The postponement strategy is a powerful weapon to reduce the complexity. Postponement strategy reducing inventory in automobile. Postponement is certainly not a strategy for every apparel retailer, but it should be highly considered as part of ones manufacturing operations given the potential benefits that could come as. The council of logistics management defines postponement as the delay of final. This paper focuses on four interrelated strategies. We are familiar of great companies which have been pioneers of postponement implemented in varied degree of maturity levels. The main drawback of postponement strategy is the higher cost and risk of holding customization compo nentsproduct 8. Each postponement strategy is closely related to the corresponding supply chain risk.
Postponement strategy is one of the major supply chain management scm pr tices that has a discernible impact on rms competitive advantage and organi tional performance. Benefits of postponement for fashion products with forecast updates by. Since its introduction, postponement as a supply chain strategy has received a lot of attention in the operations management and the supply chain management literature. Thus, decision of productcustomiza tion and payment policy with postponement strategy be tween manufacturers and customers is an important issue, especially in china. Postponement is a strategy that allows businesses to take advantage of the o.
Pdf the application of postponement in industry biao yang. Jjs manufacturings configure to order or postponement manufacturing service is particularly attractive to customers wishing to take advantage of our cee contract electronics manufacturing facility ideally located in chomutov, czech republic which provides an agile gateway to europe for our uk and usabased oem customers. Companies are seeking strategic advice and consulting in order to facilitate the. Clearly, different types of postponement strategies have different costs and benefits associated with them.
Postponement strategies in supply chain management springerlink. Postponement fosters a new way of thinking about product design, process design and supply chain management. Local manufacturing will have a definite impact on the logistics industry, and will change the way businesses try and schedule their operations. Swaminathan and lee 2003 describes three enablers of postponement in. Jjs manufacturing s configure to order or postponement manufacturing service is particularly attractive to customers wishing to take advantage of our cee contract electronics manufacturing facility ideally located in chomutov, czech republic which provides an agile gateway to europe for our uk and usabased oem customers.
This reduces the incidence of wrong manufacturing or incorrect inventory deployment. Postponement strategies in supply chain management t. The decoupling point is pushed upstream of the supply chain to accommodate wider variety to satisfy customer demand figure 4. Making sense of postponement strategies latestage production and assembly help manufacturers meet customer expectations for product customization mass customization and highly configured products are increasingly becoming the new normal in manufacturing. Postponement manufacturing is a relatively simple theory, although its practice involves a high degree of collaboration and visibility throughout the supply chain. In this strategy, all manufacturing operations are.
Also, local manufacturing can also tackle inventory concerns. As it is mentioned above, postponement can be divided into two kinds, one called form postponement, which avoids the vendor based on a forecast of production of the final product form different types of products. Nov 14, 2010 as a marketing, logistics and manufacturing concept, postponement has been around in the literature for a long time. Nov 11, 2016 it is also called as delayed product differentiation or late customization. To the best of our knowledge, there exists no paper studying the interaction between inventory and postponement in a supply chain with perishable. Postponement, mass customization, modularization and customer. The postponement strategy dictates that the firms should postpone the creation or the delivery of the final product as long as possible. For retailers, this takes the shape of postponing the delivery of the final product to its destination. Our experienced team will manufacture a generic version of the product up to embryo level. Similarly, form postponement type of strategy enables the organization to defer the point of differentiation in particularly when the standardization of components is required for better product integration. Implementation of the postponement strategy automotive. With bantas physical presence in a number of countries, including the u. Postponement strategy is one of the major supply chain management scm pr. Dell computers buildtoorder online store is the best example of this strategy.
More on postponement adapting postponement to the supply chain june 10, 2007 postponement is an operations and supply chain strategy that many companies are only beginning to see the full potential of. Assembly and manufacturing postponement refer to situations where additional assembly or manufacturing may be. Postponement for profitability 5 manufacturing at a point closer to the consumer. More on postponement adapting postponement to the supply. May 22, 2007 this research widens the scope of the use of postponement by addressing how the generic supply chain structure and information sharingrelationship among supply chain actors affects the postponement decision, based on empirical data of chinese manufacturers in the pearl river delta. The point of postponement can occur as early as the design phase and as late as packaging and distribution. The purpose is to determine what type of postponement strategy the supply chain use and what factors can hinder the use of postponement strategy in a sme fashion supply chain by applying an qualitative research approach.
