Artificial Intelligence-Based Analysis of Material Supply Costs in ETO Companies Shifting to Mass Customization

Abstract

Currently, it is necessary to compete with other strategies, such as Mass Customization (MC), in modern and competitive environments characterized by market uncertainty. Industrial companies that work with engineering-to-order (ETO) production systems need appropriate “supply management” to achieve operational excellence, which allows for remarkable improvements in supply chain performance. The factors and practical improvements in the Supply Management function of ETO companies working in MC environments are identified in this study. These factors and practical improvements affect the raw margin of the operating account and the evolution of the purchase prices of repetitive parts. This paper presents the case of an ETO company shifting to MC strategies by applying the Cross-Industry Standard Process for Data Mining (CRISP-DM) methodology. The findings show that the introduction of component standardization programs has a direct and significant impact on account operations in a company. Thus, the cost of merchandise sold in total sales decreases by 1.34%, and the percentage of repetitive parts purchased increases by 10% if Early Purchasing Involvement (EPI) is used. This involvement employs a multidisciplinary team of design assessments (MTDA), improving more than 40% of the value of expenditures over sales, a direct improvement in the raw margin of the company’s operating account.