CASE STUDY – OPERATIONS STRATEGY IN ACTION

FlexLink Systems – an introduction to strategic management

(www.flexlink.com)

FlexLink systems are an independent business partially owned by EQT Scandinavia

and the Swedish SFK Group. FlexLink have been developing and supplying
production process automation systems to a broad spectrum of industries for over
two decades. Their birth was in 1978 as an internal project to develop a new
conveyor system for the group’s manufacturing lines. The brief was to build a system
that would transport products horizontally and vertically to free up floor space and
optimize manufacturing line layout. The solution they discovered was an innovative
multiflex chain that was flexible, reusable, simple, and easy to use, design, build,
change and operate on its own. This innovation had huge business strategy spin-off
potential. In 1980 the trademark was registered and in 1981 FlexLink became an
independent operating unit with SFK. Today, the culmination of this one-off project is
an autonomous strategic business unit employing over 500 people, with a turnover of
1,000 million Swedish kroner, and an annual growth averaging 20 per cent. Now
they are structured into three core business areas: automation, systems and
components and are a leading international business, with sales, local support and
expertise in over fifty countries. FlexLink provide profitable automation to demanding
industry consumers around the world. Based upon unique application experience
and global networks, FlexLink offer innovative production solutions to the
manufacturers of high volume, lightweight goods. They combine plastic chain
conveyors, pallet-based systems, linear motion, structural and enclosure systems,
drive units and integrated production lines into consumer-specific business solutions
that embody one overarching strategy for all their business: flexibility. FlexLink
believe that it should be possible to install, modify and change the systems on-site
using 60 UNDERSTANDING standard hand tools. But this approach takes a great
deal of industry knowledge, and in particular, knowledge of their customers’
processes. Having begun in the automotive mechanical parts industry, FlexLink now
deliver complete lines for assembly, testing and packing to some of the world’s
largest sectors. These include general food processes, pharmaceutical personal
products, automotive, tobacco, paper converting, electronics, electrical appliances
and telecommunications; in fact, any production setting where processes are
customized by high volume, advanced technology, short product life cycles and
several product versions being produced in parallel. Knowing the customer’s
business and expectations in detail is essential when delivering a complete line. To
create a unique solution, FlexLink has developed an expertise by being fully aware
of the customer’s production conditions and line output needs. Based upon this
understanding, their business solutions (including the software and hardware)
provide the efficiency necessary for high levels of production output. FlexLink
Systems grew out of a strongly held strategic conviction about providing unique
customer solutions. They started with a clear intention to develop a company
strategy based upon making their customers’ lives easier. Their objective was to
offer products and services that enable sometimes complex production problems to
be automated using standard solutions provided quickly and easily, and available
anywhere in the world. This includes everything from first analysis of customer
requirements to after-sales support for the lifetime of the system. FlexLink, as you
would expect, are seriously committed to research and development. They
continuously develop, test and evaluate new high quality solutions to future customer
requirements, but they also insist that such solutions must be environmentally
friendly and sustainable. Quality is an integral part of all units and departments and
firmly based upon, and measured by, a clear understanding of customer needs and
expectations. In addition, any impact upon local and global environments is also
carefully controlled. The consumption of natural resources is minimized where
possible, and they will only use environmentally approved packaging materials and
components designed for low energy consumption. You might suspect that the
foundation for success at FlexLink was an effective production system – but this is
not the case. One of the reasons for their strong organic growth, rapid spread and
penetration into all major markets has been their strict strategic outsourcing policy,
which was adhered to from the very start of the company. They have no
manufacturing facilities whatsoever, nor do they have any forwarding or logistics.
They are in fact a virtual producer trading on their industry knowledge, their global
application base, innovative products and processes and focusing on automation
supplied to world leading customers. In practical terms, FlexLink consists of
applications and systems engineering, research and development and marketing
and sales. However, their competitive synergy is developed from less tangible, but
equally important, strategic concepts such as vision, knowledge, creativity and
innovation applied through the management of relationships. As they eloquently put
it: ‘Moving from components to concepts – from products to integrated solutions!’
FlexLink have built an extensive network of strategic outsourcing relationships. It is
these relationships that make them flexible and allow the firm to focus upon
developing and defining concepts then marketing and selling the final product after it
has been outsourced to a supplier for manufacture. However, managing such a
virtual business involves close attention to quality and supply chain processes and
the ability to define and specify needs to suppliers, many of whom have grown with
FlexLink over the last twenty years. Competitiveness and efficiency have been built
as part of a supply network relationship strategy that allows each partner to focus
upon its core business. Such an approach has also brought lower levels of cost and
increased efficiency. Indeed, growth over the last twenty years has been almost
entirely internally funded, based upon the cash and cash flow impacts of their strict
adherence to an outsourcing strategy. FlexLink Systems see their future as being a
global, knowledge-based company within industrial automation. More effort will be
put into software and hardware to add even more customer value: a people
company, focused on customer processes and looking for new opportunities and
supplier relationships in order to satisfy them. FlexLink is growing fast in new market
segments, especially auto electronics, pharmaceutical, electrical, personal products
and confectionery sectors. They are consolidating existing markets as well as
establishing new ventures for their dynamic assembly systems in the US, China,
Poland, Hungary and Malaysia – these developments being built upon their ability to
offer customers global support and competence. However, the strategy of
outsourcing remains a key cornerstone of sustainable competitive advantage for
FlexLink. The management of a global people organization, through core values and
core beliefs, is critical to their future success. Relationships, knowledge, vision and
innovation continue to create the flexibility that is FlexLink.

Reader questions related to FlexLink case study

1 Is it possible to describe the main features of the FlexLink Systems business

strategy?

2 Is their business strategy market-driven, resource-based or both?

3 FlexLink adopt a fundamental strategic positioning. Can this be described?

4 In order to develop an operations strategy for FlexLink, what factors would be of

most importance over the medium- and long-term?