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Managing Product Variety in Automobile Assembly: The Importance of the Sequencing Point

Kenan-Flagler Business School, University of North Carolina at Chapel Hill, Raleigh, North Carolina
McKinsey & Company, Inc., Germany
msj{at}unc.edu

In recent years, globalization of markets and increased consumer sophistication have led to an increase in the variety of products that customers demand and a consequent increase in the number of variants of any given product line that a manufacturer must supply. At the same time, an increasing number of companies have pushed the task of accommodating product variety up the supply chain to suppliers. This makes it increasingly difficult to understand where and how variety is accommodated. Based on our study of the automotive industry, we introduce the concept of a sequencing point, which we define as where component variants are placed in the sequence that final assembly requires. We discuss the implications of alternative sequencing-point-location strategy on management of product variety. For each strategy, we discuss associated trade-offs and provide short case studies.

Key Words: manufacturing strategy; production sequencing