Journal of Business Logistics, 2011, 32(4): 361373
 Council of Supply Chain Management Professionals
Supply Chain Strategies: Changes in Customer Order-Based
Production
Benedikte Borgstrom1,2 and Susanne Hertz2
1
Chalmers University of Technology
2
Jonkoping International Business School
S upply chain development is debated in terms of whether lean and agile supply chain strategies will work simultaneously and
whether leagile strategies are possible. This study explores complexity and dynamics of the mixed strategy in a longitudinal auto-
motive industry case study and contributes with four propositions related to the debate and practices of supply chain strategies.
Keywords: agile; automotive case study; dynamics; leagile; lean; supply chain strategy
INTRODUCTION
The car industry is challenged by, among other things, over-
capacity, increasing customer requirements, tougher environ-
mental legislation, and rapid technology development (von
Corswant and Fredriksson 2002; Mikaelsson 2004; Kohn
Radberg 2005). The cost focus is always important in the
automotive industry, and customer value and responsiveness
are seen as a way to maintain cost focus as well as to
increase incomes (Holweg and Pil 2004; Holweg et al. 2005).
Multiple objectives are seen as problematic in research; sup-
ply chain strategies are prescribed to focus on either cost
reduction or customer responsiveness; and the rm should
match the products with strategy (Fisher 1997).
However, the either or proposition is debated and some
research supports that the strategies might be employed
simultaneously (Goldsby et al. 2006) and, in practice, many
rms combine the two strategies. One reason for this is long
lead times upstream that cause problems, especially for mar-
ket-responsive strategies (Christopher et al. 2006). This often
leads to dierent strategies upstream and downstream for
the supply chain depending on the marketplace environment
(Mason-Jones et al. 2000). Another reason is that require-
ments on the supply chain change over time as, for example,
the product life cycle aects the supply chain (Aitken et al.
2003). There are several obstacles that might hamper the
strategic t (Chopra and Meindl 2001). Research in the area
is identied as a key trend to advance supply chain manage-
ment (SCM; Frankel et al. 2008).
Fisher (1997) formulates strategies in relation to product,
product innovativeness, uncertainty on the market (unpre-
dictable demand), product variety, market lead time, and
product margin. In view of that, neither dynamics of the rm
nor context seems to be considered, such as a deteriorating
economic situation, new management of the rm, changed
interaction in the supply chain, and a contextual change
involving a shift in demand. Most processes involve such
Corresponding author:
Benedikte Borgstrom, Jonkoping International Business School,
Box 1026, SE-551 11 Jonkoping, Sweden; E-mail: benedikte.
borgstrom@ihh.hj.se
dynamics, which delimits predictions of outcomes. Interac-
tion of these processes over time increases complexity. Sup-
ply chain complexity is also founded in supply chain
relationships (Lwendahl and Revang 2004) and in direct
and indirect interdependencies of activities and resources
(Hakansson and Persson 2004). The strategy, according to
Fisher (1997) and the SCM literature, is often seen as an
active choice in a relatively static situation. However, in line
with organizational strategy literature, the strategy is gradu-
ally adapted (Mintzberg and Waters 1985). In SCM litera-
ture, supply chain development is little researched (Sebastiao
and Golicic 2008), which is problematic because dynamics
and complexity complicates coordination. For example, a
shift in demand on the market will most likely change the
behavior of the rm. On the one hand, a deterioration of
rm protability causes a pressure toward lower costs and a
push for increasing sales. What eect will this have on a
market-responsive strategy? To what extent might it inu-
ence other actors in the supply chain such as dealers, logis-
tics rms, or suppliers?
On the other hand, a positive change in demand might
lead to another type of action from the rms in the supply
chain to increase sales that might shift the strategic focus
from responsiveness to speculation. Changes in the context
are other factors whose importance for the dynamics of sup-
ply chain strategies is only marginally discussed. Mergers,
acquisitions, or strategic alliances are contextual matters that
might inuence rm behavior and the interaction between
rms in the supply chain so as to cause a change in the stra-
tegic behavior. Large radical change might even cause dom-
ino eects of changes on the market (Hertz 2001), not only
changing the competitive situation but also triggering new
alliances.
Changes in strategy of a focal rm in the supply chain
inuence all the key actors in the supply chain and their
interaction. This might include trust, willingness to change,
capabilities, and priorities for the specic supply chain. Actu-
ally, insights from industry indicate that combined strategies
are likely because organizational members awareness
of organizational strategic change is low and the strategy is
often only weakly correlated to supply chain practices
(Tamas 2000). In Tamass (2000) survey of 80 supply chain
362
executive respondents, only 48% were familiar with the pre-
vailing business unit strategy and only 28% were familiar
with the corporate strategy, so it is quite understandable that
yesterdays practices remain despite strategic changes. The
literature on SCM strategies does not fully consider that
strategic choices are premised on the situation of the rm,
including the relationships and the interactions between the
rms in the supply chain and the contextual challenges.
Hybrid forms of supply chain strategy is an area for further
exploration (Goldsby et al. 2006).
Supply chain strategy literature needs a developed under-
standing related to supply chain dynamics, which is impor-
tant to understand change in SCM strategies. We want to
argue that strategies, as described by Fisher (1997), gradually
change with the rms situation, the interaction between
rms, and changes of demand or business cycles. Our pur-
pose is to describe and analyze how changes in premises for
the rm and between the rm and the context aect the degree
of customer order production over time.
The article is structured as follows. First, we provide a lit-
erature review to understand contextual and situational
dynamics of supply chain strategies. We start with a criticism
of existing categories, also dening the basic strategies of
market responsiveness and physical eciency, and discuss
these strategies. We will then focus on customer ordered pro-
duction, discuss its advantages and disadvantages, and go
deeper into the discussion of customer adaptation and the
prerequisites for the rm and its supply chain. Second, the
case methodology and the case description are presented.
Third, ndings from the case study together with the litera-
ture synthesis are used to formulate propositions of supply
chain strategies. Finally, we draw conclusions from the study
and consider research and management implications.
A SUPPLY CHAIN STRATEGY IS MORE THAN A
PRODUCT STRATEGY
In his article What is the right supply chain for your prod-
uct? Fisher (1997) presents market responsiveness and phys-
ical eciency as two basic supply chain strategies. Fisher
(1997) distinguishes between functional products with pre-
dictable demand and innovative products with unpredictable
demand. Based on these dierent types of products, he
shows how the primary purpose, the manufacturing focus,
inventory strategy, lead time, the approach to the suppliers,
and the product, are dierent prerequisites for the right
strategy and for a specic supply chain.
The strategy for a functional product is supposed to be
low costs, while the innovative product for which the
response has to be quick to minimize stock out and reduce
costs of lost sales, should use the market-responsive concept.
