Supply chain processes postponement

In the context of a supply chain, process decisions include transportation, contractual relations with suppliers, supplier monitoring, warehousing, distribution, and postponement. Process decisions also include service levels, delivery schedules (e.g., just-in-time), vehicle routing, and crew planning. Product characteristics that may affect these processes are the degree of commonality across components, the way in which the components interact with each other, and the type of the interfaces between the components. For example, supplier relationships, service levels, and delivery frequencies, are all impacted by the number and type of components a product is made of. 

The impact of the new build philosophies on the downstream supply chain processes can be judged from Figure 1.6. While the traditional inventory profile shows a maximum number of days of stock (shown in the shaded area) at finished product level, this is risky. It always seems that demand is greatest for the very items that are not available Postponing the decision on exact specification until as late as possible in the process, when we are more likely to know precisely what the end-customer wants, helps to create the much flattened inventory profile to the right of the diagram. These are issues to which we return in Chapters 6 and 7. (A development of this case, tracking what happened next, is Case Study 7.12.)... 

Process characteristics Elimination of waste Smooth operation flow High level of efficiency Quality assurance Flexibility Market sensitivity A virtual network Postponement Selected lean supply chain principles... 

The Plan process covers the boundaries of the supply chain under consideration. As shown in Figure 23.1, this is presumed to be a multicompany affair. Each supply chain component can have Source, Make, and Deliver processes. These may be more or less important from partner to partner. For example, one partner may be a distribution company. Its Make component could be minor or nonexistent. Of course, a "make" capability could be significant as part of a postponement strategy. With postponement, also described in Chapter 26, the supplier commits to the final configuration late in the process — often in response to actual customer orders. 

In the competitive markets of today, positioning a company simultaneously in the domains of product, process, and supply chain is an imperative. However, the tradeoffs among the dimensions can be quite complex, as they are interdependent. The building blocks of a framework for such tradeoffs can be the product-architecture that maps the functions of a product to physical components and determines the configuration of product-variants. The framework must include tools for assessing attributes such as component commonality, product quality, technology, manufacturing processes, and postponement, as shown in Fig. 3.1. Thus, to obtain the optimal tradeoff, one may tweak the product architecture appropriately in view of the customer preferences. 

However, to implement postponement, companies need to restructure the supply chain - redesign the product and realign the manufacturing and delivery processes. The supply chain must be capable of supplying the basic product to the customization facilities, and it must be able to deliver the finished customized goods to customers quickly. As we discuss next, the modularization of products and processes makes it easier, in a relative sense, to restructure a supply chain (Fine and Whitney 1996 Fine et al. 2005). 

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). 

Postponement can be a powerful concept when customers are willing to wait a little for their orders to arrive. This delay offers the supply chain an opportunity to reduce inventories by postponing product differentiation until after the customer order arrives. It is important that the manufacturing process be designed in a way that enables assembly to be completed quickly. Given that customers are often willing to wait for delivery, several furniture and window manufacturers have postponed some of the assembly processes for their products. 

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