Centralized vs Decentralized Production Planning in ETO Environments: A Theoretical Discussion

Abstract

The characteristics of ETO production call for further analysis to investigate the implications of traditional (deterministic) systems of planning i.e., centralized, and hierarchal, compared with decentralized systems. Accordingly, this study delineates the potential implications of centralized and decentralized planning approaches in the context of ETO. Hence, the contradictory pressure for either decentralized or centralized approaches promote one-sided solutions accentuating the crucial significance of a theoretical discussion. Our analysis suggests that implementing decentralized systems should engender flexibility, transparency and responsive, which in turn can strengthen the impact of production planning on project delivery. In contrast, implementing centralized systems is likely to stifle the impact of production planning due to the rigidity, sequential interdependence, and the top-down nature of this approach. As such, our study provides opportunities for extending extant theory on centralized and decentralized production planning within ETO contexts, while providing a tentative framework for ETO practitioners that can be applicable when decisions concerning an (re)evaluation of production planning systems are to be made.