For the cost-ecient strategy, the manufacturing focus is on
high capacity utilization, high inventory turnover, a lean but
not too costly lead time, and a selection of suppliers based
on low cost and quality. For innovative products, the focus
is on having excess buer capacity both in manufacturing
and inventory and investing aggressively in exibility, speed,
and lead time. The dierence in behavior should be present
B. Borgstrom and S. Hertz
throughout the whole supply chain, including how the prod-
uct design is created. For functional products, it is a ques-
tion of waste elimination and costs in total, and for market-
responsive innovative products, it is rather a question of
using modular design to postpone product dierentiation as
long as possible. Based on this, Fisher (1997) constructs the
well-known matrix of what is a right or wrong strategy for a
product.
The conclusions of the Fisher (1997) model show that a
strategy is right for the supply chain if it matches product
characteristics; otherwise it is wrong. The question regarding
these conclusions is whether the discussed constructs are dis-
tinct; that is, whether strategy decisions should align with
either this generic strategy or that. The combinations that
Fisher (1997) describes as mismatches are related to the fear
of being stuck in the middle; that is, neither achieving low
costs nor being dierentiated, and to a belief that products
can be characterized by the producers rather than by the
customers; that is, who decides if the product is functional
or innovative. One criticism of Fishers (1997) model is that
most products could not be classied as either functional or
innovative. Chopra and Meindl (2001) see pure functional
and innovative products rather as two extremes of a contin-
uum where the demand is more or less easy to predict. They
stress that the strategy of the rm and the supply chain must
have a strategic t. It is not enough that the strategies t,
however; the resources and capabilities of the supply chain
must support the strategy chosen. It is necessary to under-
stand the customer demand and the supply chain and match
them into a strategic t. The customer demand is based on
the need of the specic segment that the product serves. Pro-
duction of the dierent segments might vary depending on
quantity in each lot, the response time that customers are
willing to tolerate, the variety of product needed, the price
of the product, and the desired rate of innovation. In all,
these are described as implied demand uncertainty for the
supply chain. The supply chain should be designed to meet a
specic segment, rather than just going for functional or
innovative products. Chopra and Meindl (2001) show that
there is a large spectrum between demand certainty and
demand uncertainty for any product type. The degree of
responsiveness or eciency of the supply chain has to be
decided for the situated supply chain to nd the right zone
of strategic t.
Another criticism of the model is that Fisher (1997) seems
to have condence in a rationalistic view of supply chains.
The rm should undertake changes to match the strategy by
changing either the product or the strategy without really
discussing organizational changes or behavioral change in
the rm, the supply chain, or the context. The changes dis-
cussed in the model are directed and intended. Other
researchers studying strategic change (Mintzberg and Waters
1985; Achtenhagen et al. 2003) have rather stressed the
ongoing and unintentional changing of strategies. In prac-
tice, strategizing is an ongoing and continuous process in the
rm inuenced by contextual changes, but also by routines
and rules in the rm that will change the intended strategy.
The changes are both internal and external. Supply chain
strategies are in this way inuenced by dynamics. The Fisher
Supply Chain Strategies
matrix facilitates a planned direction of a supply chain strat-
egy but is problematic because it excludes dynamics. The
emergent strategy is often a reaction to a situation, and a
lack of understanding of this is a reason of strategic failure
(Johnson and Scholes 2002).
Thus, a supply chain strategy is more than a product strat-
egy. A supply chain strategy is determinant for the product
ows eectiveness for the market and eciency in the sup- when it comes to lean supply chains and responsive supply
ply chain. It is based in a set of resources, the use of which
will dier over time and therefore capabilities to align strat-
egy are crucial to adapt and respond to changes in the inter-
action patterns in the supply chain. Every supply chain
might be seen as a bundle of opportunities of resources, such
as products and partners, and of capabilities, such as innova-
tion and exibility.
REEVALUATING THE MISMATCH
We have questioned the rationalistic argumentation that it is
possible to choose either a low-cost strategy or a dierentia-
tion strategy based on product characteristics and stick to
that choice over time. Now we will discuss these strategies
under the assumption that every supply chain has a specic
bundle of constraints. The bundle of constraints will change
over time with market and environmental turbulence and
consequently calls for a pragmatic approach to strategic
development. Allen and Helms (2006) discuss the question of
either low cost or dierentiation in depth, pointing to fourth, in supply chains with long supply lead times and
ambiguous results as to whether pure generic strategies or a
combination of generic strategies leads to superior perfor-
mance. The outcome of this reasoning is not dependent on
sticking to one strategy or another or a combination of strat-
egies, but rather on understanding the necessary develop-
ment. Lwendahl and Revang (2004) argue that a context
that becomes more dynamic and complex demands eciency
and eectiveness. One illustrative example of this is the auto-
motive industry. von Corswant and Fredriksson (2002) stud-
ied trends in the car industry through a survey of original
equipment manufacturer (OEM)s and rst-tier suppliers and
discuss how priorities changed. Dynamics redenes an order-
winning criterion as well as less important criteria; for exam-
ple, costs becoming order qualiers while customer intimacy
becomes an order winner. von Corswant and Fredriksson
(2002) argue that these dynamics indicate that the competi-
tion in the car industry is changing to be more complex and
dynamic; therefore the supply chains need to be both e-
cient and eective. A case study of model changeovers in the
Toyota Production System shows that multiple objectives are
attainable through routines generating mindful cost minimi-
zation and exibility (Adler et al. 1999). Christopher and
Towill (2000) discuss emergent change; their example from
the personal computer industry illustrates how lean chains
are under pressure to become agile, and in some markets
under further pressure to become customized, which relates
to achieving strategic t based on the product life cycle
dynamics. Chopra and Meindl (2001) observe that there are
many obstacles to achieving strategic t in supply chains
since the need for product variation and innovativeness as
363
well as the degree of demand uncertainty varies. There is a
growing recognition in the logistics research eld of the need
for the supply chain to be matched to the market and in
many cases for the opposing strategies to complement each
other along the supply chain (Christopher and Towill 2000;
Mason-Jones et al. 2000; Christopher et al. 2006).
Supply chain characteristics are described as dierent
chains (Harrison and van Hoek 2005). They argue that a
high degree of supply chain integration is a prerequisite for
cost eciency while responsiveness relies on virtual nets. It is
questionable whether the needed degree of integration varies
to be ecient or to be responsive, but strategic and opera-
tional decisions will dier. Decisions about customer service
commitments, forecasting approach, manufacturing philoso-
phies, logistics network design, information exchange, inven-
tory planning, and transportation methods are most likely to
dier (Goldsby et al. 2006).
Changes in the context make it necessary to change supply
chain strategy and combine lean (physically ecient) and
agile (market-responsive) strategies. Christopher et al. (2006)
propose a continuum of four supply chain strategies. First,
in situations of short lead times and predictable demand, a
lean strategy will continuously replenish the customers
stock. Second, if lead times are longer, then the lean strategy
is applied by carefully controlling the material ow. Third,
in situations of short lead times and unpredictable demand,
an agile strategy is applicable to respond quickly. And
demand uncertainty, a leagile strategy is applied by post-
poning activities along the chain. The problem with postpon-
ing is that production is often extended to dierent places,
which increases production costs of the postponed activities.
