An empirical examination of response time, product variety and firm performance

Abstract

Response time and product variety are both important strategies that firms utilize to cope with fast changing demand and stiff competition. However, the empirical link between the two areas is not clear. The purpose of this study is to explore the link between response time, product variety and firm performance under build-to-order scenario. A multi-method approach (mainly including OTD time mapping, document examinations, interviews and plant tours) was used to collect the data at the Chinese vehicle manufacturers. Based on the objective data statistically analyzed, this study makes the contribution in three aspects: First, this study provides an empirical examination into the order-to-delivery time structure. The research results reveal that order processing time is independent from producing time. Second, this study provides the first empirical exploration into the association between product variety and response time in the automotive industry. The results show that more model variations may significantly increase order processing time while more type variations do not significantly impact on producing time. Third, the results of this study demonstrate the impacts of both product variety and response time on firm's performance. Fast response time helps increase sales in a short term while more product variety benefits higher growth rate.

Keywords:

• Manufacturing strategy
• Mass customization
• Lead time reduction
• The Chinese automotive industry

Acknowledgements

This study is supported by the National Natural Science Foundation of China (No. 70332001)