Built to Order (Bto) Model Is Used

¶ … Built to order (BTO) model is used since it is most applicable with vehicles and is, in fact, the value chain model that is often used in conjunction with vehicle producing manufactures. One doesn't know the end result or the client who will buy the product; therefore the product is only built once a confirmed number of orders have been received. It is the most appropriate approach for highly customized / configured orders and the Benz vehicles try to be just that. The Approach is also good for this company since holding inventories can be highly expensive and this approach diverts that.

In the context of Benz (or any other automotive context), the product is scheduled and built in response to the order of a final customer and it excludes dealers, national sales companies (NSC), point of sales, or other intermediaries in the supply chain.

Build to stock (BTS) is the most common model used in many companies today and reflects historical demand for product with products build before final purchasers have been identified. This model is useful for the vehicle industry since it enables dealers to equip the customer with a similar model from one of the dealers or supply shops. The vehicle can then be delivered as soon as transport is arranged which makes inventory holdings less expensive, frees up space in them, and justifies stock levels.

The BTS however has its disadvantages. Whilst providing rapid response to the consumer's desires, it however is also costly in terms of its holdings in stock (it takes up room), but also in terms of transportation as the vehicle may be geographically distant from consumer and require large distance to transport. The BTS may be one of the major reasons for the economic slump in the automotive industry. It is for this reason too that I advocate implementing of the BTO model instead.

The BTO model does not imply that orders should be built only when customers have been identified. This would be impractical. The best solution would be integration of BTS with BTO, with BTS stripped down. This is referred to as "hybrid BTO" and May save the company much expense in the first instance (or pure BTS) whilst allowing the company to satisfy consumers who suddenly desire a Benz vehicle.