Variety Management in Assemble-to-Order Supply Chains
Assemble-to-order refers to a supply chain strategy in which products are not assembled until customer order arrives. It is based on the so-called form postponement that is to hold components at a generic form and to delay the point of product differentiation. The performance of an assem-ble-to-order supply chain depends on two main dimensions, which are responsiveness and achievement level of scale economies. Responsiveness refers to the capability of fulfilling customer requirements in a fast-paced manner, whereas the achievement of scale economies reflects the degree of operations efficiency. Assemble-to-order supply chains induce high product variety, which has adverse effects on performance. We use demand volumes as a proxy for scale economies and lead times as a proxy for responsiveness. A matrix that consists of both dimensions can be defined, in which we distinguish between short/long lead times and low/high demand volumes. This matrix is called performance matrix. On the other hand, the consequence that results from product variety is a high demand variability of end products, which also affects the demand variability of components. An analysis of component demand variability enables one to identify the components with low/high demand variability. These components can further be classified into supplied and in-house made components. Thus, a second matrix (called component matrix) with two dimensions, namely variability (low/high) and supply source (in-house/supplier) can be defined. Due to the supply source dimension in the component matrix, the supply chain perspective is also taken into ac-count. The combination of both matrixes into a single one provides the performance/component matrix for assemble-to-order supply chains. To use the final matrix, it is necessary to compute lead times, demand volumes and demand variability of the supplied and in-house made components. By plotting the components in the matrix, one can determine the problems induced by variety. In order to improve the performance of the assemble-to-order supply chain, the implementation of variety management strategies is necessary. The identified strategies are: commonality, component families, modularity, and platforms. Based on the performance/component matrix, we discuss how these strategies or a combination of them can contribute to derive recommendations that aim to alleviate variety impacts on the as-semble-to-order supply chain.
|Date of creation:||Jun 2006|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Marshall L. Fisher & Christopher D. Ittner, 1999. "The Impact of Product Variety on Automobile Assembly Operations: Empirical Evidence and Simulation Analysis," Management Science, INFORMS, vol. 45(6), pages 771-786, June.
- Blecker, Thorsten & Abdelkafi, Nizar, 2005. "Modularity and Delayed Product Differentiation in Assemble-to-order Systems: Analysis and Extensions from a Complexity Perspective," MPRA Paper 5286, University Library of Munich, Germany.
- Richard J. Tersine & Michele G. Tersine, 2005. "Cholesterol and inventory: healthy choice guidelines," International Journal of Services and Operations Management, Inderscience Enterprises Ltd, vol. 1(2), pages 168-184.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:5250. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.