Variation in production schedules - implications for both the company and its suppliers

It is becoming increasingly difficult to satisfy customer demand in a competitive environment, especially when the demand keeps varying. Yet focusing on the needs and desires of the customer is now seen by many companies as a prerequisite for success. Companies are having to schedule their production to meet these needs. For mass produced products this can only be achieved through increased flexibility in production. Companies supplying parts will also need to become more flexible to support the production schedule. To illustrate the difficulties facing both original equipment manufacturers (OEMs) and suppliers in the automotive industry, the following paper reports on the findings of a research project carried out at the University of Central England. It uses a single case study to demonstrate how variation in production schedules can affect the supply of parts. It was seen that 'overbuild' (building more cars than scheduled) has a knock on effect along the supply chain, leading to material shortages and fit-point losses (incorrect components will become attached to vehicles). The findings from the study are used to illustrate some important issues for supply chains in highly competitive industries. Production needs to be more aware of the effects on suppliers who are trying to achieve sub-optimisation at the expense of overall optimisation. Also communication must be faster and more structured to give greater visibility of the customer's demand across the whole supply chain. (C) 2000 Elsevier Science S.A. All rights reserved.