Product Offering Conditioning in Assemble-To-Order Supply Chains

Product offering conditioning aims at creating marketable product alternatives to mitigate misalignments of supply and demand and to enable companies to take full advantage of a “sell-what-you-have” strategy. A well executed conditioning process benefits the customers through improved delivery times, and it benefits the enterprise through higher inventory turns, fewer supply overages and shortfalls, and reduced inventory liability exposure. We describe an analytical optimization model that determines profitable product offerings that minimize inventory liabilities and lost sales risks over the entire supply chain. The model provides dynamic, real-time sales recommendations based on current availability, price, performance and customer demand information. It not only improves the coordination of supply and sales in terms of optimizing profit, but also helps managing major product and technology transitions. It is most effective in an assemble-to-order environment with sales building blocks where end products are configured from pluggable components.

By: Markus Ettl; Pu Huang; Karthik Sourirajan; Feng Cheng

Published in: RC23878 in 2006


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