Growing product proliferation and increasing demand for customized products have proven the conventional speculation strategies as inadequate. As the demand realization period approaches closer, supply chain planning, based on these speculations, starts to crumble. Uncertainty of demand decreases towards the demand realization period since information about customer preferences is more accurately available at this stage. Therefore, many companies try to postpone the activities for as long as possible, so that more reliable information about the customer preference is available. Though the postponement strategy has been in existence since the 1950s, its potential benefits have been realized only recently. The aim of this paper is to explore the various postponement strategies that can be implemented, the benefits reaped from each of these, and the factors affecting the decision of adopting each of these strategies. An attempt has also been made to study the impact of postponement on the supply chain performance. The benefits of postponement have been explained using a case study of Benetton in the article.
The
concept of postponement was first developed by Alderson (1950)
from the marketing point of view. He argued that the uncertainty
imposed by customer demand can be minimized by postponing
the differentiation of products (form, identity or place)
since every differentiation renders the product suitable for
one segment of customers and unsuitable for the other. Over
the time, the logic of postponement has been extended to other
areas like purchasing, manufacturing, logistics, distribution
and promotional processes, too. Researchers have tried to
classify and define various types of postponement strategies
based on where and when each type of strategy is applied.
Zinn and Bowersox (1988) classify postponement strategy as
Form Postponement (including packaging, assembly, labeling
and manufacturing postponement) and Time postponement. According
to Bowersox and Closs (1996), postponement can be classified
as Logistics Postponement (combination of time and place postponement)
and Form (manufacturing postponement). Based on the degree
of postponement required, Pagh and Cooper (1998) defined four
types of postponement strategies: Full speculation, Logistics
postponement, Manufacturing postponement and Full postponement
strategy. According to Yang et al. (2004), postponement
can be classified based on the modularity of the product and
uncertainty of the product demand. They classified postponement
as Product Development postponement, Purchasing postponement,
Logistics postponement and Production postponement. |