Aligning demand and supply flexibility in custom product co-design
- 243 Downloads
Flexibility of supply and demand is essential for successful implementation of a mass customization strategy that delivers sustained competitive advantage. Supply flexibility, i.e., a choice of alternative products designed to perform the same basic function, is made possible by the range of capabilities available in flexible and agile manufacturing systems and in supply chains. Demand flexibility is derived from the degree to which a customer is willing to compromise on product features or performance levels in order to meet budgetary (reflected in price) or schedule (reflected in delivery) constraints. Flexibility of both supply and demand can have significant strategic and financial value if they are properly aligned. However, customers are mostly unaware of mapping of demand flexibility on to supply flexibility and its impact on production cost and time. Recent advances in information technology have made it possible to co-design a product that involves customer on one end and the manufacturer on the other. This creates an aura and an opportunity where a middle ground between the supply and demand flexibility can be explored and a “deal” can be struck where both parties settle for a product that is beneficial to both through a negotiated settlement. In this paper, we develop a framework for such negotiations. The customer requirements are treated as a range of negotiable options instead of a set of fixed inputs. Demand and supply for customization is then matched by aligning the flexibility of manufacturing systems with customers’ requirement options. Based on this framework, a negotiation scheme is developed to assist customers and manufacturers in exploring and utilizing demand and supply flexibility information in co-design. The negotiation scheme is formulated using goal programming. Finally, an interactive problem-solving procedure is developed and implemented with an illustrative example.
KeywordsFlexibility Mass customization Co-design Negotiation
This research is supported by National Natural Science Foundation of China (NSFC: No.70418013) and Hong Kong Research Grants Council (RGC: N_HKUST625/04). The authors would also like to express our gratitude to the anonymous reviewers for their thorough and insightful comments on previous manuscripts.
- Fisher R, Ury W et al. (1991) Getting to yes: negotiating agreement without giving in. Houghton Mifflin, Boston Google Scholar
- Fournier S, Dobscha S et al. (1998). Preventing the premature death of relationship marketing. Harv Bus Rev 76(1):42–44Google Scholar
- Lu S (2003) Engineering as collaborative negotiation: a new paradigm for collaborative engineering. http://wisdom.usc.edu/ecn/index.htm
- Raiffa H, Richardson J et al (2003) Negotiation analysis: the science and art of collaborative decision making. Belknap Press, Cambridge, MassGoogle Scholar
- Simon HA (1996) The sciences of the artificial. MIT Press, Cambridge, MassGoogle Scholar
- Squire B, Brown S et al (2006) The impact of mass customisation on manufacturing trade-offs. Prod Oper Manag 15(1):10–21Google Scholar
- Suh NP (1990) The principles of design. Oxford University Press, New York Google Scholar
- Tseng MM, Jiao J (1996) Design for mass customization. Ann CIRP 45/1:53–156Google Scholar
- Von Hippel E (2005) Democratizing innovation. MIT Press, Cambridge, MassGoogle Scholar
- Zipkin P (2001) The limits of mass customization. MIT Sloan Manage Rev 42(3):81Google Scholar