Skip to main content

Impact of Manufacturing Flexibility on Supply Chain Performance in the Automotive Industry

  • Chapter
Supply Chain Structures

Abstract

The basis of competition in the automotive industry is changing. While product innovation and styling remain the most important areas of competition, an almost equally fierce battle is now developing in the areas of customization and order fulfillment (Stalk, Stephenson and King [35]). Currently, all models of vehicle distribution are fundamentally inventory-driven and do not promote customized ordering. However, several vehicle manufacturers — most notably Ford and General Motors — have recently launched initiatives to transform their companies from predominantly make-to-stock to predominantly make-to-order producers. This will enable vehicle manufacturers and their dealers not only to dramatically reduce their finished goods inventory but also respond to challenges and threats from third party Internet companies.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 129.00
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 169.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 169.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Andreou, S.A. (1990) A Capital Budgeting Model for Product-Mix Flexibility. Journal of Manufacturing Operations Management, Vol. 3, 5–23.

    Google Scholar 

  2. Bassok, Y., R. Anupindi, and R. Akella. (1999) Single-period Multiproduct Inventory Models with Substitution. Operations Research, Vol. 47, 632–642.

    Google Scholar 

  3. Beach, R., A.P. Muhlemann, D.H.R. Price, A. Paterson, and J.A. Sharp. (2000) A Review of Manufacturing Flexibility. European Journal of Operational Research, Vol. 122, 41–57.

    Google Scholar 

  4. Biller, S., L.M.A. Chan, D. Simchi-Levi, and J. Swann. (2000) Dynamic Pricing and the Direct-to-Consumer Model in the Automotive Industry. In preparation.

    Google Scholar 

  5. Bish, E.K., A. Muriel, and S. Biller. (2000) Capacity and Flexibility Planning in a Make to-Order Environment. Under review for Management Science.

    Google Scholar 

  6. Bitran, G.R. and S. Dasu. (1992) Ordering Policies in an Environment of Stochastic Yields and Substitutable Demands. Operations Research, Vol. 40, 999–1017.

    Google Scholar 

  7. Bitran, G.R. and S. Gilbert. (1996) Managing Hotel Reservations with Uncertain Arrivals. Operations Research, Vol. 44, 35–49.

    Article  Google Scholar 

  8. Brady, D., K. Kerwin, D. Welch, L. Lee, and R. Hof. Customizing for the Masses. Business Week, March 20, 2000.

    Google Scholar 

  9. Caulkins, J.P. and C.H. Fine. (1990) Seasonal Inventories and the use of Product-Flexible Manufacturing Technology. Annals of Operations Research, Vol. 26, 351–375.

    Google Scholar 

  10. Carroll, W.J. and R.C. Grimes. (1995) Evolutionary Change in Product Management: Experiences in the Car Rental Industry. Interfaces, Vol. 25, 84–104.

    Article  Google Scholar 

  11. DE Toni, A. and S. Tonchia. (1998) Manufacturing Flexibility: A Literature Review. International Journal of Production Research, Vol. 36, 1587–1617.

    Article  Google Scholar 

  12. Dickinson, J., S. Dembkowski, C. Shah, and R. Morrison. (1998) The Future of Automotive Distribution. Financial Times Automotive,London, UK.

    Google Scholar 

  13. Drucker, P. (1946) The Concept of a Corporation. John Day, New York, NY.

    Google Scholar 

  14. Edelstein, M. and M. Melynk. (1977) The Pool Control System. Interfaces, Vol. 8, 21–36.

    Google Scholar 

  15. Eppen, G.D., R.K. Martin, and L. Schrate. (1989) A Scenario Approach to Capacity Planning. OR Practice, Vol. 37, 517–527.

    Google Scholar 

  16. Fine, C.H. AND R.M. Freund. (1990) Optimal Investment in Product-Flexible Manufacturing Capacity. Management Science,Vol. 36, 449–466.

    Google Scholar 

  17. Fine, C.H. (1998) Clockspeed. Harper Collins, New York, NY.

    Google Scholar 

  18. Geraghty, M.K. AND E. Johnson. (1996) Revenue Management Saves National Car Rental. Interfaces, Vol. 27, 1–7–127.

    Google Scholar 

  19. Graves, S.C. AND B.T. Tomlin. (2000) Process Flexibility in Supply Chains, under review for Management Science.

    Google Scholar 

  20. Hsu, A. and Y. Bassok. (1997) Random Yield and Random Demand in a Production System with Downward Substitution. To appear in Operations Research.

