The relationship between proximate supply and build‐to‐order capability

Abstract

PurposeTo investigate the opportunities provided by proximate supply to support build‐to‐order (BTO) capability and to provide empirical analysis to identify the extent to which supplier parks as a means of facilitating proximate supply can improve supply chain performance and enhance BTO capability in the automotive sector.Design/methodology/approachA case‐based approach was employed to analyse the relationship between proximate supply and BTO.FindingsThe key results of the research demonstrate how proximate supply in the automotive sector achieved through the presence of supplier parks situated adjacent or close to vehicle assembly plants, has provided the means for moving the customer‐order decoupling point upstream and, therefore, increase the percentage of a vehicle that is BTO. BTO is generally regarded as a qualitative concept yet the results are demonstrated by adopting measures that act as a proxy for building to a unique order. In addition, first‐rate performance is seen to be achieved in inventory levels and lead time with the proximate supply arrangement.Research limitations/implicationsThe research presented in this paper considers day‐to‐day, transactional supply chain performance. No attempt is made in this work to cost the implications of setting up a supplier park or to evaluate such arrangements on a life‐cycle basis.Practical implicationsThe results have practical implications for the future of supply chain design and location strategies in the automotive and other industries.Originality/valueTo date, the relationship between proximate supply and BTO capability has not been documented.