In the study by Goldsby et al. (2006), it is argued that an
agile strategy is a low-cost approach in most cases (those
including extra costs of postponed activities), and if the costs
of disjointed operations are low, then leagility might be more
advantageous. These ndings contrast those that arrive from
a perceived need to lower costs by outsourcing and from
that standpoint choose a leagile strategy because the demand
is unpredictable and lead times are long (Christopher et al.
2006). However, the combination of lean and agile can be
done in dierent ways, such as designing the supply chain
for predictable standard products but utilizing agile princi-
ples for unpredictable special products. Another alterna-
tive is to divide the total demand for a product into base
products with lean strategy and agile products for surge
demand. Baseline products are outsourced while surge prod-
ucts are insourced. Dierent ways to increase exibility to
achieve leagility involve dierent production lines in a site,
extra capacity, and form postponement (Goldsby et al.
2006). The agile lean supply conict is generic but the com-
ponents share a common objective of meeting the customer
demands at the least total cost (Goldsby et al. 2006). Strate-
gies can be merged in a variety of ways to create leagile
approaches, but these seem to be situational. It is important
to dene business-specic conicts through data analysis and
dialog, as Stratton and Warburton (2003) illustrate in their
Grin case (an apparel company). The situational analysis
364
at Grin resulted in separated supply chains characterized
by volume, agility, and innovativeness.
However, the problem with combining the two strategies
is that manufacturing, inventory, lead time, sourcing strat-
egy, and product design strategies should be aligned. Morash
(2001) develops this by arguing that there is a need for value
congruence in the strategy with the needed capabilities. Basi-
cally, there is a dierence in the logic by which products are
developed, procured, manufactured, marketed, and sold, as
well as in the relationships among internal and external par-
ties that make the supply chain strategy possible (Goldsby
et al. 2006). Furthermore, when measuring capabilities and
performance, Morash (2001) found that the excellent rms If the supply chain production is based on customer orders
were having more of a demand-side focus on customer ser-
vice and proactive quality measuring than the rms focusing
on cost eciency strategies supported by the supply side.
The better performance by market-responsive companies
with high-demand side capabilities and qualities are sup-
ported in other studies (Hulthen 2002; Kaplan 2002). Adding
to their ndings, Kim and Mauborgne (2004) argue that a
strategic focus on nding new market space and exploiting
this is the most lucrative aspect of strategy. In Kim and
Mauborgnes (2004) study of business launches of 108 com-
panies (in the automotive, computer, movie, and theater
industries), 14% were aimed at creating new markets and
delivered 38% of total revenues and 61% of total prots
(the other 86% were incremental improvements and
accounted for 62% of the total revenues, but delivered only
39% of the total prots). Kim and Mauborgne (2004) argue
that strategy is to align activities in pursuit of dierentiation
and low cost rather than making other choices. Buyer value
is the key and, in the long run, costs are reduced further due
to the high sales volumes that superior value generates. The
strategy has to continuously adapt to dynamics (Sebastiao
and Golicic 2008). Thus, market-responsive and physically
ecient supply chains are a challenge rather than a mis-
match that needs careful strategizing and organizing (Lwen-
dahl and Revang 2004). Under certain and stable conditions
one of the two might be more important, for instance when
a low-cost chain improves exibility or when a niche actor
focuses on costs, but eventually the two strategies form a
duality.
Thus, in the reevaluation of the mismatch we put forward
that in supply chains situational leagile approaches to strate-
gic development are of special interest. Postponement is a
means to achieve agility but also a long-term commitment of
resources rather than a dynamic tool. Dynamics impose
other ways of adaptation in the short term. Pure lean and
agile strategies have constraints in a complex setting.
Dynamics often enforce an adaptation to a form of leagile
strategy. Therefore, it seems as if situational leagile
approaches to strategic development might be dened by
data analysis and dialog based on business-specic conicts.
The set of less exible resources might be seen as a bundle
of constraints, such as manufacturing, inventories, lead time,
sourcing strategy, and product design strategies. The market-
ing capabilities seem to be easier to adapt in a short-term
perspective since it is about aligning activities. We put for-
ward that what is seen as a mismatch in a static setting is
B. Borgstrom and S. Hertz
actually a dynamic strategy adaptable to constraints that
evolve. It is about strategizing by dialog within the rm and
within the supply chain.
CUSTOMER ORDER-BASED STRATEGY
A customer order-based strategy is founded on a rms deci-
sion that it will only produce customers orders. Customiza-
tion is a way to create more value to the customer; it
involves cost reductions as well as improved prots (Hertz
et al. 2001; Waller and Bartolini 2002; Holweg and Pil 2004).
only, then costs of speculation are reduced (Womack et al.
1990; Hines et al. 2004). Speculative dierentiation in terms
of form, place, and time downstream, increases supply chain
risks and uncertainty costs in manufacturing and logistics
operations (Pagh and Cooper 1998). If the supply chain
interacts and develops products and processes in line with
customers needs and expectations, prots will increase
(Webster 1994; Kaplan 2002; Kim and Mauborgne 2004).
Long supply chain lead times often create problems for
customer order-based production (COP; Christopher et al.
2006). Parts modularization and postponement of activities
are requirements to be market responsive and keep lead
times acceptable downstream of the customer order decou-
pling point (van Hoek 1998, 2001; Krishnamurthy and
Yauch 2007). The same principle applies to mass customiza-
tion, which should not be interpreted as COP. Mass custom-
ization is production-oriented; that is, how we can customize
production for specic market segments; while COP is cus-
tomer-oriented; that is, how we can build-to-order. Despite
this dierence (in mindset), the strategies are applied in a
similar way in the supply chain. The dierence is the cus-
tomer orientation of the rms activities, which could be seen
in logistics, sales model, and product development. In prac-
tice, dierent supply chain strategies are dicult to separate;
Dells strategy can be interpreted as both agile (Goldsby
et al. 2006) and build-to-order (Gunasekaran and Ngai
2005). Both of these strategies engage in the supply side chal-
lenges rather than the market side. Customer order-based
strategy involves agile and build-to-order practices to be
customer oriented.
Kotha (1995) summarize some of the potential benets
and costs of mass customization, which could also apply to
COP. The benets were mainly seen as costs savings through
lower or no inventories, eliminating product obsolescence,
elaborate forecasting, and eective market research activities.
Other positive eects concern upgrading of engineering skills
and learning to create exibility that makes it possible to ask
for a higher price and to introduce more products. On the
negative side, the costs of advanced technology for IT sys-
tems and engineering resources are problematic, as is also
the managerial time needed to make the change. In addition,
Gunasekaran (2005) and Gunasekaran and Ngai (2005)
argue that problems relating to the market-responsive strat-
egy are increased costs of order processing, multiple revisions
of specications, last-minute changes in orders and in pro-
duction plans, and unreliable delivery dates.
