Lto (Locate-to Order) in Car Bussiness

Topics: Manufacturing, Automotive industry, Mass customization Pages: 15 (5172 words) Published: December 6, 2011
19 International Conference on Production Research


A SPECTRUM MODEL OF ORDER FUFILLMENT STRATEGIES TOWARDS BTO PARADIGM Yubo. Ma*, Rongqiu. Chen School of management, Huazhong university of science & technology, Wuhan, Hubei province, China * Corresponding author. E-mail:

Abstract Build-to-order is drawing more and more attention by both scholars and practitioners, as a new paradigm expected to overcome the shortcomings of forecast-based production and meet the customer’s need of right specification and acceptable lead time. But there is no a systemic framework to describe the attributes and various order fulfillment strategies of BTO, therefore, the implications and order fulfillment strategies of BTO are confused and misunderstood. In this paper, based on literature review and industry survey, the attributes of BTO, including production strategy attribute, customization content attribute and order type attribute, are ascertained and clarified. Then a spectrum model of order fulfillment strategies towards BTO, consist of sale-to-order, swap-to-order, match-to-order, amend-to-order, hybrid build-to-order, spontaneous build-to-order, configure-to-order, engineer-to-order and develop-to-order, is put forward, integrating various types of theories and application strategies of BTO. At last, the main characteristics and practical implementation of each fulfillment strategies are compared, providing a vision to the decision of adopting order fulfillment strategy for enterprises. Keywords: Build-to-order, Order fulfillment strategy, Spectrum

1 INTRODUCTION Since 1980s, customization and time responsiveness have become the core factors of business competition. In this context, many shortcomings of traditional mass production based on demand forecast has risen to a higher level: customized products are not available and standard products pile to stock, maintaining inventory costs a lot, and in order to deal with unmarketable product companies have to give customers discounts and other sales incentives, so the profit margin and brand value of the companies are eroded. For breaking the scrape and gaining long-term advantage of competition, enterprises make an all-out effort to look for new operation strategy to quickly respond the end customers demand. Simultaneously, the academes raise a series of new operation strategies in advance enlightened by the practice of some benchmarking companies: timebased competition (Stalk, 1988), mass customization (Pine, 1993), customerization (Wind and Rangaswamy, 2001), instant customerization (Yeh and Pearlson, 2000), build-to-order and mass customization (Anderson, 2004), build-to-order supply chain (Gunasekaran and Ngai, 2005), and so on. These strategies are coupled and supportive to each other, although they differ in terms of the extent and scope of responsiveness ability and customization for customers’ desire products, but the underlying logics are highly consistent: transformation from build-to-forecast to build-to-order. During this course, practical success in Dell Computer highlighted the process of gradual acceptance of BTO, but there are conceptual confusion and misunderstanding of order fulfillment strategies for BTO, and the reason lies in two aspects: first, BTO is not a new concept at all, and in different period the scholars discuss and analyze it from various points of view, so its meaning extends gradually, moreover, its application scope and industry setting diversity in the previous studies results in the different concept and strategy types classification of BTO; secondly, the paradigm transformation from BTF to BTO is actually a systemic and stepwise engineering, different enterprises

adopt multifarious order fulfillment strategies towards BTO for their own conditions, the types of BTO have gone far beyond what have been theoretically stated. For this, this paper analyzes the basic attributes of BTO on the basis of literature review and...
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