Firms in many industries are being squeezed by customer demands for both greater product variety and reduced delivery lead times. This is difficult for firms to achieve because quick delivery is usually based on standardization, whereas product variety requires the organization to be flexible and innovative. A common response to these demands is to start production of expensive, specialized products prior to receiving specific orders for them. Such a risky approach often can be avoided, the authors argue. They present a framework for determining the extent of your company’s “customization-responsiveness squeeze” and choosing appropriate tactics to mitigate it.
1. M. Jelinek and J.D. Goldhar, “Strategic Implications of the Factory of the Future,” Sloan Management Review, Summer 1984, pp. 29–37.
2. On delivery lead times, see:
J.L. Bower and T.M. Hout, “Fast-Cycle Capability for Competitive Power,” Harvard Business Review, November-December 1988, pp. 110–118;
R.W. Schmenner, “The Merit of Making Things Fast,” Sloan Management Review, Fall 1988, pp. 11–17;
G. Stalk, Jr., “Time — The Next Source of Competitive Advantage,” Harvard Business Review, July-August 1988, pp. 41–51.
On just-in-time manufacturing systems, see:
R.W. Hall, Zero Inventories (Homewood, Illinois: Dow-Jones Irwin, 1983);
R.J. Schonberger, Japanese Manufacturing Techniques: Nine Hidden Lessons in Simplicity (New York: Free Press, 1982);
J.P. Womack, D.T. Jones, and D. Roos, The Machine That Changed the World (New York: Rawson Associates, 1990).
3. A. De Meyer, J. Nakane, J.G. Miller, and K. Ferdows, “Flexibility: The Next Competitive Battle,” Strategic Management Journal 10 (1989): 135–144.
4. Castings later impose technological constraints on what product is finally produced. Further, reducing procurement time is infeasible since a large majority of these castings are imported. It is estimated that 8,000 foundries have closed in the United States since 1980.
5. A.S. Raturi, J.R. Meredith, D. McCutcheon, J.D. Camm, “Coping with the Build-to-Forecast Environment,” Journal of Operations Management 9 (1990): 230–249.
This research was completed as part of the Cincinnati Machine Tool Studies Project conducted by the Operations Management Group at the University of Cincinnati. Amitabh Raturi would like to acknowledge research funding provided by the Summer Research Program at the College of Business Administration.