Postponement strategies for re-engineering of automotive manufacturing: knowledge-management implications

Abstract

Globally, automotive manufacturers are faced with the challenges of expanding product variety and high customer service provision. They increasingly face a flexibility driven, time-based competition. This demands effective knowledge management to develop more effective processes. In other words, there is a need for knowledge-driven innovations that can offer business process improvements in the new business environment. One innovative response to these challenges is postponement, also known as “delayed differentiation”. Such a strategy calls for redesigning products and re-engineering processes so that the stages of the production process in which a common process is used are prolonged. This product/process re-engineering should allow a flexible option to defer the point of differentiation. The manufacturing industry motivation to focus in this direction can be encouraged through relevant demonstrative models capturing their existing processes. In this paper, we develop such a model that captures the costs and benefits associated with postponement strategy that is implemented through business process re-engineering. We apply this model to analyze a real case in an automobile manufacturing plant. Our findings are that there are enormous opportunities for cost-effective postponement strategies in automotive manufacturing sector through a knowledge management (KM)-based process re-engineering. We also note that as the number of differentiated models and variability in demand increase, the cost of process re-engineering can be recovered through value of postponement (VOP), in as short a time frame as 1 year. It is also suggested that for practitioners and researchers working in the KM context, the sharing of the tacit knowledge amongst different professionals managing the various processes must be continually emphasized. This is increasingly important to deal with flexibility challenges.