Reconciling sales and operations management with distant suppliers in the automotive industry: A simulation approach

A challenge for car manufacturers is to adjust rapidly and efficiently the production capacities with a volatile market demand and despite distant suppliers. In this paper, we consider a sales and operations planning problem based on the actual situation of Renault, a French global automobile manufacturer. The issue is to find the best trade-off between sales requirements and industrial constraints while limiting inventories, emergency supplies and keeping delivery lead times reasonable for customers. A new planning method based on flexibility rates is presented. The flexibility rates are defined to limit orders of a given type of vehicles, during a certain period. A simulation model is introduced and captures the dynamics of the sales and operations management. A numerical study has been performed by using industrial data. Results highlight factors that improve system performances and several policies are compared. This research also has relevance for other industries that face long procurement lead times in an uncertain environment.