IDEAS home Printed from https://ideas.repec.org/a/inm/orinte/v34y2004i5p394-403.html
   My bibliography  Save this article

Linking Product Variety to Order-Fulfillment Strategies

Author

Listed:
  • Frits K. Pil

    (University of Pittsburgh, 326 Mervis Hall, Pittsburgh, Pennsylvania 15260)

  • Matthias Holweg

    (Judge Institute of Management, University of Cambridge, Trumpington Street, Cambridge CB2 1AG, United Kingdom)

Abstract

Providing a variety of attributes in products is an important way of attracting customers, but it often increases complexity and managerial cost. We drew on two data sets collected in the automotive sector to explore the link between external variety (the variety offered the customer) and internal variety (the variety involved in creating the product). We found that these two dimensions can be independent of each other. External variety is problematic for firms producing to forecast, and handling internal variety is challenging for firms building products to order. The effectiveness of strategies to mitigate variety's negative effects, such as modularity, mutability, late configuration, and option bundling, depends on the order-fulfillment strategy the firm follows.

Suggested Citation

  • Frits K. Pil & Matthias Holweg, 2004. "Linking Product Variety to Order-Fulfillment Strategies," Interfaces, INFORMS, vol. 34(5), pages 394-403, October.
    • Handle: RePEc:inm:orinte:v:34:y:2004:i:5:p:394-403
    DOI: 10.1287/inte.1040.0092
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/inte.1040.0092
    Download Restriction: no
    File URL: https://libkey.io/10.1287/inte.1040.0092?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    2. John Paul MacDuffie & Kannan Sethuraman & Marshall L. Fisher, 1996. "Product Variety and Manufacturing Performance: Evidence from the International Automotive Assembly Plant Study," Management Science, INFORMS, vol. 42(3), pages 350-369, March.
    3. Kelvin Lancaster, 1990. "The Economics of Product Variety: A Survey," Marketing Science, INFORMS, vol. 9(3), pages 189-206.
    4. Marshall L. Fisher & Christopher D. Ittner, 1999. "The Impact of Product Variety on Automobile Assembly Operations: Empirical Evidence and Simulation Analysis," Management Science, INFORMS, vol. 45(6), pages 771-786, June.
    5. Ulrich, Karl, 1995. "The role of product architecture in the manufacturing firm," Research Policy, Elsevier, vol. 24(3), pages 419-440, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Volling, Thomas & Spengler, Thomas S., 2011. "Modeling and simulation of order-driven planning policies in build-to-order automobile production," International Journal of Production Economics, Elsevier, vol. 131(1), pages 183-193, May.
    2. Li, Wei & Sun, Hui & Tong, Meng & Mustafee, Navonil & Koh, Lenny, 2024. "Customizing customization in a 3D printing-enabled hybrid manufacturing supply chain," International Journal of Production Economics, Elsevier, vol. 268(C).
    3. Holweg, Matthias & Helo, Petri, 2014. "Defining value chain architectures: Linking strategic value creation to operational supply chain design," International Journal of Production Economics, Elsevier, vol. 147(PB), pages 230-238.
    4. Laurent Lim, Lâm & Alpan, Gülgün & Penz, Bernard, 2014. "Reconciling sales and operations management with distant suppliers in the automotive industry: A simulation approach," International Journal of Production Economics, Elsevier, vol. 151(C), pages 20-36.
    5. Enrico Teich & Thorsten Claus, 2017. "Measurement of Load and Capacity Flexibility in Manufacturing," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 18(4), pages 291-302, December.
    6. Rajesh K. Singh & Hari Om Sharma & Suresh K. Garg, 2016. "Study on Supply Chain Issues in an Auto Component Manufacturing Organization: Case Study," Global Business Review, International Management Institute, vol. 17(5), pages 1196-1210, October.
    7. Karl Martin & Parag Chitalia & Murugan Pugalenthi & K. Raghava Rau & Sudeep Maity & Rahul Kumar & Rohit Saksena & Randhir Hebbar & Mahesh Krishnan & Ganesh Hegde & Chandrasekhar Kesanapally & Tejinder, 2014. "Dell’s Channel Transformation: Leveraging Operations Research to Unleash Potential Across the Value Chain," Interfaces, INFORMS, vol. 44(1), pages 55-69, February.
