10. Supply Chain Strategies to Sustain Economic and Customer Uncertainties

Previous research showed that passenger car manufacturing sector gets affected due to economic volatility and customer behavior pattern. In course of economic slowdown, inventory builds up and production rate suffers. While during recovery, backlog increases causing customers to shift brand loyalty. Besides, customer’s preference tends to affect the supply chain of a firm too. In passenger car sector, changes in pre-designed models have significant bearing on the lead time. Delay in adopting changes sought by the customers’ results in longer production time and obsolescence of inventory. The impact of economic variations on sales of cars has been analyzed through multivariate regression, and the dimensions explaining the customers’ buying pattern have been identified through factor analysis of responses obtained from car buyers. The purpose of this chapter is to establish a system dynamics model, to study the effect of economic volatility and customer’s buying behavior on supply chain of passenger car firms. The proposed framework will enable supply chain managers to carry out policy experimentation under different volatile situations arising out of exogenous factors. The proposed model is expected to address the major challenge, i.e., when there is economic instability with changing customer preferences.