Forecast-Driven or Customer-Order-Driven? An Empirical Analysis of the Chinese Automotive Industry

Abstract

Purpose – A successful implementation of mass customization and customer-order-driven production can bring numerous benefits to automakers. However, the transition from mass production to mass customization is difficult. Most of the previous studies focus on mature markets, leaving emerging markets untouched. The purpose of this paper is to investigate the necessity of making the strategic transition to mass customization in an emerging market.

Design/methodology/approach – This research is based on an extensive field study. A multi-method approach (including semi-structured interviews, document examination and plant tours) was used to collect the data at different levels in five commercial vehicle manufacturers.

Findings – The respective advantages and disadvantages of these two manufacturing strategies are analyzed based on the findings and a framework is established. The drivers of the transition to mass customization have been recognized and the obstacles of transition are identified. The specific benefits of a successful mass customization implementation are listed. According to the empirical evidence, this paper concludes that customer-order-driven production is a promising direction in a rapidly changing market such as China.

Originality/value – This study makes a contribution in two aspects. First, the evidence of mass customization fills a gap in the empirical literature and the findings of mass production help cross validate the drawbacks reported in other studies. Second, this study presents a transition model to facilitate automakers to analyze the complex phenomena in a systematic way when they embark upon the strategic transition to mass customization.

Keywords: Automotive industry, China, Mass customization

JEL Classification: L62, M11, L10