Successful build-to-order models that make products once orders come in and deliver them in the shortest time possible typically require lean manufacturing, a methodology that seeks to eliminate all waste from the manufacturing process. The practice originated in Japan 50 years ago at Toyota Motor Co. The goal is to create a production environment driven by demand that holds only a small amount of inventory and products at any given time. "When people are doing build-to-order, they're usually doing it using lean processes," Banker says. "And lean is established and proven to improve quality while reducing inventory and costs."
But offshore manufacturing and the sourcing of supplies from overseas complicates things. Vans Inc., which has successfully implemented a mass-customization initiative that lets consumers order custom shoes from its Web site and delivers those shoes in six weeks or less, at first didn't believe it could pull off the model because it outsources almost all of its manufacturing to China. But Vans, now owned by apparel manufacturer VF Corp., was able to build a Web-based purchase-order system that's integrated with its supply- chain software and linked to the Chinese factory. A Web-services link lets factory workers view pictures of each custom pair of shoes ordered, and those pictures serve as the bill of materials.
While the build-to-order model drives companies much closer to their customers because they're responding to actual demand rather than perceived or forecast demand, the process needs to happen in the shortest time possible for it to affect customer service.
That's exactly what Ping has been working on. "Our goal is to ship in 48 hours," says John Solheim, CEO of the company and the youngest son of Karsten Solheim, who started building Ping golf clubs in his garage in the 1960s. "Golfers are usually out on the course on the weekends. If they order a new set of clubs then, the pro shop sends us the order that Monday. What really makes customers happy is if they can be playing with their new clubs by the next weekend."
Ping already has launched the first two phases of its system, a customer-service portal that lets clients check accounts on the Web and, just last week, an order-entry system. Also planned is functionality to help Ping create better production plans and then measure the performance of those plans. The company will use the system to support operations around the world, including in the United Kingdom and Japan, so the IT staff is building in the ability to handle multiple languages and currencies. Because the system is built on .Net, core business logic and objects can be developed once and reused. That means it will be easy for Ping to roll out a slimmed-down version of the order-entry system to its customer-service portal for retailers to use.
Ping currently uses a custom-developed order-management system of order-entry, product-configuration, customer-service, and production-management applications that pull data out of a Teradata rela- tional database running on a dual-processor server linked to Ping's mainframe. Employees, connected to the database via a high-speed Gigabit Ethernet network, query the system in real time to find open orders. Orders are grouped in queues based on club specifications, and those queues are used to dynamically generate requests for work orders. The work orders are then passed along to the appropriate assembly departments.
Ping's new build-to-order system will continue to run on the Teradata database, which the company implemented in 1990. Paramount in the decision to stick with that database is its ability to process transactions like an operational database while performing queries and decision-support tasks. The architecture also lets Ping give priority to requests for work orders that must be completed in 48 hours or less. "Assembly requirements are a constantly moving target," Crossland says. "The entire deck of open orders is reshuffled every time a request is made to generate work orders for assembly."
Ping also has cut the time it takes to get new products to market from two years in 2000 to about nine months now. It can turn out as many as 13 new product lines a year, a more than fivefold increase from four years ago. Ping uses computer-aided design and software for managing product life cycles to digitize and manage every aspect of developing golf clubs, from capturing and collaborating on the elements of a new concept to virtually testing how a particular iron will perform.
Ping's build-to-order model has proved successful so far. But the company won't let down its guard. Says CEO Solheim: "Our goal is to improve. We realize our competitors will catch us, and we don't intend to leave things at 48 hours. In fact, a lot of our orders go out in 24. We're looking to lead and set standards that are really difficult for our competitors to catch."