Strategies for customized shipbuilding with different customer order decoupling points

Abstract

The ship design and construction industry serves a considerable range of market segments, with different levels of required customization, different demand volumes, and other product and market variations. In order to effectively respond to various market requirements, strategies and related work processes need to be differentiated. An important strategic concept to make distinctions among strategies is the customer order decoupling point, that is, the point in the value chain where the product is linked to a specific customer order. This article aims to analyse and compare strategies for customized, low-volume ship design and construction from the perspective of the customer order decoupling point and to link them to product and market characteristics. It is based on a case study at the Ulstein Group, an established Norwegian ship designer and builder. The study allowed us to define ‘customized design’ and ‘standardized design’ as two different strategies that fundamentally differ in terms of the customer order decoupling point. In the former, customized ships are offered in a process where most activities are driven by the expectations and requirements of a particular customer. In the latter, the customer is given only a limited choice of predefined, standardized, and well-proved options. We conclude that customer order decoupling point positions upstream in the value chain imply high levels of flexibility and customization, while downstream positions allow short lead times, high delivery precision, and lower prices. The customer order decoupling point perspective provides a useful framework in which to analyse the ship design and construction industry.