AN EXAMINATION OF CUMULATIVE MODEL FOR DEVELOPING OPERATIONAL CAPABILITIES

Abstract

In today’s competitive environment, companies are faced with fierce competition from the global market. A carefully crafted manufacturing strategy that depicts how companies should develop the key competitive factors – quality, dependability, flexibility and cost efficiency, is important to the companies’ competitive position and profitability. In the field of manufacturing strategy, there are four schools of thought for the approach in developing manufacturing capabilities – the trade-off model, the cumulative model, the simultaneous model and the integrative model. This study focuses on the cumulative model,also known as the sandcone model as proposed by Ferdows & De Meyer (1990). The model suggests that to build lasting and cumulative manufacturing capabilities, a plant should always follow the following sequence of capability development –quality leading to dependability to flexibility and lastly cost efficiency. The sandcone model has been widely cited; however its validation has been inadequate. This study validates the sandcone model and found evidence in support of it using data from the manufacturing sector in Asia Pacific, namely Hong Kong, Singapore, Taiwan, Korea and Australia. Specifically, the results suggest that “Low to Medium Performers” and “High Performers” follow the sandcone approach in building up capabilities. The use of structural equation modeling (SEM) renders conclusive empirical findings with regards to the causal-effects implicit in the sandcone model. This study also builds on the findings in the sandcone validation and existing literature, to propose and test new propositions about causal relationships between the various manufacturing capabilities. More importantly, the proposed model presents more precise constructs that distinguish between the diverse dimensions of dependability, and those of flexibility. Consequently, manufacturing firms should be able to be even more specific, effective and efficient in employing resources to develop and enhance their manufacturing capabilities.