The effects of workforce strategies on manufacturing operations
Authors: Mangiameli Paul M. , Krajewski Lee J. 
Published: October 2002

This paper tests the effects of three workforce strategies on a multistage, multiproduct manufacturing system under various operating conditions. These three strategies are those that are predominant in today's world economics. One type is a chase strategy, often used by firms that employ low skilled workers and faced with seasonal product demands, where workforce levels fluctuate according to increases and decreases in production requirements. A level‐flexible strategy, commonly called the Toyota system, keeps the aggregate workforce at a constant size but by having flexibly trained workers it can allow transfers of workers between various departments and processes as production requirements dictate. The third major type is a level‐inflexible strategy, such as that used on mass‐assembly lines employed by American automobile manufacturers. Under this strategy, the number of workers remains constant in each department as well as at the aggregate level regardless of short term changes in the production requirements. The manufacturing system is envisioned as a sequential planning process with interrelated decisions made at the levels of aggregate planning, master production scheduling, and departmental planning. This process is modeled as a zero‐one mixed integer program. The operating conditions under which the strategies are tested are the variability of demand, the level of service, and the degree of inventory investment. The strategies are statistically tested as to their effects on five criteria: average weekly workforce size, average quarterly inventory investment, average weekly overtime, total setups and the average weekly ratio of departmental load to capacity.

Using four different products and an experimental manufacturing environment described within the paper, we tested for any statistical differences between the three strategies. We found that none of the strategies had significantly different workforce sizes. Also, the chase strategy had the smallest average quarterly inventory investment. This implies that the “Japanese” level‐inflexible strategy does not have the smallest workforce or lowest inventory as claimed by some.

We also tested the effects of the operating conditions on the workforce strategies. The level‐flexible strategy was most insulated from the seasonality, inventory restrictions, and service level. Thus again the claims made for the level‐inflexible strategy about being insulated from its environment were not substantiated. It was found that the seasonality of demand had the greatest impact on the three workforce strategies. Also, the level of service greatly affected the utilization of labor resources.

The major overall conclusion is that the level‐flexible strategy which is associated with some Japanese manufacturing firms does not achieve the claims that some of its adherents have made for it. It does not have the smallest workforce or the lowest inventory nor is it best insulated from its environment. Furthermore, the seasonality of demand and the level of service do effect this strategy.