    Google Scholar 

  21. J.D Power Automotive and Associates 2000 J.D. Power Automotive and Associates (2000) 2000 New Autoshopper.com Study, in The Power Report, October, Augora Hills, CA.

    Google Scholar 

  22. Jones, R.A. AND J.M. Ostory. (1984) Flexibility and Uncertainty. Rev. Economic Studies, Vol. 51, 13–32.

    Google Scholar 

  23. Jordan, W.C. AND S.C. Graves. (1995) Principles and Benefits of Manufacturing Process Flexibility. Management Science, Vol. 41, 577–594.

    Google Scholar 

  24. Karaesmen, I. AND G. VAN Ryzin. (1998) Overbooking with Substitutable Inventory Classes. Working paper, Columbia University, NY.

    Google Scholar 

  25. Khouja, M. (1999) The Single-period (News-vendor) Problem: Literature Review and Suggestions for Further Research. Omega,Vol. 27, 537–553.

    Google Scholar 

  26. Kouvelis, P. (1992) Design and Planning Problems in Flexible Manufacturing Systems: A Critical Review. Journal of Intelligent Manufacturing, Vol. 3, 75–99.

    Google Scholar 

  27. Lapidus, G. (2000) Gentlemen, Start Your Engines. Goldman Sachs Research Report, New York, NY.

    Google Scholar 

  28. Larson, R.C. AND A.R. Odoni. (1981) Urban Operations Research. Prentice-Hall, Inc., New Jersey.

    Google Scholar 

  29. Muriel, A. AND A. Somasundaram. (2000) Simulation Study of the Impact of Manufacturing Flexibility on Sales, Inventory, and Transportation Costs. Working paper, University of Massachusetts, Amherst, MA.

    Google Scholar 

  30. Netessine, S., G. Dobson, AND R.A. Shumsky. (2000) Flexible Service Capacity: Optimal Investment and the Impact of Demand Correlation. To appear in Operations Research.

    Google Scholar 

  31. Pasternak, B. AND Z. Drezner. (1991) Optimal Inventory Policies for Substitutable Commodities with Stochastic Demand. Naval Research Logistics, Vol. 38, 221–240.

    Article  Google Scholar 

  32. Sethi, A.K. and S.P. Sethi. (1990) Flexibility in Manufacturing: A Survey. The International Journal of Flexible Manufacturing Systems, Vol. 2, 289–328.

    Article  Google Scholar 

  33. Sloan, A.P. (1963) My Years with General Motors. Currency and Doubleday, New York, NY.

    Google Scholar 

  34. STALK, G. (1988) Time the next source of competitive advan-tage. Harvard Business Review July—August 1988, Vol. 66, No. 4.

    Google Scholar 

  35. Stalk, G., S. Stephenson, and T. King. (1996) Searching for Fulfillment: Breakthroughs in Order-to-Delivery Process in the Auto Industry. The Boston Consulting Group.

    Google Scholar 

  36. Triantis, A.J. and J.E. Hodder. (1990) Valuing Flexibility as a Complex Option. The Journal of Finance, Vol. 45, 549–565.

    Article  Google Scholar 

  37. Van Mieghem, J.A. (1998) Investment Strategies for Flexible Resources, Management Science, Vol. 44, 1071–1078.

    Article  Google Scholar 

  38. Van Oyen, M., E. SENTURK-GEL, and W. Hopp. (2000) Performance of Workforce Agility in Collaborative and Non-Collaborative Work Systems. To appear in IIE Transactions.

    Google Scholar 

  39. Welch, D. Where’s My Dream Car? Business Week, November 27, 2000.

    Google Scholar 

  40. Womack, J.P., D.T. Jones, and D. Roos. (1990) The Machine that Changed the World. Harper Collins, New York, NY.

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Editor information

Editors and Affiliations

Rights and permissions

Reprints and permissions

Copyright information

© 2002 Springer Science+Business Media New York

About this chapter

Cite this chapter

Biller, S., Bish, E.K., Muriel, A. (2002). Impact of Manufacturing Flexibility on Supply Chain Performance in the Automotive Industry. In: Song, JS., Yao, D.D. (eds) Supply Chain Structures. International Series in Operations Research & Management Science, vol 42. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-6635-6_4

Download citation

  • DOI: https://doi.org/10.1007/978-1-4757-6635-6_4

  • Publisher Name: Springer, Boston, MA

  • Print ISBN: 978-1-4419-4917-2

  • Online ISBN: 978-1-4757-6635-6

  • eBook Packages: Springer Book Archive

Publish with us

Policies and ethics