Exploration of opportunities to reduce lead times for engineered-to-order products

Scholars and practitioners have long advocated the benefits of reduced lead times. Moreover, most, if not all members of a supply chain would gain from reduced lead times. However, the construction industry has been slow to radically reduce lead times, particularly for Engineered-To-Order (ETO) products. This research applies Transformation-Flow-Value (TFV) theory and lean methods in order to answer the following research question: How can the performance of ETO supply chains be improved? Data were collected from supply chains of power distribution equipment (PDE). The supply chains were described with help of detailed process maps and performance measures. Simulation was applied to gain further understanding of supply chain behavior. The data demonstrated that current design and procurement practices have a major impact on the delivery lead time of PDE. This work discusses the role design batch sizes and standards may have on the delivery process. It argues that the disadvantages of competitive bidding are poorly understood from a supply chain perspective. Competitive bidding generates waste not only in the procurement phase but also in the design and manufacturing phases, e.g., by forcing people to use early commitment and large batch sizes, and by involving downstream players late in the process. As a result, the delivery process is long and changes are tedious to carry out. Finally, this dissertation proposes alternative practices to improve the current process of ETO products that can lead to major improvements over the delivery process. These alternatives include involving downstream players early in the delivery process, reducing document batch sizes, making decisions at last responsible moment, changing procurement methods, and sharing configuration software. In cooperation with industry partners it was estimated that these changes could have reduced a 2.5 year lead time by nearly 1 year. This could have led to major cost savings, particularly with respect to saved labor hours. However, major process changes in the delivery of ETO products also require redefinition of organizational relations in the delivery process. These extend to requiring an industry-wide rethinking of roles and responsibilities, risks and rewards as well as, contractual structures used in the ETO delivery process.