Configure-To-Order

Configure-To-Order

Ton de Kok
Professor
SCIENTIFIC DIRECTOR

Capital goods are expensive machines which are used for many years before being disposed of. Examples like advanced medical systems, electronic microscopes and lithography systems are highly complex and customer-specific. Instead of selling off-the-shelf, these products are configured in consultation with the customer. The end product is in most cases unique and fulfills the exact needs of the customer. It is created through the careful combination of different hardware modules and software. The hardware modules are standardized, designed for flexible use in many customer-specific configurations. For instance, think of an X-ray scanner, where the table on which a patient is exposed to the X-ray source, is standard for all X-ray scanners. The management of Configure-To-Order processes shows a high degree of resemblance with the management of Assemble-To-Order processes, where the final product is also assembled after the customer order is known, yet the customer chooses from available product specifications.

Supply Chain Characteristics

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The supply chain of a configure-to-order business distinguishes between two main phases. The first part of the supply chain concerns the modules. These must be ordered in advance, in order to prevent excessive total customer lead times. Therefore the first part of the supply chain is driven by forecast. The latter part of the supply chain is driven by the customer order. The configure-to-order lab focusses on the optimal design and operational coordination of these two phases in the supply chain.

Key Topics

Regarding the alignment of both phases in the configure-to-order supply chain, there still are a number of challenges to overcome. Amongst others, important topics are:

Effectively allocating buffer times to the different stages of final assembly
Since each end product in a configure-to-order chain is different than its predecessors, it needs to be tested before it can be delivered to the customer. In order to deliver products on time, a time buffer needs to be incorporated into the production planning.

How to coordinate the module supply chain with final assembly
A lot of decisions with regard to the supply chain concern the modules and their forecasting. Because of the complexity of the configure-to-order environments, existing planning techniques cannot be used or need further development.

What are the implications for the different corporate levels?
It is important to acquire insights in how decisions for a configure-to-order chain relate to decisions at  operational, tactical and strategic company levels.

How to design a Configure-To-Order product family that offers the required customer specifications at minimum cost?
There are many alternatives for the design of a capital goods product family. Key is to balance the required width of possible product specifications with the operational cost of managing the entire supply chain. There is a need for tools that support the assessment of alternative design choices.

 

 

Lab Focus

The configure-to-order lab focusses primarily on the development of concepts that support the control and coordination of the whole supply chain in a configure-to-order environment, with emphasis on finding valid, quantitative models. Because companies are often our laboratory, we do not solely strive for contributions to the academic field of operations research. The research conducted at our lab leads to practical insights, and the implementation of our models is just as important. We model important issues faced by different companies within this industry and use quantitative methods in order to develop decision support tools that can be used by different companies by different business functions. Besides configure-to-order, also assemble-to-order, like for instance the automotive industry, is a field of interest.

Achievements

The Configure-To-Order lab has had great impact on global industry. We collaborate closely with companies like Océ, Philips Medical Systems, FEI and ASML. At these companies, master thesis projects are conducted, where the research of our lab is implemented into practice. For example, we helped the former Philips Semiconductors to increase their gross profit with 15 million euros per year, during a five year period. This amount was substantial considering their yearly turnover of 200 million euros. To a large extent the increase in profit was due to increasing the turnover, implying that even more value was created for the supply chain as a whole.

More recently, in cooperation with ASML, we developed a planning tool called SPOT (Scenario Planning and Optimization Tool), which enables ASML to balance the expected demand and supply chain possibilities of lithography systems. The tool makes it possible to determine (1) what the output will be given the current state of materials and capacities in the supply chain, and (2) what additional materials have to be released to bring the future output in balance with expected demand, given the available capacity. The tool is thus able to optimize the planning from a supply point of view. Moreover, the tool can be used to create in a controlled way mix flexibility regarding the variants and options of the systems.

Ton de Kok
Professor
SCIENTIFIC DIRECTOR
Henny van Ooijen
Assistant Professor
SCIENTIFIC DIRECTOR

Our lab is involved in a number of (in-company) graduation projects of Bachelor and Master students. Some interesting, recently performed projects are:

 

Currently our lab is involved in the following (joint) research & development projects. These projects are usually conducted in collaboration with other universities and companies. Contact our us if you are interested in teaming up for a new project proposal.

  • A major development concerning operational management of companies and networks of companies is the concept of Synchronized Base Stock (SBS) policies. This concept has been implemented at Philips Semiconductors, generating 15 million in additional profits annually, for a period of five years. The SBS concept not only enables far more effective operational material management, it ...