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Golf-club maker Ping leads the way in build-to-order production. Can other manufacturers capitalize on the process?
At first glance, Ping Inc.'s new order-management system could be just another run-of-the-mill IT project. But it's not. The Web-services-based system is an integral part of a build-to-order production chain that makes and delivers custom golf clubs within a few days.
Ping, which also makes golfing accessories, is one of a few companies running build-to-order businesses. It provides 20,000 pro shops and retailers around the world with more than a million different custom golf-club options, delivering most of them in five days or less. These are clubs that come in countless variations with different combinations of club heads, grips, shafts, and the lie angles that determine the relationship of the bottom of the club to the shaft. Ping also ships custom clubs in 48 hours or less to golfers ordering from one of 2,500 U.S. pro shops that have trained with Ping on custom fittings--something its larger competitors have yet to pull off.
Ping hopes to shorten lead times and lower inventory levels, Crossland says.
Photo by Wayne Rainey
Ping founder Karsten Solheim "has turned club-fitting into a science," says Kent Crossland, director of information systems at Ping. For many years, golfers had to wait six weeks for custom golf clubs. But as golf's popularity took off in the 1990s and big-name companies jumped into the market, Ping had to come up with something new. "We're a small, family-owned company competing with the likes of Nike, Callaway, and TaylorMade Adidas," Crossland says. "So our business model has evolved. Not only do we pay real attention to detail, we have the custom fitting, assembly-to-order, and rapid delivery."
Ping's new order-management system, which is being built in-house on Microsoft .Net and will be phased in over the next few years, will replace a custom application written in APL, a language that Crossland says is difficult to support. "We're end of life on that system," he says. The initiative will cost Ping $500,000 over three years--no small expense for a company with an annual IT budget of about $3 million.
Build-to-order, the process of manufacturing or assembling products based on demand rather than forecasts or inventory, isn't new and has generated plenty of enthusiasm. Following Dell's lead, the PC industry began implementing build-to-order models--also known as assembly-to-order or mass customization--about five years ago. Since then, few others have followed suit. The automakers have chased it, and some companies such as Levi Strauss & Co. launched mass customization projects only to pull the plug on them.
Build-to-order models also are hard to find at midsize companies such as Ping, those with revenue of $1 billion or less. Only 10% to 15% of them have build-to-order models in place, says Dave Gardner, founder and principal of Gardner & Associates Consulting. A similar percentage of large companies use the approach, he says.
But increasingly competitive markets, squeezed operating costs, and more-demanding customers should sway companies to take a look at build-to-order. "If you aren't thinking about build-to-order, then you must be building to stock," says Jane Biddle, VP of manufacturing research at Aberdeen Group. "In the old days, people would build as much as they could so their warehouses would be full of products, then they hoped they sold. But the idea should be to anticipate what customers are going to order, get ready to make it, but don't actually produce it until the orders come in."
That approach requires a clear view of a company's supply chain as well as integrated IT systems, including order management, forecasting, manufacturing resource planning, and logistics. "Companies need to view the problem holistically as an end-to-end seamless process, starting with the customer and ending with cash in the bank," Gardner says.
But many midsize companies still only have loosely integrated IT systems and processes, according to a recent Aberdeen Group study. Only 19% of more than 90 midsize businesses surveyed in automotive, high-tech, industrial-products, consumer packaged-goods, and other industries have end-to-end, integrated order-to-delivery processes. But that 19% also has more on-time shipments and has reduced lead times and operating costs and increased inventory turns and revenue. Moreover, with synchronized IT systems and end-to-end processes, companies can shrink production and delivery times nearly to the point of build-to-order.
One challenge to broader adoption of build-to- order systems is the mind-set people bring to manufacturing. "We've been in this mass production mind-set for 100 years," Gardner says. "It's going to take some courageous automotive executive to say, 'Hey, we've got to change things.' Smaller companies really have an opportunity to exploit this and capture some market share and create some excitement for their customers."
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