Innovative Quick Response Programs in Logistics and Supply Chain Management. Moreover, the inventory is maintained on the basis of the sales history to individual stores. For example, the full speculation strategy incurs low production and distribution costs but high customer service and high inventory costs, whereas the opposite applies to the full postponement strategy. Applying logistics postponement finished goods it seeks postponement opportunities in the final movement of products, which have taken their final form in advance of customer orders, to the customer. Firms can therefore achieve mass customization through postponement strategy without incurring huge operational costs that are associated with proliferating product variety.
It also allows the products to be customizes quickly before shipment to customer. There are various ways in which companies adopt postponement in supply chain. Product development postponement While the average design-to-sales cycle times in the apparel industry are more than six months, Zara has achieved cycle times of five to six weeks. According to the text Learning From Supply Chains: Benetton Group S. To solve the problem Bucklin developed ±the speculation concept for the aim of creating the speculation-postponement strategy. Logistics postponement In this type of postponement the manufacturing is based on forecasts. In undyed form, the fabric is more easily converted other uses.
When Dell started, this was not necessarily the case in the industry, however, Dell invented a new business model and leveraged postponement as a business model — not as a supply chain strategy — though, it then designed their supply chain to support this business model. 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. We present a summary of how postponement strategy was implemented in its supply chain and elaborate on all the benefits arising from the implementation of postponement. There is less risk of product obsolescence resulting from buffering inventories throughout the supply chain. The author describes that earlier that the company used the full speculation strategy. Looking at the drivers and such conflicting trade-offs, it becomes very clear why postponement is a great strategy that has done wonders for companies. The theorist believes that the closer the product is to its consumer, the more differentiated it becomes due to changes in unique tastes and demands.
A way round this is to use the postponement strategy at different parts of the supply chain, such as textile operations. These three companies have changed their postponement strategy from full speculation strategy to logistics postponement. Next in my is the postponement as a strategy. Dell Computers , one to be emulated. Furthermore, it gives Zara the flexibility to adapt to colours close to the selling season based on customer demand Ferdows et al. One of the earliest references to the concept was in a paper by Zinn and Bowersox in the. You can help Wikipedia by.
Till now in this series, we have covered the and as supply chain strategies and this is the third conventional I will be talking about. He has been a college marketing professor since 2004. The book is intended for researchers in supply chain management interested in conducting in-depth studies on postponement strategies. End user sales are monitored by the postponement specialists through point-of-sale data feeds from retailers. The finished products are transported and stored at a distribution centre or a regional warehouse. The final assembly then is carried put at the manufacturing plant.
Reduction of inventory in the system without affecting Customer service levels is one of the prime focus areas for companies. The farther the time window for which the demand is being forecasted, the more inaccurate it will be. Lastly on deferred packaging, it refers to packaging and configuring shipments in a local warehouse, for products with a global brand, standard formulation and different peripherals. The final consumer is places at the lowest level of the supply chain. They would need a long lead time and high inventories to use sea freight to ship the goods. Zara and Benetton are both firms that have used the manufacturing postponement strategy for fabric dyeing. You can continue reading more on the subject in the book.
However, all other color options that a firm wishes to provide in each product assortment may benefit from this. Many also perform procurement and supply chain management of various commoditised parts such as cables and cardboard packaging. Application of this strategy has created marvellous results. Postponement of consumer packing In this type of strategy the postponement occurs in packaging of the material. Van Hoek in 2001 claimed that it is important to analyze postponement not just on the marketing and distribution channel levels but also on the supply chain level. Initial costs to redesign products and setup late-stage configuration centres can be significant.
A: Market demands are constantly in flux as holiday seasonality dictates inventory needs. Finally, there is the fact that this helps keep your costs low until you've secured the sale. Postponement is not an absolute choice, it is an imperative forced by the type of industry, assortment, and demand patterns. The place for warehouse is chosen as to be at an optimum distance from the place where it is required at a particular time. By delaying the final configuration of the product for as long as possible it allows for last minute changes in the assembly of a product or it can allow for a for the company. Check out my books on.