Supply Chain Strategies
Lampel and Mintzberg (1996) study customization and
develop a continuum of strategies in which customized stan-
dardization is in between the two extremes of pure stan-
dardization and pure customization. These strategies can necessary level of performances simultaneously on multiple
be seen as dierent degrees of postponement in the supply
chain. Pure standardization involves no postponement (the
supply chain provides standard products ordered by a fore-
cast). The strategies with a higher degree of customization
use standardization and mass production up to the customer
order decoupling point in the supply chain, where some
activities to nalize the product are postponed and possible
to execute during accepted delivery time to support market
responsiveness strategies. The postponement strategies will
reduce demand uncertainty by postponing the completion of
the output in accordance with customer preferences as well
as customize their products (van Hoek 2001). In this termi-
nology, COP is a built-to-order strategy, where the manu- responsive strategy based on built-to-order needs to be
facturing or part of the manufacturing is postponed until the
customer order arrives. Also, other market-responsive strate-
gies depend on postponement, for example, the leagile strat-
egy (van Hoek 1998; Christopher et al. 2006).
Postponement involves various decisions such as the
amount of customization, the degree of postponement in the
supply chain, and where on the dierent levels in the supply
chain that postponement should be handled. The built-to-
order strategy is a postponement strategy of both logistics
and manufacturing until the customer order arrives (Pagh
and Cooper 1998). Two examples are discussed in Kaplans
(2002) doctoral thesis, the two rms of Dell and Compaq.
The rms meet customer demands with dierent degrees of
customization: Compaq customizing their supply chain by
making use of intermediaries to nalize the oer (many times
by adding services); and Dell build-to-order. Kaplan (2002)
shows that customization can come with the core product in
the production as well as with services after production,
which gives homogeneous products many customization adapting and aligning strategies in the supply chain (Stock
possibilities. In a similar way, customer order-based strategy
involves agility and build-to-order in addition to customiza-
tion after production.
Thus, we put forward that a customer order-based strategy
is a distinct strategy based on postponement (form, place,
and time), customer orientation, and modularization. In
market-responsive strategies, customization diers in relation
to what part of the supply chain is involved (market side
and or supply side). The customer order-based strategy
involves customized market and supply activities. Service
customization in market activities opens up a spectrum of
opportunities to customize without far reaching conse-
quences in the supply chain.
STRATEGY, STRUCTURE, AND OVERLAPPING
SUPPLY CHAINS
Organizing and strategizing in supply chains toward cus-
tomer value are often problematic (Hines et al. 2000). The
success of structural congurations is contingent on contex-
tual factors (Autry and Gris 2008). It is partly the problem
of aligning supply chain structure and strategy and partly
365
the problem of combining eciency and eectiveness in an
optimal manner for the supply chain. Stock et al. (1999) pro-
pose that logistics provides a way for a rm to achieve the
competitive dimensions. In line with Hines et al. (2000),
Stock et al. (1999) conceptualize that various combinations
of strategy, structure, and logistics choices will result in high
rm performance. The set of logistical choices available
relate to transportation, warehousing, purchasing, and man-
agement techniques, but also to strategic scope. Stock et al.
(1999) dene competitive scope to be the extent to which a
rm attempts to emphasize and excel at more than one com-
petitive priority, such as cost and exibility.
There is a need for alignment or congruency between the
dierent strategic parts of the supply chain to create cus-
tomer satisfaction and perform well. Therefore, a market-
integrated so that customers demands and orders can be
quickly and easily transferred to the assembler and the sup-
pliers producing the components in demand. This means
that there is a need for close cooperation between the
actors in the supply chain, not only downstream but also
part of the upstream. The structure relates to network
structure (tight or loose structure and relationship charac-
teristics such as information exchange, interdependence, and
time), as well as the geographic dispersion of the supply
chain (Stock et al. 1999).
Furthermore, in a market-responsive strategy aiming at
innovative products with relatively short product life cycles,
a continuous cooperative development is vital between all
the actors in the supply chain. The same applies to a physi-
cally ecient supply chain that aims to produce low-cost
oers by eliminating waste at all levels in the supply chain.
Several authors have stressed the importance of co-develop-
ment with suppliers in the network structure as a basis for
et al. 1999; Hakansson and Ford 2002; Anderson and Narus
2004; Hakansson and Persson 2004). However, as discussed
by Christopher et al. (2006), when rms globalize a respon-
sive supply chain to achieve a leagile supply chain, there
will be decreased possibilities for adaptation and co-develop-
ment, because of the geographic dispersion of the supply
chain to achieve a specic suppliers specialization, such as
low costs. Interestingly, competitive priorities are in many
cases traded o, even though they are seen as equally impor-
tant and there is potential for them. In addition, they are
traded o dierently at dierent levels in the hierarchy; that
is, among managers and operators (Boyer and Lewis 2002).
This is a typical example of incongruence in the supply
chaindierent parts experience and perceive goals dier-
ently.
Another example of incongruence relates to how rms and
supply chains develop as both the rm and the context
change. New product varieties and models are developed,
new supply chains are established, but many of the suppliers
are the same and resources are recombined. This causes an
increasing degree of overlap between supply chains, which
makes it more dicult to integrate one specic supply chain
(Hertz 2006). There will be a tradeo between integration of
366
the supply chain under consideration and the others, and this
makes it more dicult for the supply chain to develop in
alignment. Firms being part of several supply chains might
need to prioritize between them to make use of their
resources and capabilities in the best way. The overlap will
increase complexity over time because of interacting net-
works of actors, outsourcing, etc. Therefore, strategies need
to be simple, organizational, and temporal (Eisenhardt
2002), which calls for routines involving analysis and dialog
to maintain strategic t. It was the routines and way of
working with routines that explained the success of a Toyota
subsidiarys exceptional exibility eciency combination evolved. Basically, the case involves strategic change, which
(Adler et al. 1999). As a result of changes, the rm and the
supply chain needed to change to survive or to be protable.
Thus, taking in strategy, structure, and overlapping supply
chains means that supply chain strategy inherently involves
adaption to requirements, which includes cooperative devel-
opment and waste elimination in strategy as practiced. The
adaptation requirements come from experiences and prioriti-
zation, because goals are perceived dierently in the supply
chain. Strategic decisions involve variables that shift in stra-
tegic relevance over time. Combining and tting involves
strategy, structure, competitive objectives, and related logisti-
cal choices.
So far, we have synthesized literature to interpret changes
in customer order-based strategies and learn about supply
chain strategies. Next, our illustration includes changes in
the rm, in the supply chain network and in the context that
aected the degree of COP in a long-term case study of an
automotive rm, which will provide deeper insights into sup-
ply chain strategies.
