Mass customization in the automotive industry: comparing interdealer trading and reconfiguration flexibilities in order fulfillment

Abstract

Mass customization has been viewed as desirable but difficult to achieve in the volume automotive sector. Here we consider flexibility in automotive order fulfillment systems to enhance the ability to satisfy customers with their desired vehicle variants within acceptable delivery lead times. Two types of flexibility are compared in a Virtual-Build-to-Order system—reconfiguration in the planning pipeline and interdealer trading. A representative simulation model is used to investigate the impact of the two types of flexibility across a wide spectrum of product variety levels. The impacts on major stakeholders in the system—the producer, dealers, and customers—are considered. The study shows that both types of flexibilities can bring significant benefits in terms of reductions in lead time and inventory holding. The level of product variety strongly influences the observed effects—an important finding in the mass customization context. Upstream reconfiguration flexibility brings greater benefits than downstream trading flexibility. Reconfiguration tends to dominate trading as a fulfillment mechanism when both are in operation. The findings have implications for the design and management of automotive order fulfillment systems in improving their ability to offer mass customization. The study has relevance for companies in other sectors with high levels of variety that seek to combine efficiency, speed, and flexibility in order fulfillment.