Flexible budgeting is useful because it enables managers to evaluate performance in light of changing conditions. But the ability to react quickly to changing conditions is even more important. Among automobile manufacturing facilities in the U.S., few plants are more flexible than Honda.
The manufacturing facilities of some auto companies can make slight alterations to the features of a vehicle in response to changes in demand for particular features. But for most plants, to switch from production of one type of vehicle to a completely different one typically takes months and costs hundreds of millions of dollars. At the Honda plant, however, the switch takes minutes. For example, it takes about five minutes to install different hand‐like parts on the robots so they can switch from making Civic compacts to the longer, taller CR‐V crossover. This ability to adjust quickly to changing demand gave Honda a huge advantage when gas prices surged and demand for more fuel‐efficient cars increased quickly.