part model, machine, material handling, expansion and part mix
flexibility are not making significant contributions. Factors such as serviceability and
reliability do not make any significant contribution to quality. An increase in
coefficients of these dimensions will not increase flexibility as well as quality.
• In one-machine-many-parts model, machine, material handling and expansion
flexibility are not making significant contributions. Factors such as conformance and
reliability do not make any significant contribution to quality. An increase in
coefficients of these dimensions will neither increase system flexibility nor quality.
Results of path diagrams indicate that increase in certain flexibility dimension increases
quality. However, there are certain other dimensions which do not affect product quality.
In specific terms, increase in process, routing and operation flexibility (common to all
four production models) increases the product quality. Contribution of other functions is
not significant in all the situations.

7.2 Managerial implications

Apart from the theoretical contributions, our research offers some useful implications.
First, our findings strongly demonstrate that flexibility is positively associated with
 An empirical investigation of the relationships 41

quality. It has identified the factors to be considered to maintain the desired product
quality. It not only helps in identifying the dimensions of flexibility upon which firms
have to focus their attention in order to increase the variety in part types, but also helps
them in framing strategies for strengthening and achieving the goal of the firm as well.
Second, our findings indicate that process flexibility helps firms profit from
part/product innovation, especially in a high competitive intensity environment. Firms
should improve their routing flexibility in order to avoid unwanted interruption during
machine breakdowns. In order to improve operation flexibility, firms need to be more
efficient in finding new uses and/or new combinations of existing resources in-house, in
finding new uses and/or new combinations of external resources from suppliers, in
rapidly deploying resources through organisational systems and processes to targeted
uses, and in coping with emerging problems effectively to increase the benefit from a
fast-changing environment. The capabilities of the firms to be built and improved to
integrate and deploy resources by accumulating and acquiring related knowledge.
Although the models developed in this research are tested in multi-product manufacturing
firms, it is recommended that the firms practicing mass production may also find these
models applicable.

7.3 Limitations and future research

In spite of some novel contributions to the literature, this study has certain limitations.
First, context-specific results were obtained in this research and while generalising to
other contexts, it should be viewed cautiously. Although there are theoretical reasons to
believe that firms in other economies may experience similar results, we are concerned
about the generalisability of this study to other industries. This issue needs to be validated
by future research undertaken in other economies, and the difference between India and
other countries should be carefully considered. Second, the case study data used may cast
doubt on causal statements that are derived from empirical findings. Thus, a
questionnaire survey approach will be needed in future studies. Third, although we find
little significance of common method bias, we cannot completely rule out its potential
influence. Thus, to overcome the above problems secondary data or combine survey data
with secondary data to be used while carrying out future research.
Although this study has established relationship between certain manufacturing
flexibility and quality dimensions, it would be an important research direction to examine
the impact of other dimensions such as worker flexibility, material flexibility, market
flexibility, supplier flexibility on quality. Factors such as aesthetics and perceived quality
may also be considered as measures of quality. Empirical research using a cross-sectional
data would allow the researchers to test the generalisability of the practices, as well as
identify any industry or regional differences.

8 Conclusions

With substantial implications for managers and a base for significant new research, this
study focuses on examining the relationship between production system flexibility and
product quality under different production situations. The results indicate that
manufacturing flexibility contribute directly and indirectly to product quality. The
findings suggest that the linkage between flexibility and quality is more complex than
42 N.C. Nayak and P.K. Ray

suggested by previous research. While addressing the research questions posed, this study
also stimulates improved production methodologies in other organisations by raising
critical issues in production systems. Additionally, the case study lends itself to the
development of materials for use in academic and professional training environments.
Developing greater awareness and competence among manufacturing professionals is a
critical step toward improving product quality and the case study approach helps achieve
that goal. Overall, our findings not only offer strong guidance for firms on how to better
use manufacturing flexibility to profit from product quality, but also provide a more
nuanced and in-depth understanding of production system flexibility.

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