Improving Performance in Global Engineering-to-Order Supply Chain – Automation Industry Perspective

Abstract

Companies can choose a production model that best fits their market and customer needs. One such model is engineering-to-order (ETO) manufacturing, in which customer orders initiate both design and production processes. ETO environments have unique characteristics that limit the applicability of traditional production and supply chain management practices developed for mass or make-to-stock models. Accordingly, various approaches and applications have been developed to support operations in ETO environments; however, they remain limited in number and are scattered across different streams of research. At the same time, companies operating under the ETO model face increasing pressure to deliver customized products faster, which creates a growing need to improve supply chain performance in a dynamic environment. To approach these issues, this thesis first conducts a comprehensive literature review structured around two main themes. The first explores the key characteristics, challenges, and competitive factors of ETO environments. The second focuses on supply chain management strategies and principles and the application of Lean methods in ETO – particularly those related to lead time reduction. As a result, a summary of ETO characteristics was developed along with two conceptual frameworks – that were eventually integrated into a one revised framework. The research was conducted as an interventionist study, integrating theory and practice. Accordingly, the empirical part follows the theoretical foundation. Empirical data was gathered through 23 semi-structured interviews, seven additional meetings and three workshops that were held within the case organization. The findings were analyzed thematically and by utilizing the Gioia method. This combination enabled a detailed exploration of challenges and improvement opportunities within case organizations’ ETO environment. Being an interventionist study that aims to contribute to academic discussion, the thesis therefore provides several academic contributions. Firstly, it presents an extended synthesis of the ETO environment’s key features by integrating insights from a broad set of literature across various ETO industries published over the past decade. Secondly, it develops a comprehensive synthesis of SCM strategies and Lean-based approaches for ETO, focusing on lead time reduction. This synthesis consolidates fragmented knowledge into a unified conceptual structure. Thirdly, the thesis introduces a revised framework grounded in the FORRIDGE principles, addressing the need for structured, evidence-informed models suitable for complex, project-based ETO environments. The framework consists of six principles and related tactics aimed at reducing uncertainty and thus lead times in ETO supply chains. It is based on systems thinking as well as continuous learning and improvement. The revised framework expands the understanding of how the FORRIDGE principles can be generalized in the context of the automation industry, also offering refined and new tactics. Importantly, the proposed revised framework serves both researchers and practitioners by providing a practical tool that brings together tactics for lead time reduction and supply chain performance improvement in ETO environments. These findings support the theoretical development of integrated supply chain management approaches in ETO sector and respond to the identified need in the literature for integrating fragmented research streams.