Contents
This document reviews the paper – “Postponed manufacturing: a case study in the food supply chain”- van Hoek, Remko 1997, Supply Chain Management, vol. 2, issue 2, Bradford.
Description
The concept of postponed manufacturing has been considered, of late, as an innovative supply chain arrangement in a number of industries. The importance of postponed manufacturing lies in its applications contributing significantly to the integral supply chain improvement. Starting with a brief understanding of the term ‘postponement’, it refers to delayed decision-making about a product. The primary motivation for the postponement is a strategic decision by supply chains - to gain better information about customer demand by delaying product customization. In other words, “postponement enables forecasters to make better predictions about the end product demand.” (Rietze 2006)
As van Hoek discusses the use of postponement strategies with a case study of wine producers in his paper, he talks about the relevance of operating characteristics in the costs or benefits of postponed manufacturing at length while aiming to develop a decision model based on those characteristics. van Hoek’s paper elaborates the issue with a detailed literature review along with special reference to food industry. The final speculations of his examination of postponed manufacturing can be summarized as following,
Postponed manufacturing demonstrates four types of operational characteristics, which can be distinguished and categorized - a) product differentiation, b) process characteristics, c) technological characteristics and d) market characteristics.
In postponed manufacturing system, operational costs savings can be likely to result from postponed volume and value increase, which also influence transportation and inventory carrying costs.
