Operational implications of
increasing levels of product
variety
Dr Philip Brabazon
Offerings in the market place
•
•
•
•
•
•
•
•
•
•
Early 1970’s Late 1990’s
Television screen sizes
5
15
Dental flosses
12
64
Trainer styles
5
285
Contact lens types
1
36
Bicycle types
8
31
New automotive models 140
260
Soft drinks
20
87
TV channels
5
185
Pain relievers
17
141
Magazine titles
339
790
Cox W M, Alm R (1998), The right stuff: America's move to mass customization, Federal Reserve Bank of Dallas, Annual report 1998,
Dallas
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New product introductions
•
•
•
•
•
•
•
•
Total - NPI
1980
4,414
1998
24,965
Cereals
Ice cream, frozen yoghurt
Spices, extracts, seasonings
Deodorizers, air fresheners
Paper towels, napkins
Milk, yoghurt drinks
Coffee
Beer, ale
34
57
61
53
11
26
11
25
192
556
403
372
126
255
384
187
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CORL Launch, June 2014, Brabazon
http://www.adidas.com/Eyewear/content/uk/products/
4
CORL Launch, June 2014, Brabazon
http://www.adidas.com/Eyewear/content/uk/products/
5
Variety impacts
Increasing ‘live’
product range
Responsiveness
suffers
Stock & WIP
increase
Batch size
shrinks
Competitiveness
suffers
Quality problems
increase
Lead times
increase
Scheduling complexity
increases
Changeovers
increase
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Make-to-Stock Fulfilment
system
Replenishment
initiates completion activities
Forecasts influence
supply process
Supply line 1
Supply line 2
Completion Activities
Supply line 3
Customer
Supply line 4
Inventories of
materials,
components,
or products
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Implications of Variety
Demand
variability
index
6
5
4
3
2
1
0
0
10
20
30
40
50
60
70
80
Average demand per period
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Make-to-Stock Fulfilment
system
Greater variability in inventory ~ greater overall inventory levels
Supply line 1
Supply line 2
Supply line 3
Supply line 4
Supply line 5
Supply line 6
Completion Activities
Customer
Supply line 7
Supply line 8
Supply line 9
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Make-to-Order
Supply line 1
Supply line 2
Customer orders
initiate completion activities
Supply line 3
Supply line 4
Supply line 5
Supply line 6
Completion Activities
Customer
Supply line 7
Supply line 8
Supply line 9
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Fulfilment Process: Reported
models
Stage 1
Centralised process
and inventory of the
common assembly
2a
a
Plant 1
A
2b
b
Plant 2
B
2c
c
Plant n
Y
Production
facilities
Inventories of
each product
Stage 1
Stage 2
Regional plants
and products
Customers in
each region
Customers of
each product
A
Plant
Production
facilities
B
Components
Products
Customers
Y
Inventories at
each location
Customers at
each location
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Part assembled products
(Vanilla boxes)
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Multiple fulfilment
mechanisms
Production Pipeline
Customer
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‘Floating’ decoupling point
system
Switch ‘to-order’
Initial ‘plan’ is
based on
Forecast
Production plan and process
Customer
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Fulfilment options
Specification match
A planned product exactly matches the
Customer’s specification
Specification substitution
Customer receives a product with one or
more superior features in the product
Specification redundancy
Customer receives a product with one or more
additional features
Specification compromise
Customer gets a different product to the one
requested
Specification reconfiguration
The product is amended to be exactly as the
customer has ordered
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Reconfiguration
Production Plan
Factory
Stock
Customer
Order fulfilment pipeline
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Reconfiguration
Customer
Cost of reconfiguration
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Re-configuration cost curves
Gradual
Ingredient
Postponed
Decoupled
Cost to
reconfigure
first
last
Pipeline stages
first
last
Pipeline stages
first
last
Pipeline stages
first
last
Pipeline stages
Different components / assemblies could have different cost curve
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Reconfiguration cost and
investment
Cost per product
reconfiguration
Optimum for low frequency of reconfiguration
Optimum for high frequency of reconfiguration
Investment in flexible
fulfilment resources
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Comparison of fulfilment
systems
Conventional
Stock
Forecast feed
Pipeline
Customer
BTO queue
Open Pipeline
Stock
Forecast feed
Pipeline
Customer
BTO queue
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Comparison of stock levels
Conventional
Open Pipeline
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Implications to control
Feed control
process
Stock
Pipeline
Customer
Market demand
profile
BTO queue
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Implications to control
Feed control
Adjustment
control
Stock
BTO queue
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Mid-pipeline mix
adjustment
Customer
Market demand
profile
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