THE CASE OF CUSTOMER ORDERED PRODUCTION
IN THE AUTOMOTIVE INDUSTRY
Our study is a longitudinal case study of an automotive sup-
ply chain with 6070 interviews of various actors in the
supply chain such as dealers, sales agencies, assembler, pro-
ducer, transport rms, suppliers, etc., starting in 199394. It
is a qualitative process study that focuses on critical events
in strategic change. The events were chosen because there is
a certain continuity of the activity in each phase and there is
a certain discontinuity at its frontier (Langley 1999). The
rst part of the study was undertaken over a period of three
to four years with more than 40 interviews, while the later
study, with around 20 interviews, started in 2003 and is still
ongoing. The early study concerned the premises in, and the
eects on, the rm and its supply chain network when shift-
ing from scale economy and cost eciency to a market-
responsive strategy by introducing COP. The later study has
been researching the development and performance of COP
over time. Implementing COP was a radical change for the
automotive assembler; it involved change on all levels of the
hierarchy, but also change for all organizations in the supply
chain, including sales agents and dealers. The COP was
introduced for expensive cars, cases in which customers also
have been more willing to wait for a car being built-to-order.
With this kind of material, a qualitative approach will be
B. Borgstrom and S. Hertz
suitable to make sense of context and contrary forces that
interact in the process.
The basis of the empirical material is the automotive
rms initiative to implement COP. The actors in the chain
that were aected were interviewed. We interviewed people
in key positions in the development, among others a CEO
and managers of production, planning, sales, purchasing,
logistics, IT of the OEM, dealers and national sales agents
in Europe, suppliers key account people, and logistics
rms. These were selected with the help of others involved
and by increased learning about the case as the study
is preferably researched through a process study. This is a
type of case study (Pettigrew 1992, 1997) in which interde-
pendencies, dynamics, and complexity might be further
investigated.
The narrative that follows is a purposeful synthesis of the
empirical material to provide deeper understanding of the
phenomenon. The main source is interviews; other sources
are informal discussions, formal meetings, internal presenta-
tion material, internal statistics and reports, press releases,
and observations. Most often a process study leads to a con-
tinuum analysis rather than a hierarchical, classicatory one
(Langley 1999).
In the analysis of the material, the temporal bracketing
strategy (Langley 1999) will best describe our method. It is
called bracketing in reference to structuration theory (Gid-
dens 1984), which is a classic example of a perspective
involving mutual shaping (actions are constrained by struc-
tures of, for example, routines, and the actions inuence the
structures over time). The temporal bracketing analysis is
used to transform a shapeless mass of process data into
more discrete but connected blocks; that is, two phases of
COP. Both involve change; the rst a planned and radical
one, and the next an unplanned and emergent one. These
two phases were chosen because we want to show change in
COP to give insights into supply chain strategies beyond its
face value. The temporal bracketing analysis is eective to
analyze dierences in development because of the possibility
to compare critical phases. Other events are also key to the
development and would be appropriate to represent if we
applied a more inductive-driven analysis, such as the narra-
tive (Van Maanen 1988) or the grounded theory (Glaser and
Strauss 1967). The temporal bracketing analysis is used to
examine how context aects a process and what the conse-
quences are, to produce useful insights. Such a study and
analysis are dicult to replicate because they rely on access
to development and learning with the respondents when the
change occurs. Instead, the insights and theoretical implica-
tions are possible to rene in other studies. Langley (1999)
evaluates dierent process analyses; the temporal bracketing
analysis has, in relation to a narrative or a grounded theory
approach that remain more deeply rooted in raw data, only
moderate to high accuracy. The conceptualizations are the-
ory-laden rather than simply representations, and the gener-
ality is moderate (until tested on more data). This means in
broader terms that we theorize about supply chain strategy
by abductive reasoning in which theoretical deduction and
empirical induction interplay (Alvesson and Skoldberg 2000;
Supply Chain Strategies
Dubois and Gadde 2002). In the research process this means
that in an empirically interesting issue we make up tentative
propositions based on literature that we rene through fur-
ther empirical material and literature. In this article, the the-
oretical framework is critically examining the literature and
provides a basis for the propositions in the summaries of the
theory sections that are supplemented by ndings to learn
about strategic development.
The earlier study in the 1990s
Scale economy, low cost, and mass production was the basic
business model for the automotive industry for a long time.
However, increased competition, higher innovativeness, and
increased variation in customer demands made production
forecasting increasingly dicult, resulting in large stocks,
high costs, and discounts. On top of this, many customers
did not get the car they wanted.
A downturn in the economy led to a decrease in the mar-
ket demand for cars and the situation for the automotive
rm in this study deteriorated. To change the situation and
understand the customers better, the assembling rm decided
to become more customer-oriented and let the customers
decide and specify their own car. When the customers order
arrived, the automotive rm planned the production, ordered
from suppliers, assembled, and delivered the car to the end
customer. As planned, no more stocks, high costs for refur-
bishing, or large discounts were needed, customers were
more satised, and the automotive rm increased its prot-
ability.
The goals were 100% customer order production, 25%
less capital needed, and a reduction of lead time by 50%.
Radical changes were needed for all directly and indirectly
involved organizations in the whole supply chain as the new
conditions were set. Implementing the change was a demand-
ing task for most of the organizations involved.
The results of the changes and the rethinking were positive
for the development of the supply chain. The integration and
the eectiveness of the supply chain increased. The revenues
per car increased as customers were willing to pay more for
their specic cars even when some costs decreased or others
increased. The eects were changing roles and organizational
structure. Customer ordered production caused great plan-
ning problems for both the assemblers and the suppliers
plants. Uncertain and lower capacity utilization increased
the production costs. The market side is crucial in the cus-
tomer-oriented supply chain. Customer-oriented sales people
learned to work with the customer in deciding the customer
order. Next, we will focus specically on the changes and
implications of COP on the downstream network of the sup-
ply chain.
The study from 2005
The development and the outcome of COP have since the
implementation been gradual rather than radical. The rm
continued on the same strategic track with COP. However,
the company was acquired by a large American automotive
group with a long tradition of producing standardized cars.
367
Importantly, new decision makers were introduced but they
announced their intent of letting the rm keep its autonomy.
To study dynamics related to supply chain strategy and
performance we will go through the changes in the relation-
ships between each of the organizations involved in the COP
development. We start with the relationship between end
customer and dealer, which basically represents the dealers
view. Then, the dealer and sales company relationship fol-
lows, which represents a European view rather than an
American one. Dealers are most often local and autonomous
rms dealing with end customers. Sales companies are regio-
nal (most often national) intermediary organizations for
marketing activities. Finally, the sales company and produc-
tion relationship involves production (the automotive OEM)
in several production sites. The sales company and produc-
tion relationship represents a large number of people with
dierent responsibilities in the producing rms organization
because of the rms hierarchy of inuential individuals
regarding the order-to-delivery process.
The reason to go deeper into the marketing side of the
supply chain is that the number of customer ordered cars
has decreased over time and the volumes of noncustomer
ordered cars have increased. We were interested in why this
is the case and what eects it has.
End customer and dealer
Customers can specify their own customer ordered car but
the option is not used in all cases. The use of COP is more
frequent for company cars for which a rm pays a certain
sum and the employee selects the specic car. Even though
private consumers have the same opportunity to buy a cus-
tomized car, this happens less often because the price is a
more important factor in the purchase. Furthermore, the car
can be delivered sooner, since dealers might have the car in
stock or they may have ordered a car themselves. In the lat-
ter case, the car was predened by the dealer but has not yet
been assembled. The dealer is also more inclined to give a
discount on such cars. In other cases, consumers are per-
suaded by a promotion campaign to buy a predened car
during a certain period of time.
