Demand Flow

Revamping Methods
Staff Report  

  Many of the current problems in the auto industry can be attributed directly to antiquated methods of forecasting and fixed-volume manufacturing, says John Costanza, prominent consultant to the manufacturing industry.

  Costanza, the world’s leading expert in demand-based manufacturing, is challenging automakers to revamp production methods to be responsive to actual customer demand. “The automakers are doing things basically the same way they did in the 1970s and 1980s,” Costanza says. “Consequently, they focus on raw material while they hold huge, finished goods inventories, and now the discount-sale signs are out on the car lots. They need to transition to a business model that’s demand-driven, where they build and adjust volumes based upon what the customers buy. Old, fixed-volume manufacturing is not only outdated, it’ll be the nemesis of companies too set in tradition to change.”

  Costanza expresses concern with automakers’ focus to pinpoint schedules and delivery of raw materials based upon their fixed-volume production plans, which are built upon theoretical forecasts and not actual demand. “The industry needs to drive ...

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