Configuring Make-to-Order vs. Make-to-Stock for a Custom Product Line
A furniture manufacturer sells two lines through the same channel. Standard line: 40 SKUs, stable demand, 5-day customer promise, currently made to stock. Custom line: effectively infinite configurations (fabric, finish, dimensions), 6-week customer promise, currently made to order with a 3-week quoted lead time that is missed 35% of the time. Both lines share one plant, one finishing line, and a constrained upholstery cell. The custom line's order-entry errors (wrong fabric/finish codes) cause 12% of rework. Sales wants to promise 3 weeks on custom to win deals; the plant says the shared bottleneck cannot absorb it. Inventory of standard line is 45 days; custom line carries almost none.
1. Recommend the appropriate decoupling point for each line and how to protect the shared bottleneck.
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Treat the two lines differently because their order penetration points and variability profiles differ.
- Standard line: keep make-to-stock with the decoupling point at finished goods. Stable demand and a 5-day promise justify finished-goods buffer; 45 days is likely excessive and should be reset against service targets rather than left as-is.
- Custom line: the decoupling point should sit at a configurable sub-assembly / pre-finish stage (postponement) rather than raw material or finished goods. Pre-build common frames and neutral bases, then apply fabric/finish/dimension late. This shortens the customer-facing lead time without stocking infinite variants.
Bottleneck protection: the upholstery cell is the constraint, so schedule it with explicit capacity reservation split between lines, and do not let custom promise dates consume capacity implicitly. Improve the order-entry/configurator accuracy to remove the 12% rework, which is pure capacity recovered at the constraint. Only after rework is cut and postponement is in place should sales quote 3 weeks - and the quote should be driven by available capacity at the constraint, not by sales ambition.
2. Sales argues that promising 3 weeks is a competitive necessity. How do you respond with a supply chain configuration logic?
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Reframe: the promise is a configuration and capacity decision, not a marketing one. A 3-week promise with 35% misses is already damaging credibility; shortening the quote without changing the configuration will raise miss rates, not win sustainable deals.
Path to a credible shorter promise:
- Reduce the customer-facing lead time via postponement - pre-position neutral sub-assemblies so the post-order work is finish/assembly only.
- Recover constraint capacity - eliminate the 12% rework through configurator validation; that is capacity at the bottleneck without new capital.
- Quote from capacity - publish lead time by capacity bucket at the upholstery cell, with a premium/expedite tier if sales needs faster.
Then the promise can move toward 3 weeks as a consequence of the configuration change. Committing to the number first inverts the logic and pushes the plant to violate the constraint, which degrades both lines.