1

An Exploratory System Dynamics Model

of Strategic Manufacturing Capabilities

by

Andreas Größler

Mannheim University, Germany

2What are strategic

manufacturing capabilities?

• Behavior modes that a plant is able to

perform …

• … in order to support and shape corporate

strategy (and the competitive position of

the firm);

• their development, nurture and abandonment

are major tasks of manufacturing strategy.

• 4 basic capabilities: (1) to produce with

high quality, (2) to deliver reliably, (3)

to produce with low cost, and (4) to remain

flexible concerning volume and product mix.

3Assumptions about the relation-

ships between capabilities

Accumulation Trade-offs

4An empirical model of

strategic capabilities

Quality

0.54**

Delivery

-0.08Cost Flexibility

Structural Equation Model based on a questionnaire

survey of 465 manufacturing plants

(International Manufacturing Strategy Survey, IMSS-3)

** significant with p<0.01

5Strategic capabilities as levels

Strategic

Capabilityincrease decrease

INITIAL VALUE

attrition/

neglect

employment

of resources

support/

inhibition

dependent on other

strategic capabilities!

6

80

60

40

20

04

44

44

44

44

44

3

3

33

33

33

33

3

2

2

2

22

22

22

22

1

1

1

1

1

1

1

1

11

11

0 10 20 30 40 50 60 70 80 90 100

Equal efforts

80

60

40

20

0 4 4 4 4 4 4 4 4 4 4 4

3 3 3 3 3 3 3 3 3 3 32 2 2 2 2 2 2 2 2 2 21

11

11

11

11

11 1

0 10 20 30 40 50 60 70 80 90 100

Emphasis on flexibility

Time (Month)

Quality 1 1 1 1 1 1 1 1

Delivery 2 2 2 2 2 2

Cost 3 3 3 3 3 3 3 3

Flexibility 4 4 4 4 4 4 4

2

Testing different effort policies

(i)

7Testing different effort policies

(ii)

Time (Month)

Quality 1 1 1 1 1 1 1 1

Delivery 2 2 2 2 2 2

Cost 3 3 3 3 3 3 3 3

Flexibility 4 4 4 4 4 4 4

2

200

150

100

50

04 4 4 4 4 4 4 4 4 4 4

3 3 3 3 3 3 3 3 3 3 32

22

22

22

2 22 2

1

1

1

1

1

1

1

1

11

11

0 10 20 30 40 50 60 70 80 90 100

Hierarchical effort

80

60

40

20

0 44

44

44

4

4

4

4

4

33

33

33

3 3 33 3

22

22

2

2

2

22

22

1

1

1

11

11

11 1 1

0 10 20 30 40 50 60 70 80 90 100

Shift to

flexibility

8The methodological issue!?

• Other than in “conventional” system

dynamics, (so far) I do not study

causal linkages between structural

elements or between structure and

behavior.

• Rather, I take empirically established

quantitative relationships and analyze

their dynamic consequences, without

assumptions about causality.

9Research implications

• Theorizing about what constitutes

strategic capabilities

• Longitudinal studies about capability

development

• Qualitative studies about what constitutes

relationships between capabilities

• Simulation studies of causal structure and

effects on behavior

• Conceptualizing the capability-performance

link