Multi†Modal Order Fulfillment: Concept and Application

Benn Lawson, Frits K. Pil and Matthias Holweg

Production and Operations Management, 2018, vol. 27, issue 2, 269-284

Abstract: Empirical work on order fulfillment strategies suggests that building products to customer order is an important driver of organizational value. Similarly, the experimental literature indicates that customers derive value from customization. The modeling literature provides a more equivocal perspective, suggesting that a combination of build†to†forecast and build†to†order (BTO) fulfillment modalities may lead to the best system†wide outcomes. Using an industry studies approach, we build on these theoretical perspectives to examine order fulfillment at a global automotive producer. Interviews with key decision makers and a statistical analysis of 48,534 individual vehicle sales enable the development of four propositions on the organizational and profitability implications of the firm's evolution in order fulfillment strategy. Our analyses indicate that building products to customer order is a source of higher unit profit margin. The BTO process also exposes fault lines and generates opportunities for operational improvement, both in the order†to†delivery system and in the broader organization. Build†to†order evolves to provide the firm with insight on customers’ willingness to trade delivery lead times against their product attribute preferences. This information allows BTO to incorporate a demand management role, for example, by shifting custom orders to later time periods to accommodate excess demand. These changes lay the groundwork for a multi†modal order fulfillment strategy that no longer distinguishes between the order source or production modality. This strategy enhances customer responsiveness, while addressing manufacturing capacity management imperatives. Our findings open new avenues for theory building, as well as experimental, empirical and modeling research in order fulfillment.

Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.1111/poms.12801

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:popmgt:v:27:y:2018:i:2:p:269-284

Ordering information: This journal article can be ordered from
http://onlinelibrary ... 1111/(ISSN)1937-5956

Access Statistics for this article

Production and Operations Management is currently edited by Kalyan Singhal

More articles in Production and Operations Management from Production and Operations Management Society
Bibliographic data for series maintained by Wiley Content Delivery ().