Postponement as supply chain strategy next in my series on supply chain strategy is the postponement as a strategy. Postponement strategy is one of the major supply chain management scm. Postponement is a strategy that allows businesses to take advantage of the offshore capacity and labor for manufacturing in addition to local finishing centers for final assembly, packaging, and distribution. Through this blog, i would like to share critical drivers and few design principles for a right postponement strategy and urge each one of you to give comments, share your opinion and point of view. Jeff hoi yan yeung department of decision sciences and managerial economics, faculty of business administration, the chinese university of hong kong, shatin, hong kong, peoples republic of china. Using postponement as a rescheduling strategy in the. The paper then discusses the meaning of each delay strategy and how to reduce the supply chain risk. Postponement is a mass customization strategy that captures the advantages of. In packaging postponement products are not packaged into individual packs until final orders are received.
Reviewing postponement in the south african automobile. Manufacturers proactively make products up to the point of differentiation, and then reactively complete a customised version to satisfy a unique or smalllot requirement. Postponement strategy in supply chain management mba. Pdf implications of postponement for the supply chain. One innovative response to this challenge is postponement, also known as delayed differentiation. It dictates that the firms should postpone the creation or delivery of the final product as long as possible. Only 3 in 10 manufacturers have implemented key digital manufacturing technologies. The primary outputs of the business strategy process are. The second half of the article determines the feasibility of a manufacturing strategy, postponement, as a possible solution for the companies to adjust and cope with the volatile customer demands and new generation of technologies towards more responsive production and customizable products. They also suggest that the lean based strategy is the best option when the order winner is cost, and that an agile based strategy should be preferred if the order winner is customer service. Postponement is an adaptive supply chain strategy that enables companies to dramatically reduce inventory while improving customer service. Postponement strategy from a supply chain perspective. Postponement strategies and practices serve to reduce the anticipatory risk in a supply chain.
Here they follow a different kind of manufacturing strategy. Oct 25, 2014 this has resulted in huge savings in time and cost for the company. Postponement strategies in supply chain management. An example of this strategy is dell computers buildtoorder online store. Oct 29, 2010 postponement as supply chain strategy next in my series on supply chain strategy is the postponement as a strategy. The purpose of this paper is to assess and document the progress of postponement research, identify current gaps, and provide direction for future research efforts. Managerial consensus customer segmentation and customer value proposition the mission of the business supported by industry structure and competitive positioning analyses the strategic agenda of the business the strategic agenda of the adaptive. Postponement is defined as a strategy that intentionally delays the execution of a task, instead of starting it with incomplete or unreliable information input yang et al. One of the earliest references to the concept was in a paper by zinn and bowersox in the journal of business logistics. Use a postponement strategy, wherein you maintain inventory of only the base product at retailerdistributor. Manufacturers are learning that one simple linear flow doesnt allow for the high degree of variables contained in product offerings today. Structuring postponement strategies in the supply chain by. Case studies of postponement in the supply chain by susan m.
This strategy delays certain stages in manufacturing process of a product until a customers order has been received zinn and bowersox, 1988. Further downstream, there are gains in terms of transportation and warehousing cost reduction, such as lower cost of goods sold, total landed costs, and inventory positions. Dec 08, 2006 with bantas physical presence in a number of countries, including the u. Postponement is a business strategy which maximizes possible benefit and minimizes risk by. Analysis of postponement strategy for perishable items by. Sony, toyota, dell, ikea, xilinx, hp and asian paints are great success stories. Using postponement strategies to reduce planning uncertainty in meat supply chains willem a.
The goal of the postponement is to delay the customization as late as possible in the supply chain. However, only in recent times has it been used as a supply chain strategy. The most similar one to our work is the research of ananth v. More on postponement adapting postponement to the supply chain.
