BTO is an abbreviation of “Build To Order”, which is a manufacturing industry that carries out “make-to-order manufacturing” in which products are prepared in the state of parts so that they can be customized, and after receiving an order, the product is assembled according to the customer’s request. It is a business model. We make full use of the Internet, etc., and provide products that meet the needs of our customers at low prices.
In conventional large-scale factories, low-cost products could be mass-produced, but it was not possible to make different products one by one. However, due to improvements in IT and production technology, BTO factories have achieved both low-cost mass production and flexible response while finely controlling the production flow through supply chain management. At that time, we are reducing the intermediate margin by dealing directly with consumers.
Although mere build-to-order manufacturing has been done for a long time, “BTO” is characterized by making full use of IT and production technology, mass-producing at low cost, and flexibly responding to individual requests. there is. This mechanism is sometimes referred to as “mass customization”.
It was the personal computer maker “Dell” that established an excellent BTO system and made its name known to the world. With the success of Dell, many PC makers have now introduced BTO, and PCs created in this way are sometimes called “BTO PCs”.
- 1 How to make a BTO( Build to order ) mechanism
- 2 Technology required to realize BTO( Build to order )
- 3 Benefits of BTO( Build to order )
- 4 Disadvantages of BTO( Build to order )
- 5 BTO( Build to order ) examples
- 6 Making the manufacturing industry a service industry
- 7 Summary
How to make a BTO( Build to order ) mechanism
Products that have diverse customer needs and can be divided into appropriate units
It is important that customer needs are diverse for products suitable for BTO, such as the computers, automobiles, shoes and clothing mentioned above. For example, there are various customer requests such as specifications required for computers and size and design for clothing. It can be said that BTO is suitable for BTO if the parts and parts that make up a product or service can be classified into appropriate units in order to meet these demands and not to miss the strength of mass production.
Utilization of IT for production and sales
In mass customization, it is necessary to have a mechanism that enables customization of products and services after understanding the customer’s taste in detail. We also need a production system that lowers costs and shortens the lead time to product sales. For example, like adidas and BMW, it is essential to utilize 3D printers, CAD and other information technologies at all automobile factories and production sites. This is because if the design information is digitized and transmitted, the 3D printer can properly select colors, accounting, materials, etc. for manufacturing. In addition, there is a large presence of IOT (Internet of Things) that monitors the operating status of machine tools and production lines, and Harley-Davidson, which is famous for motorcycles, leads delivery to customers by the factory that introduced IOT. The result is that the time is shortened by 2 to 3 weeks.
In order to flexibly change the production process, modularization of each process is a prerequisite. If one process has a large impact on another process, it is difficult to customize at low cost, so BTO can be realized because the process is easy to handle even with robots and 3D printers.
Technology required to realize BTO( Build to order )
Design technology is the first entry point needed to digitize customer needs and reflect them in product design, and a typical example is the technology called “generative design.”
With generative design, for example, with adidas, customers can design their own products by entering the color, shape, and design of their favorite shoes on the web browser (front end) . The completed design data is sent to the factory and used for production to realize manufacturing in a form that is as close as possible to the needs of customers.
Manufacturing technology refers to factory technology and equipment (back end) for actual manufacturing based on customer needs data sent from the front end side.
Specifically, a technology called “ digital fabrication ” is mentioned, and materials are cut out, processed, and molded based on data using digital machine tools such as CAD and 3D printers. It is also important to have equipment that can flexibly change the production line according to the order status. Therefore, back-end requirements include autonomous vehicles, industrial robots, IOT technology for transmitting and receiving data between machine tools, and wireless communication using 5G. BTO is expected to become even more sophisticated in the future when smart factories are expected to be realized.
A digital twin is a virtual model that is reproduced in digital space using real-world data so that reality and virtual become twins . The main feature is that data can be synchronized in real time by utilizing IoT, etc., and not only individual products but also processes such as production processes and operating environments of products can be reproduced.
