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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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