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Postponement Strategies for Effective Warehousing

Effective management of a supply chain includes thinking creatively about the way of integrate and perform logistics and manufacturing activities. Postponement and speculation strategies of products during a timely and cost-effective manner by the standard production and logistics structures. Supply chain have reducing risk and forecasting techniques, cooperation and integration between the manufacturing and logistics processes.

Supply planning
Diagram taken from: http://www.hesol.co.in/secret-recipe-to-solve-complex-supply-chain-issues/supplychain-scm-alvislazarus-consultant-hesol/

Businesses that depend on high volumes of easily accessible stock as a part of their operation, in-house warehousing is not usually an option. Cost effective route is that the utilisation of off-site warehousing, but finding the proper company is crucial to the on-going continuity of supply and distribution.

Warehouse management system
Picture taken from: https://lowrysolutions.com/blog/3-tips-for-ensuring-a-successful-warehouse-management-system-implementation/

Incorporating Postponement Strategies

In the short life cycle era, many companies struggle to survive by increasing their product spectrum to realize more market share. Pressure of such competitive environment including the problem of forecast, the planning of products tends to use the concept of modularity and postponement strategy in supply chain management. The environmental uncertainty profiles is developed to research postponement, speculation and hybrid strategies with diverse system properties to match the value effect incurred. Accordingly, the maker can utilize this model to work out which postponement strategy should be adopted to succeed in better performance.

  • Purchasing Postponement, which refers to the delayed purchase of high-priced and fragile materials or components.
  • Product Development Postponement, which refers to the market demand for lower-cost products, increased pressure to fulfill delivery deadlines, Particular interest, market demand and feature-rich products.
  • Logistics Postponement, which refers to maintaining a full-line of anticipatory inventory at one or a number of strategic locations. Products are often customized quickly in production facilities getting ready to customers.
  • Production Postponement, which refers to the development in addition as production strategy by considering demand and provide sides.
Uncertainty, Modularity
Chart pie created by Joseph Ng Tze Kau, SIPMM (2020). Reference from https://www.semanticscholar.org/paper/Adapting-Postponement-Strategies-with-Respect-to-of-Chang/241844451e45b15adfe134367e1047e3b9c30534/figure/0

Postponement in Manufacturing and Supply Chain

Specialized processes or components are to customize the work-in-process, which was a standard (generic) product up to point within the process, into the various end-products. now is referred as point of product differentiation. Postponement refers to redesigning the method to delay the purpose of differentiation. There are typically two stages in the supply chain for differentiation. The first is to occur at an early stage or early level of postponement and the second is to take place at a later stage, or  late level of postponement.

Implementing Postponement Strategies

Postponement is employed to realize customization and efficiency within one OS. Integration of the flow of data is required to realize a seamless integration of functions and therefore the sizable amount of (outside) companies involved within the physical sphere.Managing supply-chain integration, such as mass customization, postponement and modularization. While the goal of mass customization is to supply customized goods at low costs, postponement strategy focuses on delaying customization as on the point of the purchasers as possible. The customization and postponement of products architecture designs. Product customization can happen either supported a standard platform with additional options or supported combining and mixing-and-matching modules to realize different product characteristics. Strategy to facilitate assembly, logistics and outsourcing. Analyses of ‘modularization characteristic curve’, opportunities for modularization and interface constraints, which represent the mixture effect from interface compatibility effects, component customization, value inputs and supplier–buyer interdependence. Managerial implications of those strategies are discussed.

Postponement in Processing

Involves the delay of ultimate manufacturing until a customer order is received and is usually considered an approach to mass customization. This Customer Order Decoupling Point (CODP) would be better located further upstream within the manufacturing process.

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Joseph Ng Tze Kau, DLSM
Joseph Ng Tze Kau, DLSM
Joseph Ng Tze Kau has substantive years of experience supervising warehouse operations and managing deliveries of a distribution centre in the Food Industry. He is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). He completed the Diploma in Logistics and Supply Management (DLSM) on September 2020 at SIPMM Institute.
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