Since BTO is a multi-product production, there is a problem that the movement of parts and machine tools in the manufacturing process is complicated and difficult to manage, so by utilizing the digital twin, the actual movement of the factory and the virtual space It is possible to detect in real time the part that does not match the result of the simulation in. Digital twin is a technology in the empirical research stage at the moment, but it has excellent compatibility with BTO, and it is expected that the production control capacity will be dramatically improved.
Benefits of BTO( Build to order )
Get the benefits of mass production and customization at the same time
Mass customization is a business model that can balance the advantages of mass production and the advantages of customization to some extent. As you can see from the cases of Dell and BMW above, BTO secures the production volume for each pattern by preparing a number of “patterns” of parts to be combined. As a result, mass purchasing and mass production can reduce product depreciation and production costs . Also, by shortening the assembly time, the lead time to shipment can be shortened, which can be said to be an advantage of mass production.
At the same time, mass customization allows you to change specifications according to customer needs and reduce the risk of inventory generation compared to when you have a wide variety of parts. The products that customers get have added value that is not unique to each product , so these are the benefits of customization.
Acquisition of fans
According to a survey by the American consulting firm Bain & Company, about 30% of consumers are willing to buy customized products for themselves.
For young people who post their daily lives on social media, they want a customized experience that they want to share with others. As a result, many fans will come to the customer-centered companies that meet the needs of each and every one of them.
Disadvantages of BTO( Build to order )
It is difficult to achieve both mass production and customization
If you put too much effort into BTO customization, you will approach pure customization, that is, tailor-made. It may seem like a good thing in terms of meeting customer needs, but be aware that excessive pursuit of customization will undermine the economies of scale of “cost reduction through mass production.” .. However, if too much standardization is promoted for efficiency, the added value of the product will not be created by commoditization (= homogenization). Therefore, it is important to prepare for the key points of the options that users can choose while promoting standardization in order to obtain the benefits of mass .
In addition, the transition to BTO requires a review of the company’s existing Seisan system and sales system. Resistance from the existing system is expected in the review.
BTO( Build to order ) examples
Founded in Texas, USA in 1984, Dell focused on the fact that PC parts were standardized and could be assembled, and received orders from customers by mail order, and from the outside according to each person’s wishes. We started the business of procuring parts and delivering finished products. Dell prepares several patterns for each PC part (CPU, hard disk, etc.) and sells custom-ordered products that meet customer needs using a build-to-order (BTO) mechanism based on a direct sales model. .. This epoch-making business model at that time was called “ direct model “, and Dell, which had a capital of only $ 1,000 at the time of its founding, became the second largest PC sales worldwide in 1998. Has grown into a company of. Customers can get customized products at a low price, and Dell doesn’t have unnecessary inventory, which is a big advantage for both parties.
Since shifting from mail-order sales to Internet sales in the latter half of 1990, we have been developing a service that appropriately procures models necessary for business and applications from past history by managing customer purchasing data.
NIKE is a successful example of BTO in recent years.
In 1999, the company launched NIKEiD, a service that allows users to customize sports shoes to their liking. It is supported by people who want to get their own shoes because they can design the lines, soles, strings, etc. written on the side on the website in detail.
Recently, due to technological advances, the development of devices such as 3D printers and 3D scanners that can make one-of-a-kind items as desired is progressing. Services that can make various things to order by utilizing these are also appearing. As technology develops further and more products can be made, the needs for full orders as well as easy orders such as BTO may increase in various fields.
Sporting goods maker adidas is a company that is focusing on selling products by BTO, and its big weapon is “ Speed Factory , which is a fully automatic factory of adidas in Germany. “is.
