The effects of hybrid order processing strategies on economic and logistic objectives

Abstract

In a dynamic environment, companies face the challenge of increasing customer requirements. Today’s customers expect fast delivery of affordable and to their needs tailored products. As a result, companies need to act more flexible and thus move away from pure make-to-stock and make-to-order productions described in literature. Shifting the customer order decoupling point to in-between order processing strategies such as assemble-to-order can increase the probability of meeting the customised demand on time. In addition, companies in practice use a variety of different methods for processes like order generation, order release, sequencing and lot sizing to adjust their chosen order processing strategy to fit their individual needs. An example known from industry regarding such hybrid order processing strategy is a make-to-order production with fixed lot sizes. The share of a batch, which is not needed to satisfy the customer’s order, is stored. These leftover products allow very short delivery times for small order quantities. In this paper, possibilities to generate such hybrid order processing strategies are identified and structured. Causal diagrams and logistic models are used to analyse the effects of hybrid order processing strategies on economic and logistic objectives.