FAW-Volkswagen’s build-to-order model

JIN Xiaotong1 and WANG Hefeng2

1 Professor and doctoral adviser, School of Business, Jilin University
2 Ph.D. candidate, School of Business, Jilin University

Abstract:

This paper represents an attempt to: 1) conduct a systematic analysis of the build-to-order model and concomitant process change FAW-Volkswagen Automobile Co., Ltd. adopted 1 ; 2) elaborate on how Chinese automakers should restructure and improve themselves along the value chain under the build-to-order model in order to acquire new competitive advantages; and 3) modify the value chain under the build-to-order model according to the findings of the case analysis based on a review of value chain and customization theories. This study shows that the build-to-order model is an important way for Chinese automakers to effectively handle the production and market relationship. Order management enables automakers to effectively understand and gauge market demand, reduce inventory costs, reasonably arrange production capacity planning and concentrate on advantageous resources to plan corporate production and operation. Under the build-to-order model, scientific market forecast and time management can be combined with a certain margin of safety in inventory to effectively cope with domestic automotive market fluctuations.

Key Words: Value chain, order, competitive advantage, production and sales model

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