Order management plays a crucial role in the success of make-to-order (MTO) production processes. In a world where customization is becoming increasingly important, businesses are faced with the challenge of efficiently managing orders to meet customer demands while also maintaining responsiveness. A research article titled “Order Management in the Customization-Responsiveness Squeeze” by Antti Tenhiälä and Mikko Ketokivi delves into the complexities of this topic, shedding light on the impact of customization on order management in MTO production processes.
Published in the Decision Sciences journal in 2012, this study explores the multilevel nature of customization and its influence on order management. By dividing MTO production processes into three distinct customization gestalts, the researchers provide valuable insights into the challenges and potential solutions faced by businesses operating in this space.
How does customization affect order management in MTO production processes?
The customization of MTO products can occur at either the configuration or component level. This distinction gives rise to three distinct customization gestalts: non-customizers, custom assemblers, and custom producers. Understanding the implications of these gestalts is crucial for effective order management.
Customization, in all its forms, places unique demands on order management. The complexity of configuring various components or assembling custom products requires businesses to adapt their order management practices accordingly. Anticipating and meeting customer demands while maintaining efficiency becomes a delicate balance to achieve.
The research highlights the need for businesses to assess the specific customization gestalt they fall into and tailor their order management practices accordingly. By understanding the nature of customization within their processes, businesses can navigate the customization-responsiveness squeeze with greater efficiency and deliver satisfactory outcomes to their customers.
What are the challenges and solutions in each customization gestalt?
The three customization gestalts identified in the study—non-customizers, custom assemblers, and custom producers—each present unique challenges and opportunities for order management. Let’s explore each gestalt and the strategies that can be employed to overcome these challenges:
1. Non-customizers
Non-customizers are MTO production processes that do not involve customization at either the configuration or component level. This gestalt poses fewer complexities compared to others, as it primarily focuses on fulfilling standard orders. Order management in non-customizers can be streamlined through efficient inventory management, accurate demand forecasting, and standardized order processing.
However, the research cautions against neglecting seemingly “old-fashioned” practices such as available-to-promise (ATP) verifications. These verifications, which assess the feasibility of meeting delivery dates based on available resources, prove effective in ensuring customer satisfaction. Neglecting ATP verifications can result in missed commitments and potential customer dissatisfaction.
Key takeaway: Non-customizers benefit from streamlined order management, but organizations must not overlook the importance of traditional practices like ATP verifications to maintain customer satisfaction.
2. Custom assemblers
Custom assemblers are MTO production processes that focus on configuring various components to meet customer specifications. This gestalt requires effective order management strategies to handle the complexity of assembling unique products while ensuring timely delivery.
The research highlights the importance of systematic configuration management methods in custom assembly. These methods, typically associated with project-based environments, prove equally indispensable in custom assemblers. Employing tools and processes that facilitate accurate component selection, compatibility checks, and efficient assembly sequencing enable businesses to manage orders effectively and minimize bottlenecks in the production process.
Key takeaway: Custom assemblers should adopt systematic configuration management methods to ensure smooth order handling and minimize delays due to component selection or assembly challenges.
3. Custom producers
Custom producers are the most complex of the three gestalts. They involve both customization at the configuration and component level, resulting in highly individualized products. Consequently, order management in custom producers demands an intricate balance between customization and responsiveness.
One key challenge faced by custom producers is the need to manage and coordinate multiple customized orders simultaneously. The research emphasizes the importance of agile order management practices in such situations. Agile order management allows businesses to quickly adapt to changing customer demands and unforeseen circumstances.
Moreover, custom producers must focus on effective communication and collaboration with customers and suppliers to align expectations and ensure smooth production processes.
Key takeaway: Custom producers require agile order management practices and strong communication with customers and suppliers to effectively handle the complexities of simultaneous customized orders.
How do different order management practices vary across supply chains?
The researchers analyzed a sample of 163 MTO production processes embedded in seven distinct supply chains to understand how order management practices vary across different contexts. The findings underscored the importance of considering contextual factors when developing order management strategies.
Supply chains exhibit various contingencies, and these need to be taken into account when formulating effective order management practices. The study suggests that practices effective in one supply chain may not yield the same results in another.
For instance, order management practices that prove effective in a complex and fast-paced supply chain may not be as suitable for a supply chain characterized by stability and predictability. Organizations must carefully evaluate their supply chain context and tailor their order management practices to suit specific requirements.
Key takeaway: Supply chain context significantly influences the effectiveness of order management practices. Businesses must consider the unique contingencies of their supply chain to optimize their order management strategies.
In conclusion, this research article by Tenhiälä and Ketokivi provides valuable insights into how customization affects order management in MTO production processes. By categorizing MTO processes into three gestalts, the authors shed light on the challenges and potential solutions associated with each. Additionally, the study highlights the importance of contextual factors and the need for businesses to tailor their order management strategies accordingly.
As we move further into the era of customization, organizations must continuously refine their practices to address the evolving demands of customers. By leveraging the findings of this research, businesses can navigate the complexity of MTO production processes, improve order management efficiency, and ultimately deliver satisfactory outcomes to their customers.
Link to the original research article: Order Management in the Customization-Responsiveness Squeeze*
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