    8. Annika Becker & Raik Stolletz & Thomas Stäblein, 2017. "Strategic ramp-up planning in automotive production networks," International Journal of Production Research, Taylor & Francis Journals, vol. 55(1), pages 59-78, January.
    9. Tobias Kreiter & Ulrich Pferschy, 2020. "Integer programming models versus advanced planning business software for a multi-level mixed-model assembly line problem," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 28(3), pages 1141-1177, September.
    10. Clément Chatras & Vincent Giard & Mustapha Sali, 2016. "Mass customisation impact on bill of materials structure and master production schedule development," International Journal of Production Research, Taylor & Francis Journals, vol. 54(18), pages 5634-5650, September.
    11. Um, Juneho & Lyons, Andrew & Lam, Hugo K.S. & Cheng, T.C.E. & Dominguez-Pery, Carine, 2017. "Product variety management and supply chain performance: A capability perspective on their relationships and competitiveness implications," International Journal of Production Economics, Elsevier, vol. 187(C), pages 15-26.
    12. Umpfenbach, Edward Lawrence & Dalkiran, Evrim & Chinnam, Ratna Babu & Murat, Alper Ekrem, 2018. "Promoting sustainability of automotive products through strategic assortment planning," European Journal of Operational Research, Elsevier, vol. 269(1), pages 272-285.
    13. Aoki, Katsuki & Staeblein, Thomas, 2018. "Monozukuri capability and dynamic product variety: An analysis of the design-manufacturing interface at Japanese and German automakers," Technovation, Elsevier, vol. 70, pages 33-45.
    14. Inas S. Khayal & Amro M. Farid, 2018. "Architecting a System Model for Personalized Healthcare Delivery and Managed Individual Health Outcomes," Complexity, Hindawi, vol. 2018, pages 1-24, March.
    15. Mohammad Heydari & Kin Keung Lai & Xiaohu Zhou, 2020. "Creating Sustainable Order Fulfillment Processes through Managing the Risk: Evidence from the Disposable Products Industry," Sustainability, MDPI, vol. 12(7), pages 1-32, April.
    16. Aoki, Katsuki & Staeblein, Thomas & Tomino, Takahiro, 2014. "Monozukuri capability to address product variety: A comparison between Japanese and German automotive makers," International Journal of Production Economics, Elsevier, vol. 147(PB), pages 373-384.
    17. Volling, Thomas & Matzke, Andreas & Grunewald, Martin & Spengler, Thomas S., 2013. "Planning of capacities and orders in build-to-order automobile production: A review," European Journal of Operational Research, Elsevier, vol. 224(2), pages 240-260.
    18. Sali, Mustapha & Ghrab, Yahya & Chatras, Clément, 2023. "Optimal product aggregation for sales and operations planning in mass customisation context," International Journal of Production Economics, Elsevier, vol. 263(C).
    19. Chuang, Chia-Hung & Zhao, Yabing, 2019. "Demand stimulation in finished-goods inventory management: Empirical evidence from General Motors dealerships," International Journal of Production Economics, Elsevier, vol. 208(C), pages 208-220.
    20. Masood Fathi & Victoria Rodríguez & Dalila B.M.M. Fontes & Maria Jesus Alvarez, 2016. "A modified particle swarm optimisation algorithm to solve the part feeding problem at assembly lines," International Journal of Production Research, Taylor & Francis Journals, vol. 54(3), pages 878-893, February.
    21. Lockström, Martin & Lei, Liu, 2013. "Antecedents to supplier integration in China: A partial least squares analysis," International Journal of Production Economics, Elsevier, vol. 141(1), pages 295-306.
    22. Andreas Hottenrott & Martin Grunow, 2019. "Flexible layouts for the mixed-model assembly of heterogeneous vehicles," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 41(4), pages 943-979, December.
    23. Ayd{i}n Alptekinou{g}lu & Charles J. Corbett, 2010. "Leadtime-Variety Tradeoff in Product Differentiation," Manufacturing & Service Operations Management, INFORMS, vol. 12(4), pages 569-582, January.
    24. Wochner, Sina & Grunow, Martin & Staeblein, Thomas & Stolletz, Raik, 2016. "Planning for ramp-ups and new product introductions in the automotive industry: Extending sales and operations planning," International Journal of Production Economics, Elsevier, vol. 182(C), pages 372-383.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Taylor Randall & Karl Ulrich, 2001. "Product Variety, Supply Chain Structure, and Firm Performance: Analysis of the U.S. Bicycle Industry," Management Science, INFORMS, vol. 47(12), pages 1588-1604, December.
