Abstract
The placement of the order penetration point (OPP) is a key decision in automotive supply chains since the product will be differentiated according to the customers’ requirements only after the OPP. From a marketing perspective variety proliferation is encouraged. Yet, competition has shifted from individual firms to global supply chains and under given market uncertainty the significance of supply chain flexibility is increasing. Upstream however, the expansion of outsourcing, supplier rationalization and lean production practices has yielded substantial progress in terms of supply chain efficiency. In order to economically operate the supply chain, the positioning of order penetration points is vital to inflict as much downstream process and product flexibility to be amenable to changing market demand and to guarantee as much upstream stability to allow for accurate and risk-controlled planning of cost-efficient supply chain processes. This paper identifies and analyses the main factors related to OPP problems and presents a method for OPP positioning under a supply chain perspective, integrating the influence of product diversity and supply chain flexibility over a complete product life-cycle systematically.
Highlights
The Order Penetration Point (OPP) is not a new subject as it has already been a topic of interest since the 1980’s (Bowersox and Morash, 1989), when Sharman defined it as the point at which a product becomes earmarked for a particular customer and where product specifications get frozen (Sharman, 1984)
When deciding about the position of an order penetration point within an automotive supply chain all these design options have to be taken into account
Our studies revealed that most performance measurement systems offer indicators that can be assigned to one of the two categories “supply chain costs” with the objective of costs reduction and the “supply chain performance” with the objective of performance increase (Pires e Sacomano Neto, 2009, Braz et al, 2011, Cirullies et al, 2011)
Summary
The Order Penetration Point (OPP) is not a new subject as it has already been a topic of interest since the 1980’s (Bowersox and Morash, 1989), when Sharman defined it as the point at which a product becomes earmarked for a particular customer and where product specifications get frozen (Sharman, 1984). 103-120 markets, increasing global competition and shorter product life cycles (Olhager, 2003) This interest and importance is even more accentuated in industries that embrace global organizations with high product diversity resulting in the need for intra/interorganizational flexibility (Holweg and Pil, 2004; Pires and Diaz, 2007). This holds especially true for the automotive industry which is in focused here. The choice of the automotive industry as the object of study was reinforced by the fact that this industry has been at the forefront of many managerial and industrial developments throughout the world (Thun and Hoenig, 2011)
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