In most cases both parts are satised. An exception is the
customer who intended to buy built-to-order but bought a
predened car. In this case, the deviation from COP creates
lower customer value scores on the dealers performance
indicators. Also, the dealer gets lower revenues per car,
which might be discounted and predened with extras that
are otherwise protable.
Dealer and sales companies
Customer-oriented dealers were expected to have more of an
advisory role helping the customers in their choice of a cus-
tomer ordered car. Many dealers upgraded their facilities to
showrooms. The dealers became more important actors in
the order ow. The orders, based on customers choices went
directly to the factory instead of via the sales companies.
Forecast of sales are needed despite the COP, and sales com-
panies make sales forecast of various models. The sales com-
panies are responsible for marketing activities. They are
convinced that selling only customer produced cars would be
368 B. Borgstrom and S. Hertz

the most long-term protable solution. Based on the strategy
and the common agreement on COP superiority, it would be
reasonable to suggest that the expensive stock of new cars
would be close to zero. However, despite COP, a dealer
might have 100150 cars in stock.
One reason for having cars in stock was the pressure to
sell more. There seems to be a common opinion among the
new American owners that dealers need to be pushed to
actively sell; that is, 100% COP will not lead to active sell-
ing. Therefore, they encourage dealers with a bonus system
to have cars in stock. This increases volumes, stimulates
demand, and increases capacity utilization. The bonus is an
important income for dealers, but it also increases their risk.
It is believed to increase short-term volumes by 10%15%.
The bonus system is a nancial incentive that is benecial
when the market has a positive development. The dealer will
most likely sell the cars at a discount and delivery is fast.
Sales companies and production
The sales companies forecasts are still needed in spite of the
fact that production is based on orders from dealers. The sup-
pliers and the factory need to have some rough forecasts to
secure capacity for future sales. The COP forecasts are a
guide to future production, while orders start the production
process. The objectives of the new owner regarding sales and
overall cost control put pressure on production to minimize
costs by having high capacity utilization, and on sales compa-
nies to use forecasts as sales targets to put a pressure on sales.
As the sales companies see the patterns of which type of
combinations is most popular, there is a tendency to produce
cars according to those patterns and turn them into quick
sellers or oer them to the dealers with special bonuses
attached to them. The agreement between the sales compa-
nies and production on reasonable output and production
might improve utilization, and sales companies can inuence
dealers to be more aggressive in their marketing.
Changes in COP
The pressure of selling more and the acceptance of uncer-
tainty in the matching of supply and demand create chal-
lenges for strategic COP action. The market-side focus is
shifting from customers to selling a product by the bonus
system. It is a question of short-term benets and bonuses or
customization of cars that is experienced as customer value
and long-term benets.
Over time, the customer orientation in COP is distorted,
and there is a change in the process of selling cars. Through
the bonus system and various forms of quick sellers, the
conditions for COP production have changed. This manipu-
lated COP increases the number of late changes in supply
chain plans. Consequently, COP has changed in content
since its implementation (Table 1). Table 1 shows COP as an
organizational strategy that shape and is shaped by the sup-
ply chain. Also, the economic situation of the automotive
rm and its corporate governance has inuenced the devel-
opment.
Changes in content of COP are logical responses to the
situation of the dierent actors. The next section is a theoret-
ical analysis of this development in which the variables of
Table 1 is related to strategic change and a set of proposi-
tions describing change in supply chain strategies.
FINDINGS
During the rst decade of the 2000s, the share of customer
ordered cars has decreased, which means that the supply

Table 1: Case description, COP development

Variables Implementation of COP COP with changed content

Economic situation
Governance
Objectives of
organizational actors
Objectives of supply
chain actors
Highly competitive situation in which COP
was seen as a relief involving reduced lead
times and higher revenue per car.
Committed to make organizational changes to
create market-responsive capabilities.
Reorganization.
Changed characteristics of resources, such as
customer orientation in sales, production
and delivery.
Changed rm behavior
A lean strategy becomes customer oriented.
Increased integration.
Changed chain relationships.
A lean strategy becomes customer oriented.
Highly competitive situation in which COP
was taken as a given.
Multiple objectives in overlapping supply
chains by adding another rm behavior.
Conicts inuence objectives in hierarchy.
Customer orientation looses in importance
compared to, for example, low-cost-country
sourcing and capacity utilization in
production.
Production has customer order objectives
while market side has forecast related
objectives.
Business-specic conicts inuence objectives.
Objectives emerge in dierent directions.
Market side modies sales model.
A market-responsive strategy becomes guided
by cost-eciency objectives.

COP, customer order-based production.

Supply Chain Strategies
chain is now working with the two strategies in parallel. This
would mean a decreased value congruence (Morash 2001;
Goldsby et al. 2006). There are factors inuencing the grad-
ual change in value congruence, such as the dealers behav-
ior, the need to increase sales in the short term, and the need
to reduce costs and increase capacity utilization. The inter-
pretation of the situation in the mid 1990s is dierent from
that of the mid-2000s, which drives an emergent strategy to
create new value propositions (Sebastiao and Golicic 2008).
The sales companies argue that sticking to only customer
ordered cars would be more protable in the long-term per-
spective, but promotes push based sales in the short-term
perspective. The production system, including the supply
chain, continues to handle every order as induced by a cus-
tomer.
It is more lucrative to be market responsive and work with
demand-side capabilities than to be cost-ecient with the
capabilities of the rm on the supply side (Morash 2001).
However, sales companies and dealers changed the degree of
COP. When demand is high and lead times for new cars are
long, some of the consumers are less inclined to wait, and
consequently the dealer might lose a sale. Therefore, dealers
order a preset car with relatively few extras and make a
change before the xed production date. This gives them a
shorter delivery time but the last-minute changes cause prob-
lems for production and forecasting (Kotha 1995; Gunaseka-
ran 2005; Gunasekaran and Ngai 2005) and imply an
increased risk for the dealer. Therefore, situational business
conicts create a mismatch in the supply chain, if they are
uncoordinated.
Comparing this case of the decreasing degree of market
responsiveness over time with what is seen as possible combi-
nations of strategy, a dynamic dimension is added. Christo-
pher et al. (2006) exemplify with a rm having a standard
production for a large range of customers and then being
responsive to specials. In our case, it seems to be the other
way around. Market responsiveness is the basis, but the
number of preset cars is growing in the production structures
that are aligned to a responsive strategy. These structures
would be more costly (Goldsby et al. 2006), which might be
seen as unnecessary costs in a situation of increasing number
of standardized car orders.
