Logistical postponement

In competition on lead times, distribution channels often get shortened or narrowed. Logistics postponement is an example. This term is understood as the replacement of a dispersed distribution structure... 

For example, the aim of the three-day car project is to complete paint, trim, final assembly and defivery of a car to dealer within three days (Holweg and Miemczyk, 2002). Many less ambitious postponement applications delay packaging, labelling, adding documentation or product peripherals until an order is received. If the decision is limited to peripherals such as type of power supply to a printer, or to whether the number of cans in a pack is 6 or 12, we call this logistical postponement. 

Finally, SCM has a direct impact on production and logistics assets utilization and on the entire inventory level, which represents on average around ten to 20 percent of sales. An improved supply chain performance, such as a potential ten to 20 percent increase in production asset utilization and/or a ten to 15 percent reduction in inventory levels, enables companies to postpone or even cancel planned capital expenditure. 

Assembly postponement refers to maintaining a product in a given state for as long as possible and customizing it after demand is realized. Thus, a set of products is replaced by a common platform product that is manufactured and customized only after demand is realized. Such an approach is also called design for logistics. This approach involves designing the product to reduce supply chain costs. 

The product line is broad, with more that 100 specific items carrying manufacturer stock numbers. Each item can also be finished with multiple ophons. Many products are also upholstered with custom fabrics. TLC can choose to have e wood finish done af fhe factory or by a local (Los Angeles) finisher — a form of "postponement" described in Chapters 26 and 27. TLC preferred the factory finish for consisfency and lack of hassles in arranging the logistics of moving fhe ifem to the finisher and back — and tracking each item in the process. 

The supply chain must be restmctured to implement postponement. Based on the extent of customization needed, the development team must redesign the product into a modular form. Manufacturing and assembly processes must be restructured to produce the modified components and the modules. Distribution logistics must coordinate the shipment of the core product to distribution centers with product customization at those centers (refer to Chap. 6 for further discussion). 

Purchase-postponement is comparable to supplier owning the inventory in the buyer s warehouse until needed by the buyer, as is the case in specific applications of vendor-managed-inventory. However, to implement purchase postponement the supplier must modify its logistics system to be able to transport large quantities of the item at short notice, controlled by the buyer. With a stable supply, the supplier s market power will be limited, and he would be receptive to changes in the procurement system. 

Peck, H. (2003) Creating Resilient Supply Chains a practical guide, and Understanding Supply Chain Risk a self-assessment work book. Available for free download, courtesy of the UK Department for Transport, at www.som.cranfield.ac.uk/som/scr. van Hoek, R.l. (1998) Reconfiguring the supply chain to implement postponed manufacturing, International Journal of Logistics Management, Vol. 9, No. 1, pp. 95-110. 

Waller, M. A., Dabholkar, P. A., Gentry, J. J. (2000). Postponement, product customization, and market-oriented supply chain management. Journal of Business Logistics, 21Qf, 133-160. 

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