The supply chain postponement strategy analysis business essay. Postponement is a business strategy which maximizes possible benefit and minimizes risk by delaying further investment into a product or service until the last possible moment. By leveraging the capabilities and processes of logistics service providers, companies can rapidly acquire postponement competencies. Customization of products is possible with additive manufacturing. Backhouse abstractit has been well documented that the growing im to prompt and further progress the implementation of post portance of postponement is significantly driven by the current ponement, it has been well. But designing a postponement strategy involves various aspects not every product or supply chain needs postponement. Although every strategy presents pros and cons, some are more adequate given different circumstances. Customizing base product this process can be classified under jobshop, and can be carried out to add value to the customer. Postponement, mass customization, modularization and. The adverse effects of inventory pileup have become more pronounced over the years. A absolute first priority postponement will hurt competitive position significantly. The manufacturing is completed as per the customers requirements.
Manufacturing postponement products in semifinished forms and can be customized quickly in production facilities. At its core, postponement strategies in supply chain management analyzes how both pull postponement strategy and form postponement strategy can be leveraged to yield substantial benefits to adopting firms in different competitive. For assembly and manufacturing postponement, it is in related to bundled manufacturing and deferred assembly where both impacting the form and place of the finished product and also its function. Manufacturing base product make this as continuous process to achieve economies of scale. Despite much existing research in the area, no one book devoted solely to postponement has been published. Postponement strategy is successful in a wide range of supply chain sectors such as automotive, food and fashion, which require high differentiation. However, postponement is not an omnipotent strategy. The full speculation strategy can, in one way, be compared to a mts production strategy. Within supply chain management scm, postponement is a deliberate action to delay final manufacturing or distribution of a product until receipt of a customer order. In many ways, it is a direct contradiction to the lean principles and focus on completion speed that has dominated manufacturing for the last two decades.
Labelling, packaging, assembly, manufacturing and time. Benefits of postponement for fashion products with. As a marketing, logistics and manufacturing concept, postponement has been around in the literature for a long time. Pdf postponement strategy from a supply chain perspective. As most of us know, postponement is one of the strategic initiatives adopted by companies to build an agile supply chain. Postponement is a strategy that delays product differentiation decisions until a later point. Till now in this series, we have covered the lean and agile as supply chain strategies and this is the third conventional supply chain strategy i will be talking about. For example, with packaging postponement, inventory. The second half of the article determines the feasibility of a manufacturing strategy, postponement, as a possible solution for the companies to adjust and cope with the volatile customer demands and new generation of technologies towards more. A product design strategy that shifts product differentiation closer to the consumer by postponing identity changes, such as assembly or packaging, to the last possible supply chain location. The postponement strategy leverages the above characteristics of demand forecasting. This mainly aims at standardizing the upstream stages to the maximum extent. Applying the matrix into zara, the company uses the full postponement strategy, where the manufacturing and logistics operations are initiated after the knowledge on customer demand. Postponement can be a powerful strategy for managing product variety.
That there are three generic types of postponement. Pdf the application of postponement in industry biao. Nov 23, 2016 postponement is certainly not a strategy for every apparel retailer, but it should be highly considered as part of ones manufacturing operations given the potential benefits that could come as. Postponement refers to a concept in which activities in the supply chain are. Postponement became an attractive strategy due to manufacturing agility and a shift away from make to stock strategy. This process makes postponement manufacturing both proactive and reactive. It is also called as delayed product differentiation or late customization.
To better understand postponement lets look first at the definition. The local dcs had the job of assembling a final product complete with instruction manual. Only 25% can move production across any of their facilities and contract manufacturing partners anywhere in the world. Labelling and packaging postponement is related to the level of postponement in deferred packaging, both impacting the place and form of the finished product. Managerial consensus customer segmentation and customer value proposition. The distinction between assembly and manufacturing postponement is the use of various sourcing locations and the resulting converging stream of goods. Postponement can take on many forms for a variety of products.
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