A reason for combining the two strategies might be that
the acquisition brought decision makers with a dierent
strategy and new management thinking. Coordination and
network overlap with the new owners together with the dete-
riorating economic situation aected the focal automotive
producer and its supply chain strategy (Hines et al. 2000;
Chopra and Meindl 2001; Morash 2001). Dierent parts in
the supply chain were more or less coordinated and the sup-
ply chain had problems to achieve congruence. A change in
the degree of COP might have happened anyhow, regardless
of the ownership situation. Strategies vary continuously
through internal and external changes (Mintzberg and
Waters 1985; Achtenhagen et al. 2003). But the acquiring
rm, which uses a cost-eciency strategy, wants to reduce
supply costs by partly using the same suppliers for the two
dierent supply chains. This also creates an overlap between
the two supply chains. Such an overlap of dierent strategies
369
is problematic. Hertz (2006) argues that a need to integrate
and increase eectiveness might be obstructed by the overlap
between two supply chains. This causes problems for both
chains to become eective or ecient in the long run. For
example, production planners have a strong need to ll the
existing capacity, which is an important part of their job.
New management thinking enforces capacity utilization
rather than a capacity buer and dierent objectives emerge
in the rm hierarchy (Boyer and Lewis 2002).
The importance of aligning supply chain rms with
increased responsiveness and customer order production is
emphasized by several researchers (Hines et al. 2000; Chopra
and Meindl 2001). However, the adaptation is not only made
in the build-to-order production by the assembler; rather it
is organizational change, rm behavior, and chain relation-
ships that accomplish responsiveness and alignment of the
supply chain. The relationships between the actors in the
supply chain become important in a responsive supply chain
when agility and adaptation to customer demands are cru-
cial. The demand-side capabilities are especially important
for creating an excellent performance (Morash 2001), putting
focus on sales companies and dealers. As we have seen in
the case study, top management assumed that COP hindered
some of the sales and that the dealers and the sales compa-
nies are capable to sell more. Therefore, sales behavior is
manipulated, which changes the strategic customer orienta-
tion focus and develops a chain less aligned with the respon-
sive strategy.
More cars are predened and include a standard package,
but dealers can oer some complementary applications
according to customer demand through after-sales services.
The strategic content of COP is changing, which has its
eects. In line with Kaplans (2002) discussion, the car cus-
tomer not getting the decided customer order produced car
was less satised. The dealers were, however, satised with
the incentives since these increased protability although rev-
enue per car decreased. Although lean and agile strategies
can be employed simultaneously, other eects are likely in
the long run since the method diers in product develop-
ment, procurement, manufacturing, and marketing (Goldsby
et al. 2006). A redened competitive scope will work as long
as the supply chain is aligned (Stock et al. 1999; Hakansson
and Ford 2002; Anderson and Narus 2004; Hakansson and
Persson 2004).
Summarizing, the strategic behavior of the rms in the sup-
ply chain has been changing for both external and internal rea-
sons. Figure 1 illustrates that these change the lean agile
balance over time. The development is a larger share of prede-
ned cars and fewer ones built-to-order. Partly, this was due
to a change in demand and attempts to take advantage of that,
but also due to changes in managerial perceptions, inuenced
by, for example, the new owners. External changes have been
the acquisition of the focal rm by a large rm with a tradition
of cost- or operations-ecient strategy implying changes in
the relationships with many actors in the supply chain. This
has implications for the supply chain strategy.
The leagile strategy varies in content (Goldsby et al. 2006),
due to supply chain eects. In this way, the supply chain is
decisive in strategic development. Strategies such as lean, agile,
370
Figure 1: Findings, strategic change in lean agile balance.
Change in governance,
such as new owners.
Change in the
economic situation. The situated leagile Lean
strategy changes in
content; relates to
Supply chain actors supply chain Agile
dynamics.
action, such as dealers
tricking the order system.
Organizational actors action,
such as one functions interest
in reducing supply costs and
another functions decreased
trust in dealers sales efforts
when applying a customer-
focused sales model.
and build-to-order are prescriptions while COP is emerging
with content that changes over time. It is rather more or less
lean agile than a cyclical pattern of lean agile. In this case,
some implications are decreased customer orientation of the
sales force, decreased eectiveness in product ow by specula-
tive orders in a responsive supply chain, decreased eciency
because of late changes in orders, and unresolved conicts
among organizational actors about objectives. However, there
are also increased short-term sales. The COPs basis is cus-
tomer orientation. It is based on a lean strategy and developed
to an agile. In the balancing, the build-to-order capabilities are
used dierently. If we now reexamine what was put forward in
the literature review, it is possible to propose four implications
based on the assumption that a supply chain strategy is deci-
sive for the product ows eectiveness to the market and
eciency in the supply chain.
Proposition 1: The supply chain resources are the strategic
basis and will be used dierently over time depending on the
supply chain interaction patterns. Therefore, adaptation and
response to changes are the sources of developing opportuni-
ties of resources, such as products and partners, and of capa-
bilities, such as innovation and exibility.
Proposition 2: Lean and agile supply chain strategies have
constraints in a complex setting. Supply chain dynamics
enforce a leagile supply chain strategy that is adaptive over
time, based on business-specic conicts in manufacturing,
inventories, lead time, sourcing strategy, and product design
strategies. Parts of the supply chain have more exible
resources; adaptable in a short-term perspective, such as
sales companies and dealers. In the adaptation, a mismatch
might occur between the adapted strategy and the agreed-
upon strategy.
Proposition 3: Even though a customer order-based strategy
is a distinct strategy, customization diers in relation to what
part of the supply chain is involved (market side and or
B. Borgstrom and S. Hertz
supply side). The customer order-based strategy involves cus-
tomized market and supply activities. Customization involves
change in behavior of market activities; these give a possibil-
ity to short-term changes in degree of customization that
might have negative long-term consequences in the supply
chain.
Proposition 4: In practice, supply chain strategy inherently
involves adaption to requirements, which includes coopera-
tive development and waste elimination, to make sense of
strategy, structure, competitive objectives, and related logisti-
cal choices.
CONCLUSIONS
In the long run a supply network develops in dierent direc-
tions, which is logical as involved rms are autonomous and
have to adapt to shifting demands, which brings about an
emergent strategy. In the case of COP, the number of cus-
tomer ordered cars has gradually decreased together with a
change in the situation of the rm and its internal organiza-
tional behavior, a change in the interaction and reaction of
the organizations in the supply chain, and changes in the con-
text of the market, and the environment. The changes were to
a certain extent interactive, causing the assembler to decrease
their share of COP. One important change is that the rm
was acquired by a large American rm which had a dierent
strategy and a deteriorating nancial situation. Therefore, the
interest in increasing sales through dealer bonuses or market
quick sellers, and to reduce costs, with eects on suppliers
and the risk of a reduced degree of integration, seems to t
the situation. This caused incongruence between the increas-
ing number of cost-eciency actions and the customer-
responsive structure. Thus, changes inuence the content in
the strategy. Based on the case study and the literature review
we propose (1) that a supply chain strategy is determinant for
the product ows eectiveness to the market and eciency
in the supply chain. Even though the supply chain resources
are the strategic basis, these will be used dierently over time,
and therefore adaptation and response to changes in the sup-
ply chain interaction patterns is the source of developing
opportunities of resources, such as products and partners,
and of capabilities, such as innovation and exibility.
