Understanding synergies and trade-offs between volume flexibility and mix flexibility in Build-To-Order strategies

Build-To-Order is an increasingly adopted strategy in many industries, including consumer electronics, automobile and apparel, which implies performing value-adding activities to order rather than to forecast. As a result, Build-To-Order requires a supply chain that is both volume-flexible, i.e. it can rapidly change its gross output while maintaining cost-effectiveness, and mix-flexible, i.e. it can rapidly change the mix of items being delivered to the market while maintaining cost-effectiveness. Research has been studying volume and mix flexibility for a long time but, the issues related to the simultaneous pursuit of volume and mix flexibility have not been explored. Through an in-depth case study of a business unit within a company involved in a Build-To-Order strategy, this paper investigates factors enabling and opposing the simultaneous pursuit of volume and mix flexibility in a manufacturing plant. The study found that volume flexibility and mix flexibility can be in trade-off or in synergy, depending on the specific lever used to achieve each of them.