    2. Kai-Lung Hui, 2004. "Product Variety Under Brand Influence: An Empirical Investigation of Personal Computer Demand," Management Science, INFORMS, vol. 50(5), pages 686-700, May.
    3. Ayd{i}n Alptekinou{g}lu & Charles J. Corbett, 2008. "Mass Customization vs. Mass Production: Variety and Price Competition," Manufacturing & Service Operations Management, INFORMS, vol. 10(2), pages 204-217, August.
    4. Kamalini Ramdas & Mohanbir S. Sawhney, 2001. "A Cross-Functional Approach to Evaluating Multiple Line Extensions for Assembled Products," Management Science, INFORMS, vol. 47(1), pages 22-36, January.
    5. Aoki, Katsuki & Staeblein, Thomas & Tomino, Takahiro, 2014. "Monozukuri capability to address product variety: A comparison between Japanese and German automotive makers," International Journal of Production Economics, Elsevier, vol. 147(PB), pages 373-384.
    6. Anuj Kumar & Rahul Telang, 2011. "Product Customization and Customer Service Costs: An Empirical Analysis," Manufacturing & Service Operations Management, INFORMS, vol. 13(3), pages 347-360, July.
    7. Johnson, Michael D. & Kirchain, Randolph E., 2009. "Quantifying the effects of product family decisions on material selection: A process-based costing approach," International Journal of Production Economics, Elsevier, vol. 120(2), pages 653-668, August.
    8. Brun, Alessandro & Capra, Eugenio & Miragliotta, Giovanni, 2009. "VRP revisited: The impact of behavioural costs in balancing standardisation and variety," International Journal of Production Economics, Elsevier, vol. 117(1), pages 16-29, January.
    9. Antonio Moreno & Christian Terwiesch, 2017. "The Effects of Product Line Breadth: Evidence from the Automotive Industry," Marketing Science, INFORMS, vol. 36(2), pages 254-271, March.
    10. Cecere, Grazia & Corrocher, Nicoletta & Battaglia, Riccardo David, 2015. "Innovation and competition in the smartphone industry: Is there a dominant design?," Telecommunications Policy, Elsevier, vol. 39(3), pages 162-175.
    11. Wallace J. Hopp & Xiaowei Xu, 2005. "Product Line Selection and Pricing with Modularity in Design," Manufacturing & Service Operations Management, INFORMS, vol. 7(3), pages 172-187, August.
    12. Jonathan R. Clark & Robert S. Huckman, 2012. "Broadening Focus: Spillovers, Complementarities, and Specialization in the Hospital Industry," Management Science, INFORMS, vol. 58(4), pages 708-722, April.
    13. Carolyn D. Egelman & Dennis Epple & Linda Argote & Erica R.H. Fuchs, 2013. "Learning by Doing in a Multi-Product Manufacturing Environment: Product Variety, Customizations, and Overlapping Product Generations," NBER Working Papers 19674, National Bureau of Economic Research, Inc.
    14. Suren Basov & Svetlana Danilkina & David Prentice, 2020. "When Does Variety Increase with Quality?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 56(3), pages 463-487, May.
    15. Rachna Shah & George P. Ball & Serguei Netessine, 2017. "Plant Operations and Product Recalls in the Automotive Industry: An Empirical Investigation," Management Science, INFORMS, vol. 63(8), pages 2439-2459, August.
    16. Marshall L. Fisher & Christopher D. Ittner, 1999. "The Impact of Product Variety on Automobile Assembly Operations: Empirical Evidence and Simulation Analysis," Management Science, INFORMS, vol. 45(6), pages 771-786, June.
    17. Ushchev, Philip & Zenou, Yves, 2018. "Price competition in product variety networks," Games and Economic Behavior, Elsevier, vol. 110(C), pages 226-247.
    18. V. Krishnan & Rahul Singh & Devanath Tirupati, 1999. "A Model-Based Approach for Planning and Developing a Family of Technology-Based Products," Manufacturing & Service Operations Management, INFORMS, vol. 1(2), pages 132-156.
    19. Sima Sabahi & Mahour M. Parast, 2023. "An operations and supply chain management perspective to product innovation," Operations Management Research, Springer, vol. 16(2), pages 808-829, June.
    20. Bradley R. Staats & Francesca Gino, 2012. "Specialization and Variety in Repetitive Tasks: Evidence from a Japanese Bank," Management Science, INFORMS, vol. 58(6), pages 1141-1159, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:orinte:v:34:y:2004:i:5:p:394-403. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.