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Linking Product Variety to Order-Fulfillment Strategies

Author

Listed:
  • Frits K. Pil

    (University of Pittsburgh, 326 Mervis Hall, Pittsburgh, Pennsylvania 15260)

  • Matthias Holweg

    (Judge Institute of Management, University of Cambridge, Trumpington Street, Cambridge CB2 1AG, United Kingdom)

Abstract

Providing a variety of attributes in products is an important way of attracting customers, but it often increases complexity and managerial cost. We drew on two data sets collected in the automotive sector to explore the link between external variety (the variety offered the customer) and internal variety (the variety involved in creating the product). We found that these two dimensions can be independent of each other. External variety is problematic for firms producing to forecast, and handling internal variety is challenging for firms building products to order. The effectiveness of strategies to mitigate variety's negative effects, such as modularity, mutability, late configuration, and option bundling, depends on the order-fulfillment strategy the firm follows.

Suggested Citation

  • Frits K. Pil & Matthias Holweg, 2004. "Linking Product Variety to Order-Fulfillment Strategies," Interfaces, INFORMS, vol. 34(5), pages 394-403, October.
    • Handle: RePEc:inm:orinte:v:34:y:2004:i:5:p:394-403
    DOI: 10.1287/inte.1040.0092
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Andreas Hottenrott & Martin Grunow, 2019. "Flexible layouts for the mixed-model assembly of heterogeneous vehicles," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 41(4), pages 943-979, December.
    2. Laurent Lim, Lâm & Alpan, Gülgün & Penz, Bernard, 2014. "Reconciling sales and operations management with distant suppliers in the automotive industry: A simulation approach," International Journal of Production Economics, Elsevier, vol. 151(C), pages 20-36.
    3. Chuang, Chia-Hung & Zhao, Yabing, 2019. "Demand stimulation in finished-goods inventory management: Empirical evidence from General Motors dealerships," International Journal of Production Economics, Elsevier, vol. 208(C), pages 208-220.
    4. Rajesh K. Singh & Hari Om Sharma & Suresh K. Garg, 2016. "Study on Supply Chain Issues in an Auto Component Manufacturing Organization: Case Study," Global Business Review, International Management Institute, vol. 17(5), pages 1196-1210, October.
    5. Volling, Thomas & Matzke, Andreas & Grunewald, Martin & Spengler, Thomas S., 2013. "Planning of capacities and orders in build-to-order automobile production: A review," European Journal of Operational Research, Elsevier, vol. 224(2), pages 240-260.
    6. Aoki, Katsuki & Staeblein, Thomas, 2018. "Monozukuri capability and dynamic product variety: An analysis of the design-manufacturing interface at Japanese and German automakers," Technovation, Elsevier, vol. 70, pages 33-45.
    7. Karl Martin & Parag Chitalia & Murugan Pugalenthi & K. Raghava Rau & Sudeep Maity & Rahul Kumar & Rohit Saksena & Randhir Hebbar & Mahesh Krishnan & Ganesh Hegde & Chandrasekhar Kesanapally & Tejinder, 2014. "Dell’s Channel Transformation: Leveraging Operations Research to Unleash Potential Across the Value Chain," Interfaces, INFORMS, vol. 44(1), pages 55-69, February.
    8. Lockström, Martin & Lei, Liu, 2013. "Antecedents to supplier integration in China: A partial least squares analysis," International Journal of Production Economics, Elsevier, vol. 141(1), pages 295-306.
    9. Inas S. Khayal & Amro M. Farid, 2018. "Architecting a System Model for Personalized Healthcare Delivery and Managed Individual Health Outcomes," Complexity, Hindawi, vol. 2018, pages 1-24, March.
    10. Annika Becker & Raik Stolletz & Thomas Stäblein, 2017. "Strategic ramp-up planning in automotive production networks," International Journal of Production Research, Taylor & Francis Journals, vol. 55(1), pages 59-78, January.
    11. Um, Juneho & Lyons, Andrew & Lam, Hugo K.S. & Cheng, T.C.E. & Dominguez-Pery, Carine, 2017. "Product variety management and supply chain performance: A capability perspective on their relationships and competitiveness implications," International Journal of Production Economics, Elsevier, vol. 187(C), pages 15-26.
    12. Ayd{i}n Alptekinou{g}lu & Charles J. Corbett, 2010. "Leadtime-Variety Tradeoff in Product Differentiation," Manufacturing & Service Operations Management, INFORMS, vol. 12(4), pages 569-582, January.
    13. Masood Fathi & Victoria Rodríguez & Dalila B.M.M. Fontes & Maria Jesus Alvarez, 2016. "A modified particle swarm optimisation algorithm to solve the part feeding problem at assembly lines," International Journal of Production Research, Taylor & Francis Journals, vol. 54(3), pages 878-893, February.
    14. Holweg, Matthias & Helo, Petri, 2014. "Defining value chain architectures: Linking strategic value creation to operational supply chain design," International Journal of Production Economics, Elsevier, vol. 147(PB), pages 230-238.
    15. Tobias Kreiter & Ulrich Pferschy, 2020. "Integer programming models versus advanced planning business software for a multi-level mixed-model assembly line problem," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 28(3), pages 1141-1177, September.
    16. Sali, Mustapha & Ghrab, Yahya & Chatras, Clément, 2023. "Optimal product aggregation for sales and operations planning in mass customisation context," International Journal of Production Economics, Elsevier, vol. 263(C).
    17. Clément Chatras & Vincent Giard & Mustapha Sali, 2016. "Mass customisation impact on bill of materials structure and master production schedule development," International Journal of Production Research, Taylor & Francis Journals, vol. 54(18), pages 5634-5650, September.
    18. Enrico Teich & Thorsten Claus, 2017. "Measurement of Load and Capacity Flexibility in Manufacturing," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 18(4), pages 291-302, December.
    19. Umpfenbach, Edward Lawrence & Dalkiran, Evrim & Chinnam, Ratna Babu & Murat, Alper Ekrem, 2018. "Promoting sustainability of automotive products through strategic assortment planning," European Journal of Operational Research, Elsevier, vol. 269(1), pages 272-285.
    20. Mohammad Heydari & Kin Keung Lai & Xiaohu Zhou, 2020. "Creating Sustainable Order Fulfillment Processes through Managing the Risk: Evidence from the Disposable Products Industry," Sustainability, MDPI, vol. 12(7), pages 1-32, April.
    21. Aoki, Katsuki & Staeblein, Thomas & Tomino, Takahiro, 2014. "Monozukuri capability to address product variety: A comparison between Japanese and German automotive makers," International Journal of Production Economics, Elsevier, vol. 147(PB), pages 373-384.
    22. Volling, Thomas & Spengler, Thomas S., 2011. "Modeling and simulation of order-driven planning policies in build-to-order automobile production," International Journal of Production Economics, Elsevier, vol. 131(1), pages 183-193, May.
    23. Wochner, Sina & Grunow, Martin & Staeblein, Thomas & Stolletz, Raik, 2016. "Planning for ramp-ups and new product introductions in the automotive industry: Extending sales and operations planning," International Journal of Production Economics, Elsevier, vol. 182(C), pages 372-383.

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