Over the past year there has been a significant increase in the number of companies looking to introduce build-to-order rather than build-to stock inventory management systems.  This increasing trend has been confirmed by the number of visitors I have been getting to my last blog on this subject which I wrote early last year.  This has been one of the most popular blogs that I have written which I guess ties in with the growing general interest in this subject.

From an automotive perspective, build-to-order has been the preserve of the premium car manufacturers such as BMW, Audi and Mercedes. However due to the recent downturn in the economy the volume manufacturers such as Ford and GM are also having to think about introducing build-to-order inventory management systems.  I recently read an article in Automotive Logistics Magazine that discussed why Ford was going down the build-to-order route and how they are having to change the front and back end business systems to be able to support this new way of managing inventory.

Increased consumer spending, globalization of manufacturing plants and changes in consumer demand have contributed to the need for many car manufacturers to think about developing new inventory management systems. At GXS we have seen a number of car manufacturers ask us if we can help improve the visibility of their global vehicle shipments.  With a shift towards build-to-order type production, car manufacturers will need to improve the visibility of their global car shipments so that they can keep track of vehicles built to a specific customer specification.

At Ford there is still a lot of work to do to implement a build-to-order inventory management system, however they also have supply chain synchronization problems to overcome and complex order-to-delivery systems to implement.  The whole shift towards build-to-order inventory management is a huge cultural change for many manufacturers, but if these companies are to survive and lay the foundations for future growth then it has to be done. In Ford’s case the front end will effectively offer dealers a more reliable and accurate predictor of new orders, from which Ford can then build more accurate forecasts.  The back end will mean that this forecast translates into a production plan communicated right back through the multi-tiered supply chain, including logistics providers, to help better capacity planning and route scheduling.  The new system will replace Ford’s current thirty year old inventory management system.

For years the automotive industry has implemented lean inventory systems to manage inbound parts logistics and now the industry is starting to shift its focus to improving the management of outbound logistics.  I guess this is fairly logical but you could ask why has it taken so long for the car companies to do this?  If these new, leaner, order-to-delivery processes had been introduced a few years ago, would the automotive industry have been affected as badly as it was during the most recent economic downturn?, may be but the industry would have been able to recover much faster.  The whole area of global vehicle tracking is something I will be taking a look at in a future blog as I believe that B2B and in particular visibility solutions such as GXS Active Logistics have an important part to play in supporting the next generation order-to-delivery inventory management systems.