Postponement is a mass customization strategy that captures the advantages of both mass production and mass customization. Integrating supply with demand is a fundamental challenge for managers today. Postponement strategies in supply chain management t. Introduction to supply chain management supply chain management is now considered to be a key to competitiveness for global companies. As a marketing, logistics and manufacturing concept, postponement has been around in the literature for a long time. Logisticssupply chain strategy and planning prepared by dr. To cause or arrange for to take place at a time later than the time at which it was originally supposed to.
Postponement is widely used in the automotive, apparel, and consumer electronics industries. Postponement strategies in supply chain management springerlink. I have heard of postponement within 3pl and freight forwarding ser. Practitioners and educators need a common definition of supply chain management, and a shared understanding of the processes. Developed first to explain marine transport is less prone to accidents than other systems like nuclear plants nat supports the presumption. One other academic development during this period was the introduction of the customer order decoupling point codp sharman 1984 in a logistic context with the name of order penetration point opp olhager 2003.
Responsive supply chain inputs and outputs approvals are completed, shipping decisions can be made closer to the exfactory date, and so on. Apr 14, 2018 supply chain concepts in this video, we discuss on one of the most powerful supply chain strategy the product postponement strategy. However, only in recent times has it been used as a supply chain strategy. I appreciate the request to answer but i believe the answers already given paint the picture. For example, companies can improve manufacturing efficiency and capital utilization to maximize yield. They addressed the challenges of extending postponement research beyond the manufacturing context. Operations research united states air force academy, 2004 submitted to the department of civil and environmental engineering in partial fulfillment of the requirements for the degree of massachuseuts instife master of science in transportation of technology. Case studies of postponement in the supply chain by susan m. Developed first to explain marine transport is less prone to accidents than other systems like. Postponement is a mass customization technique that is applicable for certain products that can have their variety postponed until just before shipping. Postponement could be explained as the segregation of products at the closest point to the end user underlying the fact that if the goods are produced on demand rather than on forecast. Lean supply chain thinking was developed by toyota to develop their production capabilities through constant innovation in resource reduction and utilisation. The bestinclass are 70% more likely to segment demand by key product, customer, or channel characteristics. Lean and agile supply chain strategies and supply chain.
Complexity perspective of postponement natnormal accident theory accidents in complex system are presumed to be normal or inevitable. Reverse supply chain reverse supply chain refers to the movement of goods from customer to vendor. Yang and burns, 2003 another definition about postponement is late customization or delayed product differentiation. It has been widely acknowledged by practitioners may innovative business models were developed based on postponement principle, for instance, zara and dell business models 1 and by scholars. Nov, 2015 postponement strategy in supply chain management 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. More on postponement adapting postponement to the supply chain. The debate continues over the decision to develop a lean supply chain, an agile supply chain, or a hybrid model.
Jan 22, 2018 the five types of postponement are labelling, packaging, assembly, manufacturing and time postponements. The point of differentiation may occur in two stages of supply chain, first it may occur in early stage which is referred as early level of postponement and in the. Determine what type of postponement strategy the supply chain use and what factors hinder the use of postponement strategy in unibrands supply chain. Application of risk management techniques to supply chain decision making with the goal of maximizing. It has been widely acknowledged by practitioners may innovative business models were developed based on postponement principle, for instance, zara and dell business models and by scholars. Postponement strategies in supply chain management. The later the postponement point is sited in a process, the lower is the cost of providing variety. Postponement is a mass customization strategy that captures the advantages of. This is followed by the utilisation of normal accident theory to explain the role of postponement in supply chain risk management. Supply chain management is the integration of key business processes from end user through. As supply chain managers target even greater efficiencies, one overarching cloudbased strategy can be used to enhance cost improvements and performance. Postponement in supply chain manoj jhawar iit kanpur mba 2nd year, 20 2. Plus, get practice tests, quizzes, and personalized coaching to help you succeed. We recommend the definition of supply chain management developed and used by the global supply chain forum.
However, the motivation for implementing postponement policy in supply chain management confined mainly to the provision of incentives for reducing cost and improving the level of service, while increasing product variety to suit the changing demands of the customers role of warehouse in supply chain management. Postponement definition, to put off to a later time. A supply chain model for lean facilities considering milk. While the poor response implications of supply are often not elaborated on in the literature, postponement has recently been mentioned as a useful tool for managing supply risk and disruptions. Postponement manufacturing is a relatively simple theory, although its practice involves a high degree of collaboration and visibility throughout the supply chain. This reduces the incidence of wrong manufacturing or incorrect inventory deployment. Postponement is as an operations design principle to mitigate the negative impact of product variety on operational performance. Postponement is a concept in supply chain management where the manufacturer produces a generic product, which can be modified at the later stages before the final transport to the customer. More on postponement adapting postponement to the supply. Postponement as supply chain strategy the postponement strategy is based on the following two basic principles of demand forecasting. Sep 23, 20 it is also shown that supply chain responsiveness is associated with enhanced firm performance. Supply chain concepts in this video, we discuss on one of the most powerful supply chain strategy the product postponement strategy.
