TY - UNPB

T1 - Product customisation: an empirical study of competitive advantage and repeat business

AU - Hendry, L

PY - 2005

Y1 - 2005

N2 - Empirical evidence is presented from 24 UK based manufacturing companies, all offering a degree of product customisation, with most having a significant Engineer-to-order (ETO) element. The majority of the companies are SME’s, with the associated limited managerial resources. The evidence addresses the issues of competitive advantage, including a detailed investigation of the strategic importance of repeat business. It contrasts its results with those generally found in the literature and concludes that there are significant differences in the order winners/ qualifiers. In particular, the evidence suggests that customisation is an order qualifier rather than an order winner; as it is increasingly unlikely that competitors will only offer a more standard product. Thus alternative order winners are needed and often price becomes the most significant factor, rather than being a mere order qualifier. Four different types of repeat business are then identified and the strategic importance of repeat business is discussed. It is indicated that for some ETO companies, repeat business is perceived to be an important method to reduce costs and achieve business stability. However, a number of the other companies studied saw repeat business as infeasible and hence need to find other ways to reduce costs and improve company performance measures, such as lead times. Future research to extend this work into a longitudinal study is proposed. Issues to explore are how the importance of repeat business has changed, and how the companies have evolved in terms of the degree of customisation offered versus that offered by their competitors.

AB - Empirical evidence is presented from 24 UK based manufacturing companies, all offering a degree of product customisation, with most having a significant Engineer-to-order (ETO) element. The majority of the companies are SME’s, with the associated limited managerial resources. The evidence addresses the issues of competitive advantage, including a detailed investigation of the strategic importance of repeat business. It contrasts its results with those generally found in the literature and concludes that there are significant differences in the order winners/ qualifiers. In particular, the evidence suggests that customisation is an order qualifier rather than an order winner; as it is increasingly unlikely that competitors will only offer a more standard product. Thus alternative order winners are needed and often price becomes the most significant factor, rather than being a mere order qualifier. Four different types of repeat business are then identified and the strategic importance of repeat business is discussed. It is indicated that for some ETO companies, repeat business is perceived to be an important method to reduce costs and achieve business stability. However, a number of the other companies studied saw repeat business as infeasible and hence need to find other ways to reduce costs and improve company performance measures, such as lead times. Future research to extend this work into a longitudinal study is proposed. Issues to explore are how the importance of repeat business has changed, and how the companies have evolved in terms of the degree of customisation offered versus that offered by their competitors.

KW - Manufacturing strategy

KW - engineer-to-order / make-to-order

KW - order winners / qualifiers

KW - competitive advantage

KW - repeat business customisation

M3 - Working paper

T3 - Management Science Working Paper Series

BT - Product customisation: an empirical study of competitive advantage and repeat business

PB - The Department of Management Science

CY - Lancaster University

ER -