Dialog in and understanding of tradeos between the cus-
tomers responsiveness and having full capacity utilization
was dicult. The decreasing share of built-to-order cars (the
change in content of COP) is possible and positive for vol-
umes during periods of high demand. However, when
demand decreases, the inherent risks of reliance on forecasts
will materialize. Based on the case study and the literature
review, we therefore propose (2) that both lean and agile
supply chain strategies have constraints in a complex setting.
Supply chain dynamics enforce a leagile supply chain strat-
egy that is adaptive over time based on business-specic con-
icts in manufacturing, inventories, lead time, sourcing
strategy, and product design strategies. Those parts of the
supply chain that are less constrained by static resources
seem to be easier to adapt in a short-term perspective, such
Supply Chain Strategies
as sales companies and dealers. Changes in content of COP
can be a source to mismatch between the adapted strategy
and the agreed-upon strategy.
The case illustrates that changes are also based on an
acquisition and a change in the behavior and attitudes of the
rms in the supply chains in relation to various performance
indicators. Conicting business logic creates problems in
understanding performance. For example, the acquiring rm
promoted certain actions with direct and indirect impact on
costs as well as exibility. In spite of the intention to stick to
COP and the market-responsive strategy the strategy seems
to be changing. The number of customer ordered cars is
decreasing. Some explanations for this are seen in the dier-
ences in terms of the economic situation, corporate gover-
nance, objectives of organizational actors, and objectives of
supply chain actors (Table 1). It is problematic when dier-
ent supply chain actors change their behavior without coor-
dination of the whole. The strategy emerges in a direction
(Mintzberg and Waters 1985), and adapting supply chain
practices and strategies is a tool to remain ecient and eec-
tive (Achtenhagen et al. 2003; Lwendahl and Revang 2004).
Demonstrably, COP changes over time, which relates to our
next proposition (3). A customer order-based strategy is, on
the one hand, a distinct strategy based on postponement
(form, place, and time), customer value, and modularization.
On the other hand, customization diers in relation to what
part of the supply chain is involved (market side and or sup-
ply side). Together with services, a leagile strategy comprises
customization that opens up a spectrum of strategic positions
that are possible to draw on to adapt to strategy dynamics.
The cars produced as built-to-order are normally more
protable with a high degree of customer adaptation. With
continuous exceptions from COP, the supply chain might
lose in performance. This combined with cost reductions and
unresolved conicts with the supply side as well as the speed
of innovation might threaten the performance of the rm.
Based on literature and the development in our case we pro-
pose (4) that in practice supply chain strategy inherently
involve adaption to requirements, including cooperative
development and waste elimination, to make sense of strat-
egy, structure, competitive objectives, and related logistical
choices.
RESEARCH IMPLICATIONS
Limitations of the results might be derived from the theoreti-
cal review and the applied method and be a basis for further
research. First, our literature review is synthesized to explore
strategic change in the case of supply chain strategies. This
delimits the results to supply chain strategy literature. Much
of what is discussed about the strategies includes the custom-
ers and their behavior and handing the order over to the
next part upstream. However, the strategies seldom include
the importance of the behavior of the sales company and the
dealers. The demand side is an important part of the respon-
sive strategies but it seems that this side is much less
researched than the production side, especially in the auto-
motive industry when it comes to market-responsive strate-
371
gies. Our research is based on the automotive industry,
which means that we are careful to draw implications about
other industries. However, we can see that existing supply
chain strategy literature is limited in its understanding of
changes in strategic behavior over time of the focal rm as
well as in the interactions between rms and in the context.
Adapting the strategy is a continuous and gradual process,
sometimes formally intended, and further exploration of
dynamics and complexity in supply chain strategy develop-
ment is needed. Further exploration of supply chain strategy
is possible via multiparadigm research (Schultz and Hatch
1996), for example, strategy-as-practice literature (Regner
2003; Johnson et al. 2007), or via industrial network strate-
gizing (Gadde et al. 2003).
Second, our longitudinal and interpretative method pro-
vides insights rather than conclusive suggestions supported
by a statistical analysis. In addition, the study is situated in
a process of COP, and a complementary study would investi-
gate a similar process of a lean strategy. Also, the empirical
material is analyzed using a temporal bracketing analysis of
dierences of strategic conduct over time; other types of
analysis might provide complementary theoretical insights,
such as a more inductive study in which the raw material
would be used for developing concepts or comparative phe-
nomenological insights that are derived from theory and sub-
stantiated by a sample of cases. Process studies are uid in
their character and, despite the aim to make thick descrip-
tions and gain in-depth understanding (Geertz 1973), the
phenomenon develops and there is more to learn.
MANAGERIAL IMPLICATIONS
COP is a capability that depends both on supply chain rela-
tionships with customers and suppliers and the own organi-
zation. Over time, changing premises of what is reasonable
actions make rms adjust their strategic actions, and the
capability might be less important. However, mindfulness is
needed to safeguard customer orientation. Changing the
number of built-to-order orders is a situational result of
changes in actions. The adaptation should be reected upon
regarding its inuence on the basic business model of income
and costs. For example, which practices are we changing?
And, under what circumstances shall we return to the origi-
nal practices? Also, what are the long-term and short-term
eects on the supply chain? Otherwise, actions to manage a
temporary problem, such as a downturn in the economy,
might be incorporated in the practices, and will then eventu-
ally create a conict of goals. Thus, it is crucial in a cus-
tomer closeness model to keep customer focus and maintain
the capability of COP despite deviations in practices to facili-
tate performance improvements. Lean rationalization and
innovation responsiveness are not dierent sides of the same
coin; in the long run both need to be performed. Generic
strategies might be seen as metaphors, but heterogeneous
drivers and dynamics of supply chain practices will inuence
the adopted and implemented strategy and the incremental
adaptation needs to be revisited to learn about implications
and to generate timely supply chain advantages.
372
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SHORT BIOGRAPHIES
Benedikte Borgstrom (PhD Jonkoping International Busi-
ness School, Sweden) is a research fellow at the Division of
Industrial Marketing in the Department of Technology Man-
agement and Economics at Chalmers University of Technol-
ogy and research fellow and Vice Director at the Centre of
Logistics and Supply Chain Management in the Department
of Entrepreneurship, Strategy, Organization and Leadership
at Jonkoping International Business School in Sweden. Her
research interests include supply chain management logistics,
interorganizational relationships, supply chain integration,
supply chain strategies and supply chain dynamics, and com-
plexity related to supply chain practices.
Susanne Hertz (PhD Stockholm School of Economics,
Sweden) is a Professor at the Centre of Logistics and Sup-
ply Chain Management in the Department of Marketing
and Logistics at Jonkoping International Business School in
Sweden. Her research interests include supply chain man-
agement logistics, interorganizational relationships and stra-
tegic alliances, third-party logistics and services, supply
dynamics.