Integrating marketing and production planning in make-to-order companies

Abstract

Make-To-Order companies are in the business of supplying products only in response to a customer's order. They may supply unique products made to a customer's specification and/or a limited range of products. They range from the traditional job shop, e.g. cutting pieces of metal to a specific shape, to producers of machine tools, e.g. a vulcanising line. A major problem is the divide between sales/marketing and production. The production function is often faced with unrealistic delivery dates for incoming orders. This arises when the sales force quote delivery dates and prices which will maximise the chance of the company winning the order. The lack of coordination with production often leads to confirmed orders being delivered later than promised by sales and/or being produced at a loss, or alternatively production has to delay other orders with consequent extra costs. The need to integrate sales and production planning considerations at the customer enquiry stage in deciding how to respond has been pointed out by several authors, yet little research has been carried out. The paper will discuss some possible approaches to the problem. These essentially depend on estimating routinely the probability of winning an enquiry order, dependent on many factors including price and lead time etc. Companies do not traditionally keep records of this data, particularly records of unsuccessful bids and on competitors. In addition, the paper describes the experience of setting up a system to collect such data in a major UK company and the potential uses of such a database.