Production and Inventory Strategies

Production and Inventory StrategiesStrategies for manufacturing processes differ from those in services not only because of low customer contact and involvement but also because of the ability to use inventories not only as purchased materials but also in the form of subassemblies or finished products. As we learned in Chapter 1, there are clearly exceptions to this rule as Avis has an inventory of autos to rent, and FedEx has an inventory of in-process parcels. Design-to-order, make-to-order, assemble-to-order, and make-to-stock strategies are four approaches to inventory that should be coordinated with process choice. Design-to-Order Strategy A firm uses a design-to-order strategy when it can design new products that do not currently exist, and then manufacture them to meet unique customer specifications. Typically a job process is employed to create a highly customized product, such as a designer pair of shoes for a particular client.