Postponement Strategies for Effective Warehousing

Written by Joseph Ng Tze Kau, DLSM

by Joseph Ng Tze Kau, DLSM

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.

Postponement in Processing
Combined pictures created by Joseph Ng Tze Kau, SIPMM (2020)

Postponement in Supply Chain

In modeling postponement, most researchers specialise in the manufacturing postponement; whereas this study extends it to the postponement of supply chain operations, namely, manufacturing, packaging, and logistics. Professional digital equipment and software system to supply chain as an example to model the optimal combinations among these operations’ postponement. The function of management tool to the optimal supply chain operations for postponements into consideration.

Disrupt Supply Chain
Diagram taken from: https://link.springer.com/article/10.1007/s40092-019-00322-2

Postponement in Logistics

logistic postponement refers to when a corporation delays one or more of the ultimate steps of manufacturing a product until it’s been purchased. While doing this, logistic postponement helps companies keep their costs down by saving the last expensive step of customization until the top, after a purchase has been completed.The most important element of supply chain management in an uncertain environment should be keeping track of even weak signals which will disrupt chain operations. Early information about changes address and improve chain management, for example, by changing the production and logistics strategy in certain fields. a crucial feature of today’s supply chain strategies is to strive to extend the level of flexibility while maintaining a high level of competitiveness, which is achieved by low prices and top quality products. Low prices successively mean the necessity to maintain low operating costs, especially variable costs. Supply chain flexibility are often achieved through the utilization of a multi-skilled workforce, versatile equipment and companies’ integration within the whole supply chain. Only then is it possible to regulate the chain to last-minute changes.

Postponement in Products and Processes Development

Companies that compete during a global market need to manufacture and configure products to satisfy the various needs and demands of consumers. The result from government regulations, or just differences in customer preferences and tastes. Uncertainty within the market place makes it extremely difficult to forecast product demands accurately. This leads to high inventory costs and low product availability. Postponement may be a strategy whereby the ultimate configuration of a product is delayed the maximum amount as possible, usually until a customer order is received. Packaging and labeling, bulk packing and final product integration. Effective implementation of postponement requires careful redesign of the products and therefore the processes involved. during this paper, conceptual framework for design for postponement, the appropriate cost drivers which will be wont to assess postponement strategies for a corporation.

Postponement in Packaging

Postponement packaging is an adaptation of manufacturing concepts that have arisen during recent years, primarily from the automotive industry. It provides an efficient way of managing the differences between the process manufacturing approach of pharmaceutical’s bulk production world of packaging and the distribution suppliers.

Packaging drugs
Picture taken from: https://www.saintytec.com/pharmacy-packaging-machine/figure-4-packaging-drugs/

Conclusion

Postponement may be a widely used manufacturing strategy. Dell’s success within the practice of supply chain management has generated an excellent deal of interest for companies to emulate its best practice excellence. Before embarking on postponement, companies have to be compelled to identify and fully understand the market requirements. The degree of uncertainty is critical for choosing an appropriate postponement strategy. Although it is difficult or impossible to get accurate information about the longer term, postponement may be a typical response to external uncertainty. The warehouse is an integral a part of the provision chain infrastructure becomes crucial in supporting and ensuring the success of the availability chain. The warehouse has producer and customer. The warehouse has got to play a lively role to make sure service excellence and repair levels arenot affected arising from uncertainties and inefficiencies within the system.

Video taken from:https://www.youtube.com/watch?v=dDxzlJJdxXI

References

Ee Soon Sern, DLSM. (2018). “Autonomous Mobile Robotics for Effective Warehousing”. Retrieved from SIPMM: https://sipmm.edu.sg/autonomous-mobile-robotics-effective-warehousing/, accessed 09/09/2020.

Khin WinKhant, DLSM. (2020). “Essential Factors for Evaluating Logistics Performance”. Retrieved from SIPMM: https://sipmm.edu.sg/essential-factors-for-evaluating-logistics-performance/, accessed 09/09/2020.

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Lee Huan Peng, DLM. (2017). “Mitigating Key Supply Chain Risks and Disruptions”. Retrieved from SIPMM: https://sipmm.edu.sg/mitigating-key-supply-chain-risks-and-disruptions/, accessed 09/09/2020.

Pannir Selvam P Marimuthu, DLSM. (2019). “Crucial Service Levels for Logistics Providers of Pharmaceutical Products”. Retrieved from SIPMM: https://sipmm.edu.sg/crucial-service-levels-logistics-providers-pharmaceutical-products/, accessed 09/09/2020.

Rick Chua Chee Hack, DPSM. (2019). “Technologies for Effective Pharmaceutical Warehousing”. Retrieved from SIPMM: https://sipmm.edu.sg/technologies-effective-pharmaceutical-warehousing/, accessed 09/09/2020.

Surendran, DLSM. (2018). “Adopting New Technologies for Effective Warehousing”. Retrieved from SIPMM: https://sipmm.edu.sg/adopting-new-technologies-effective-warehousing/, accessed 09/09/2020.

About the Author: 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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