At Speed Factory, we use computer-based knitting machines and robots to automate almost the entire shoe manufacturing process. In addition, the factory uses 3D model technology that allows individuals to design appropriate shoe designs based on information such as shoe materials and foot shapes. These technologies make it possible to manufacture shoes that meet customer needs at low cost. In addition, since the ordered products are manufactured in a factory near the place of consumption, the cost and time required for transportation can be drastically reduced. Adidas has traditionally been produced by low-wage workers in emerging markets, but rising wages in emerging markets have made it impossible to take advantage of costs. Therefore, we have developed a production line centered on robots in Germany, which is the main consumption area and the location of our head office, so that we can flexibly respond to customer requests at low cost.
Harley-Davidson, which provides large motorcycles, is also one of the companies that implements BTO.
Harley’s appeal lies not only in its power but also in its “customizability”, and Harley-Davidson’s strength lies in its ability to build only one motorcycle in the world.
Harley-Davidson provides services that utilize BTO after understanding the characteristics of such motorcycles. In 2011, Harley-Davidson, which had manufactured and sold many genuine optional parts until then, launched “ Build your own bike” and provided a service that allows you to purchase custom motorcycles “from the beginning”. Did.
Customers can uniquely combine all parts such as seats, handles, wheels and mufflers to get their own bike from the start. Harley Davidson’s BTO is supported by a technology called “ smart factory “, which is by connecting lines, sensors, and various equipment in the product factory to the network. , It is a production concept that visualizes all information in production by centralized management of data. By managing product quality, production status, etc. with a system, we will maximize the benefits of systematization and maximize production efficiency.
“Industry 4.0”, which the German government works on as a national project, has the same concept as a smart factory.
Making the manufacturing industry a service industry
Traditional manufacturing has optimized the production process with the aim of delivering cheap and good products, but at BTO, the business model has changed to optimize the “purchasing experience” for customers rather than the product itself. doing. Looking at the situation in the recent manufacturing industry where even low-wage workers and robots can produce, it is thought that the management resources that can be in charge of manufacturing and assembly have become commoditized. Therefore, we have entered an era in which it is difficult to make a difference in the production process itself. If it is difficult to differentiate in the production process itself, it is desirable to differentiate by product planning and customer service, and attempts are being made to increase the number of fixed fans by grasping the needs of each individual through customer-centered marketing and raising brand awareness. Create better added value. Customers also find value in companies that have short lead times to delivery and good after-sales and maintenance.
As the case of Adidas and Harley Davidson tells us, the manufacturing industry is not just a business model that delivers products, but it is optimal for products that meet customer needs so that customers can “self-realize” with products customized only for themselves. It has changed to a business model that offers prices and lead times. The manufacturing industry is changing beyond “manufacturing” to a “service industry” that fulfills customer needs.
“Mass marketing” has been used for a long time in corporate marketing, but in recent years, “ one-to-one marketing ” that tries to meet individual customer needs has been conscious. .. Mass customization seeks to efficiently respond to these companies individually. BTO is not a factory-closed concept and requires optimization throughout the supply chain, reducing the cost of receiving customer requests and delivering them in a short amount of time in the entire process from receiving an order to delivering it. increase.
Efforts to advance the manufacturing industry by making full use of information technology like BTO are a global trend. In the United States, it is called “ Industrial Internet “, and GE and IBM are playing a central role in creating new business models. It is called “ Industry 4.0 ” in Germany and “ Fourth Industrial Revolution ” in Japan, and it is advanced information such as robots, artificial intelligence, and IOT that realizes them. It’s technology. Mass customization can be achieved by minimizing human control and autonomously adjusting the manufacturing process by robots and the like. In order to meet the needs of each customer, we aim to be a factory with customer satisfaction, and since the lead time is significantly shortened, it is also effective in reducing inventory and delivery costs.
The Fourth Industrial Revolution is about to begin, and like leading companies, implementing this concept requires major corporate transformation. In order to completely robotize the production line, there are issues such as securing highly skilled human resources who can handle advanced technology as well as technological development.
Furthermore, mass customization, which increases collaboration between companies, requires standardization and modularization of technology, and appropriate investment and management efforts are required to realize the ideal of achieving both differentiation and cost reduction.