Daily Archives: June 20, 2006

Build to Order (Supply Chain Management)

Recently, on Procurement Central, Dave Stephens indicated that he saw “a growing link between “Long Tail” thinking (excelling in variety vs. going for the homogenous blockbuster) & demand-driven supply chains” and indicated that he would like to see a fellow blogger tie the threads together. Although I might not be entirely sure how to wind them up with spring-loaded precision , I’m pretty sure how to connect them. And the first answer is “Boeing” and its 787. Specifically, instead of building a complete aircraft from a bill of materials, Boeing will instead attach fully completed subassemblies from its suppliers.

So how does this tie “long-tail” and demand-driven? The answer is the sub-assembly. By switching to this model, Boeing is indirectly engaging more suppliers as its tier 1 suppliers will need to engage more suppliers to build the subassemblies. Furthermore, by reducing its assembly time, it can essentially build its aircraft on demand. Thus, we have a connection.

Of course, the big question is how do they intertwine? Hard to answer, but we get another connection if we look at Dell. Dell is now using a number of suppliers for many components, long-tail. Furthermore, it builds computers, and orders components, based on user demand, demand driven.

So now that we have connected the threads, how do we begin to twine the two threads? I could be wrong, but I believe the answer is, as the title of this post suggests, “build to order”. What do I mean by this? Design your products not as integrated wholes, but interconnections of components. Furthermore, make sure the connectors are standard, then you can switch out subcomponents, just like PC enthusiasts can switch out memory chips, video cards, and even processors. Then work with a number of suppliers capable of providing different versions of the components (long tail), order components based upon continually updated forecasts (demand driven), and assemble the final product to customer specifications (build to order).

I’ll admit its not the whole answer, but I think it’s a good, innovative, start. Feel free to share your views or e-mail thedoctorsourcinginnovationcom.