BUILDING CARS TO CUSTOMER ORDER — WHAT DOES IT MEAN FOR INBOUND LOGISTICS OPERATIONS?

The automotive industry is undergoing a strategic transition. Cost pressure from rising stock levels in the market and increasing incentives needed to sell these vehicles are forcing vehicle manufacturers to rethink their prevalent “stock-push” approach, building vehicles against a forecast and selling from stock, in favor of a stock-less “build-to-order” order fulfillment strategy. More responsive order fulfillment at the vehicle manufacturer level however will not only require flexible and responsive component supply, but will also have wide ramifications for the logistics operations. Based on three case studies of major inbound logistics operations, this exploratory study assesses their ability to support such a build-to-order approach, as well as the potential implications of such transition. The paper concludes with a set of general strategies for how these implications could be mitigated.

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