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Editorial - Assemble to order Article
The article entitled: "Editorial" is in the Assemble to order Articles section of Operations Management Papers area...
ARTICLE DESCRIPTION: Although some of the advantages of an assemble-to-order (ATO) approach have been discussed in Control before, they have perhaps primarily addressed cost issues. Making items or sub-assemblies that can be used in multiple higher-level assemblies gives, albeit at the expense of some functional redundancy, economies of scale and reduced tooling costs. But there are even greater advantages.
MORE INFO: Editorial Although some of the advantages of an assemble-to-order (ATO) approach have been discussed in Control before, they have perhaps primarily addressed cost issues. Making items or sub-assemblies that can be used in multiple higher-level assemblies gives, albeit at the expense of some functional redundancy, economies of scale and reduced tooling costs. But there are even greater advantages. A year or two ago, I spent enough time in central and eastern Europe to realise that we are facing an increasing threat from manufacturing facilities that were once behind the Iron Curtain. Their advantage is very low cost base and they are exploiting it. So are Internationals such as Volkswagen, Fiat and Dell Computers. All is not lost, however. I recently visited a small manufacturing company that operates, very successfully thank you, in a niche market. They make a low-value product that could easily, and far more cheaply, be made abroad. One advantage that they know they have is that their product, though low-cost, is very bulky. If imported, transport costs would be disproportionately high. When I asked them what other competitive advantages they had, they immediately identified speed of response to customer requirements. This is the advantage that ATO, allied with clever design, can give us. When I visited Acer Computers in Holland a couple of years back, they were gearing up for a one-day turn round of customer orders. Order any PC, in any quantity, and they will despatch within 24 hours. Now there's a challenge. How were they planning to do it?By manufacturing and stocking sub-assemblies (and by Master Production Scheduling at that level, also). When the customer order rrives, they don't have to start from scratch;they simply assemble pre-manufactured sub-assemblies. Yes;I know that there is a danger of obsolescence but that is where the clever design comes in. Despite cost disadvantages, British industry can win by being fleet-footed. Customers will always pay a price for shorter delivery lead times. By adopting ATO wherever we can, and backing it up with appropriate systems, we can keep ahead of the game and can win, even when the cost odds are against us.
PUBLISHER: Institute of Operations Management
Page number: 5 Word count: 280
Vol 28 - No 08 October 2002
The article can be downloaded in full from the publisher's site i.e. the Institute of Operations Management.
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