Towards responsive vehicle supply: a simulation-based investigation into automotive scheduling systems

Vehicle supply has traditionally been based on forecast-driven production, and a large fraction of cars has been sold from stock-a practice which incurs considerable cost in terms of stock holding and sales incentives. Derived from successes in other industries, the benefits of responsive supply systems capable of providing customized vehicles in short lead-times have been pointed out. While the theoretical discussion of such 'build-to-order' (BTO) strategies is well advanced, the dynamic feasibility of implementing these concepts is far from understood. Using a simulation of a multi-tier supply chain-system, this paper investigates the impact of altering key aspects of the scheduling activities with the objective of determining the scope for potential improvements in responsiveness of the supply chain. The simulation results show that current vehicle supply systems are not capable of supporting BTO due to insufficient feedback between supply and demand, as well as due to the strong reliance on forecasting in the scheduling process. The paper concludes with a set of recommendations on how to improve current scheduling systems towards increasing the content of vehicles built to customer order. (c) 2004 Elsevier B.V. All rights reserved.