Build To Order 1

[butlen]

How does Build To Order work for car manufacturers? Why would you only build a unit when it is ordered, rather than build units, stock and sell, when unit numbers are so high. This isn't my field so I need some basics.

 

[mikek10]

A google search turned up the following:

http://hbswk.hbs.edu/archive/4358.html

http://retailindustry.about.com/library/bl/bl_gartner0208.htm

http://www.glscs.com/archives/02.02.alvarengaopinion.htm?adcode=30

http://www.thecarconnection.com/Industry/Techno_Beat/Build_to_Order.S198.A1410.html

 

[butlen]

Thanks mate,

I didn't pick these URLs up when I googled for some reason. I really wanted a discussion with a real person rather than documents, but the first URL gave me the name of a chap at Cambridge University who has exactly the research base i need. I live in Cambridge so I'll go to his school and ply him with beer.

Nice one

 

[tripleZ]

For a variety of reasons:
1) Reduced inventory
2) Reduced raw material (both enable a closer version of JIT manufacturing)
3) No need to offer incentives to unload cars that consumers aren't 100% positive they want.
4) Lack of overages (e.g. excess parts inventory) sitting around when a model change comes.
5) The ability to only produce what is needed when it is needed, negating significant upfront cost from the manufacturer.

The list goes on. Try Google Scholar and see what you come up with. I think I have a few .PDF files on this at home that I'm using for a paper I'm writing. If you can get into the ABI/Inform database, I guarantee you'll find some literature.

There are obvious negatives though to BTO:
1) Inefficiences caused by a lack of batch sizing (e.g. cleaning out the spray guns to paint a different color).
2) The environmental impact of said inefficiencies.
3) Union labor...either you pay them when they're idle or you'll never get a contract signed.

 

[tomwalz]

At one time it was much more common to order cars with exactly the features you wanted.

It was a selling tool for the dealers.

Thomas J. Walz
Carbide Processors, Inc.

http://www.carbideprocessors.com