Improving supply chain performance through postponement strategy

Abstract

Managing high product variety and high demand uncertainty, while keeping operational and inventory costs under control and maintaining high customer service levels, is the supply chain challenge for many firms. An important and recent development in supply chain management is the concept of postponement strategy. Postponement delays an operational process to a later point in the supply chain, thereby delaying the point of product differentiation. Among other benefits, postponement strategy helps in reducing inventory levels, transport and operation lead times and transport costs, and facilitates responsiveness to customer demand. Demonstrating the concept through a number of case studies, Janat Shah and Balram Avittathur identify some industry segments that could benefit by the employment of the postponement strategy and list the relevant issues that organisations must address while attempting it.