Postponement is a deliberate action to delay final manufacturing or distribution of a product until receipt of a customer order. This will reduce the incidence of wrong manufacturing or incorrect inventory deployment. Postponement strategies and practices serve to reduce the antipatory risk in a supply chain. There are two types of postponement both utilizing warehouse/ Distribution centre. (1) manufacturing, or form postponement; and geographic, or logistics postponement.
How warehousing facilitates postponement strategies? (Elaborated Explaination)
Manufacturing Postponement
A buy situation
From the above diagram, generic sub-assemblies/standard or base product purchased from supplier are usually stored in a warehouse near the production plant and will only be pulled in when a customer commitment is received.
A make situation
A firm will manufactures a standard or base product in sufficient quantities to realize economies of scales through mass production while deferring finalizating of features, until customer committment is received. This generic base will be stored in a warehouse.
The operative goal of manufacturing postponement is to maintain products in a neutral or noncommitted status as long as possible. Through postponement, firm is able to reduce the number of stock keeping units(Costs) while supporting the marketing effort and retaining mass production economies of scales. Once product is customized, it will be able to serve different customers' requirements.
Activities like labelling, kitting and pre-assembly are often conducted at distribution centre level.
United Colours of Benetton example:
The clothings manufacturer mass produce clothes in white colour and then only dye/customize them until customer's order had been received.
Logistics Postponement
Full line inventory is built and stocked at one or a few strategic warehouse. The forward movement/deployment of inventory is delayed at the latest possible point in the supply chain until customer orders are received. Under the concept of geographical postponement, the risk of forward movement inventory is eliminated while manufacturing still enjoys economies of scales.
Example: The distribution centre would aggregate the demand from various Wal-Mart retail store leading to lower deviation in demand, often called risk pooling. Proctor and Gamble will deliver their products to Wal-mart distribution centres as requested. This will lead to minimal inventory investment for Wal-mart while meeting customer's committment.
2 – 3 usefulness of this topic in the distribution centre
- Reduce uncertainty in demand and investment in inventory.
- Able to provide mass customization services to suit different cilent needs.
- Improved customer service.
2 – 3 contraints of this topic in the distribution centre
- Man power at the distribution centre must be able to multi task and skilled to handle the various aspect of customization services requested by cilent.
- Logistical performance is heavily dependent on the DC. Once customers' order is received, most work are carried out there, from assembly/kitting/labelling to order fulfillment. Therefore, operations in the DC must be managed well by experience managers.
No comments:
Post a Comment