Control tower systems connect trading partners and service providers to create a. Based on this classification, two propositions are postulated. A leagile supply chain a lean supply chain focuses on promising the best. 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. Exercising strategic postponement creates additional value upstream and downstream in the supply chain. To interpret this in a more complete manner, this paper has attempted to explore the role of postponement in supply chain risk management from a complexity perspective. Pdf postponement in logistics strategies of global supply.
Also, the authors look at the relation between supply chain responsiveness and firm performance. Haim mendelson graduate school of business stanford university stanford, ca 943055015 abstract we model a supply chain consisting of a production facility, a distribution center and two di. Postponement and information in a supply chain krishnan s. Postponement postponement is a business strategy that aims to maximize the possible benefit and minimize risk by delaying current investment into a product or service until the last possible moment. A growing body of literature has begun to recognise that in the era of supply chain management it is important to look beyond the flexible factory to the flexible supply chain. Postponement is a very important concept used in supply chain management wherein the manufacturer on produces a generic product, to be modified at later stages before transporting it to the customer. The farther the time window for which the demand is being forecasted, the more inaccurate it will be. Supply chain management is primarily concerned with the efficient integration of suppliers, factories, warehouses and stores so that merchandise is produced and distributed in the right quantities, to the right locations and at the right time, and so as to minimize total system cost subject to satisfying.
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. Postponement refers to redesigning the process to delay the point of differentiation. A supply chain is a network between a company and its suppliers to produce and distribute a specific product, and the supply chain represents the steps it takes to get the product or. Supply chain flexibility has emerged from the manufacturing flexibility literature and hence to date is largely confined to a manufacturing context neglecting the role. The purpose of this paper is to examine the role of strategic supplier partnership and postponement respectively, on the relation between lean and agile supply chain strategy and supply chain responsiveness. With so many variations of final product configuration, a companys product design and supply chain strategy becomes critical to profitability.
The accuracy of the forecast demand decreases with an increase in the time horizon. A logistics network model for postponement supply chain. 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. The supply chain postponement strategy analysis business essay. Vice president and group director, supply chain and global supply management practices. The goal of the postponement is to delay the customization as late as possible in the supply chain. The council of logistics management defines postponement as the delay of final. However, if the marginal increase in unit holding cost at the point of di. Pdf implications of postponement for the supply chain. As a member, youll also get unlimited access to over 79,000 lessons in math, english, science, history, and more. How can packaging be a catalyst for business process change elsewhere in the supply chain.
The figure graphically represents this effect as a funnel. Anand the wharton school university of pennsylvania philadelphia, pa 19104. By employing the concept of postponement and combining it with a holistic view of the supply chain, a small number of best practice companies, some of which serve as examples in later sections, have managed to increase the performance of their firms and the supply chain as a whole. The five types of postponement are labelling, packaging, assembly, manufacturing and time postponements. Heres a list of methods for achieving mass customization. Jun 26, 2007 findings much of the existing research has a limited definition of supply chain flexibility and describes flexibility simply as a reactive means to cope with uncertainty. Pdf postponement in logistics strategies of global. 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. Postponement strategy in supply chain management mba. Postponement strategies and practices serve to reduce the anticipatory risk in a supply chain.
In other words, it means delay the point of differentiation processed in a supply chain as much as possible until the supply chain is cost effective grag and lee, 1998. Supply chain postponement strategy in a sme fashion supply. Supply chain definition and meaning collins english. To better understand postponement lets look first at the definition. We then hold this in inventory until the customer sends instruction to progress. Our experienced team will manufacture a generic version of the product up to embryo level. Memon department of industrial engineering and management strategy is the process whereby plans are formulated for positioning the. What might not be covered is how a logistics service provider accomplishes this.
Dec 08, 2006 with so many variations of final product configuration, a companys product design and supply chain strategy becomes critical to profitability. Glasersegura, phd slides from introduction to supply chain management, by david. Rietze submitted to the department of civil and environmental engineering on may 12, 2006, in partial ful. The point of differentiation may occur in two stages of supply chain, first it may occur in early stage which is referred as early level of postponement and in the other case it may occur in the late in the supply chain which is referred as late level of postponement. The bestinclass are 59% more likely to manage outside suppliers and partners in the design process than all others. This paper focuses on four interrelated strategies. May 24, 2010 by employing the concept of postponement and combining it with a holistic view of the supply chain, a small number of best practice companies, some of which serve as examples in later sections, have managed to increase the performance of their firms and the supply chain as a whole. Postponement, mass customization, modularization and.
Decision postponement to synchronize supply with latest demand signals 3. Mastering supply chain management can enable companies to. The role of warehouse for any manufacturing or trading. 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. Postponement, mass customization, modularization and customer. Take for example an umbrella manufacturer who does not know what the demand will be for different colored umbrellas. For example, companies can improve manufacturing efficiency. Supply chain meaning in the cambridge english dictionary. Supply chain postponement strategy in a sme fashion supply chain. Postponement definition of postponement by the free dictionary. Supply chain analytics for perishable products, springer 20 slides from principles of supply chain management.
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