The three-day car challenge: Investigating the inhibitors of responsive order fulfilment in new vehicle supply systems1

^[1]Based on the 2002 LRN James Cooper Memorial Cup winning PhD by the author.

Abstract

Time as a source for competitive advantage has been widely acknowledged, yet the motor industry struggles to provide quick response to customer demand. Current new vehicle supply is still based on large inventory in the market-place, and customers are left with the choice of either taking a vehicle from stock—often compromising on specification—or waiting an average 6 weeks for a custom-built vehicle. This study investigates the reasons for this lack of responsiveness in UK new vehicle supply systems. Taking a holistic approach, all key subsystems—component supply, vehicle manufacturing and logistics—are investigated regarding their ability to support responsive order fulfilment at system level. The findings clearly show that the current vehicle supply systems are misaligned to external customer needs. Specifically, four key inhibitors could be identified, and based on further empirical evidence a set of principles is proposed as to how these inhibitors could be overcome in order to implement a build-to-order strategy.

Notes

^[1]Based on the 2002 LRN James Cooper Memorial Cup winning PhD by the author.

^[2]According to SMMT UK new vehicle registration data.

^[3]“Right-first-time” rates refer to the combined probability of a vehicle passing through the body shop, paint and assembly process in the assembly plant without quality defect at any of these stages. Defects commonly require the vehicle to go “off-line” for repair, which results in delays and thus delivery date uncertainty.

^[4]The survey was conducted in parallel to the underlying analysis and covered over 1,200 new vehicle buyers in the UK. Inter alia, customers were asked about their actual and ideal waiting time from ordering to receiving their new vehicle, and whether they compromised on specifications in order to receive their vehicle in less time.

^[5]Back-loading refers to utilisation of transport capacity on the way back from the initial delivery point to the original or next destination. Back-loading aims at using transport capacity that otherwise would have been an “empty run”. In some cases the back-loading might cause the vehicle to detour from its original route, yet the overall journey might still be more efficient.

^[6]The graph is an amalgamation of the surveys conducted in this study and UK distribution data (Williams, 2000).