Supply Chain Management of Mass Customized Automobiles

Abstract

Challenges of mass customization has increase dependence upon supplier, disruptions from suppliers have resulted many times in stop of production from OEM. Keeping this in background, this study analyzed supply chain policies and practices with in the modern automotive industry. The study focused on three German automotive companies, Mercedes Benz, BMW and Volkswagen, all three companies are investigated through qualitative and quantitative analysis. Qualitative analysis showed outsourcing demands high level of managerial changes in supply chain structure. Moreover, OEM needs to manage not only Tier I supplier but Tier II supplier as well. A quantitative approach addresses the issues related to inventory management, distributional policies and downstream supply chain and their impact on supply chain efficiency under mass customization. The results suggests to increase raw material inventories and to decrease in-house operation. Furthermore, it is more profitable to keep production near the markets. The results also suggest that the issues of downstream supply chain have a strong and significant impact on supply chain efficiency under mass customization.