How SERU production system improves manufacturing flexibility and firm performance: an empirical study in China

SERU production system (SERU) demonstrates more manufacturing flexibility in response to volatile market demands. Although many firms have implemented SERU successfully, little research on manufacturing flexibility in SERU exists, especially empirical evidence in the context of Chinese firms. Manufacturing flexibility considers two major dimensions in SERU, namely, product mix flexibility and volume flexibility. We propose a contingency-based framework to explore the source factors of manufacturing flexibility and their impact on firm performance. We examine the moderating effects of both multi-skilled worker turnover and industry type. Using a total of 357 samples from China, we test the hypotheses with structural equation modeling. Our results reveal that both SERU reconfiguration and multi-skilled worker involvement are important sources of product mix flexibility and volume flexibility, and the two kinds of flexibility subsequently improve firm performance. Multi-skilled worker involvement has a stronger impact than SERU reconfiguration on improving manufacturing flexibility. Both multi-skilled worker turnover and industry type are important moderators. We also conduct tests indicating that the mediation effects of manufacturing flexibility are moderated by multi-skilled worker turnover and industry type. Overall, the acquisition of manufacturing flexibility and its impact on performance in SERU are situation dependent.