POSTPONEMENT STRATEGY IN SUPPLY CHAIN MANAGEMENT
Postponement is first implemented in manufacturing processes to reduce cost of inventory and improve service level within the company while the product variety increases. The concept of postponement is to delay the change in form, identity and place to the latest possible point until customer commitments have been obtained. It is by exploiting the commonality between items and by designing the production and distribution process so as to delay the point of differentiation.
Postponement is closely intertwined with modularization where products in a certain product family are designed where all of them consist of different standardized units. With modularization, combination of different standardized sub-components allows the producing of different end products.
The form, function and place of
the product are altered and is in contra with the push systems in which goods
are manufactured entirely in anticipation of future customer orders and stored
downstream without customer’s formulated specifications.
Postponement is a mass customization technique that
is applicable for certain products that can have their variety postponed until
just before shipping. Here’s a list of methods for achieving mass customization:
1. Create products and services that are
customizable by customers (involving design function)
2. Modularize components to customize finished
products and services (involving the manufacturing, distribution, marketing
function and the product design).
3. Provide quick response throughout the value
Chain (involving the design, manufacturing, distribution and marketing
function).
4. Customize services around standard products or
services (involving the distribution and marketing function).
5. Provide point of delivery customization (involving the marketing function).
Need for Postponement:
The application of postponement strategies is increasing in the practice of international business. Final processing or manufacturing activities are moving either upstream from national operations or downstream from global production plants.
The biological products life cycle of product is the concern in respect to inventory risks and this is in contrast with electronics industries where short product life cycles in the market are a key driver of postponement.
Postponement reduces the uncertainty and risks coupled with product variety. In additional, it saves costs and adds values to the supply chain by eliminating obsolete inventory and making the product to customer’s specification more easily.
The accelerating need for simultaneous product differentiation, rapid delivery, regional product variation and competitive cost levels are also the factors that led to the usage of postponement strategy.
TYPES OF POSTPONMENT
ACTIVITES
That there are three generic types of postponement:
1.form postponement
2.Time postponement
3.place postponement.
Form postponement: It refers to the postponement of final
manufacturing or processing activities
Time postponement: It refers to the delaying of the forward
movement of goods until customer orders have been received
Place postponement: It refers to the positioning of inventories
upstream in centralized manufacturing or distribution operations to postpone
the forward or downstream movement of goods.
With the combination of time and place postponement, it is
referred to as logistics postponement.
Depending on the type of final manufacturing operation, the type
of product and market,
There are four
possible final manufacturing structures in postponement:
1.unicentric manufacturing
2.bundled manufacturing
3.deferred assembly
4.deferred packaging.
Unicentric manufacturing:
In unicentric
manufacturing, the final stage of manufacturing is delayed until the point of
consumption. This type of postponement is used through integrated manufacturing
in a global manufacturing plant, distribution to order, for global brands with
standard formulation and peripherals for example CPUs.
Bundled manufacturing:
In bundled manufacturing, it is forecast-driven where final manufacturing in a continental plant, for products with a global brand, standard peripherals and different formulation, for example TVs.
deferred assembly:
In deferred assembly, it is order-driven where final
manufacturing or processing in the international distribution channel, for
products with a global brand and different formulation and peripherals.
deferred packaging:
it refers to packaging and configuring shipments in a local
warehouse, for products with a global brand, standard formulation and different
peripherals.
POSTPONMENT ACTIVITES
Five types of
postponements are there:
1.labelling
postponement
2.Packaging
postponement
3.assembly postponement
4.manufacturing
postponement
5.time postponement.
Labelling and packaging postponement: It is related to the
level of postponement in deferred packaging, both impacting the place and form
of the finished product. 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.
The distinction between
assembly and manufacturing postponement is the use of various sourcing
locations and the resulting converging stream of goods.
Manufacturing
postponement operation is obligated to have a complete job-shop layout in
manufacturing postponement which contrasts to assembly postponement systems
where products are sourced mainly from one source, only some peripherals or
additives may be sourced locally.
time postponement: it is related to the level of postponement in unicentric
manufacturing, in which the place of the finished goods in the supply chain is
impacted.
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