An improved flexible manufacturing system comprises a plurality of computer numerically controlled machine tools, each controlled by a machine control system which is supplied with a plurality of sets of machine NC part programs and a program map from a supervisory control computer system. Each of the machine tools is located about the perimeter of a track which carries a plurality of pallet-carrying transporters, each moving under the control of a material handling system controller. The supervisory control computer system, coupled to the control system of each machine tool and to the material handling system controller, is provided with input data indicative of production requirements, material resources and system status, that is to say, the type of part carrying pallet carried by each transporter. In accordance with the input data supplied thereto, the supervisory control computer system supplies routing information to the material handling system controller which, in response, initiates movement of a transporter to a machine tool, shuttling of the part carrying pallet from the transporter to the machine tool, and execution of a selected one of the sets of machine NC part programs by the machine control system in accordance with the program map. During intervals, when the supervisory control computer system is inoperative, continued flexible manufacturing system operation can be maintained by operating the material handling system controller in semi-automatic or manual mode.