Postponement in Manufacturing and Supply Chain

Postp championment in Manufacturing and Supply rangeIn general carrefourion go, galore(postnominal) of the end products sh ares some common figure out and some of them in the initial stages. At some limited even in the process, extraized processes or comp onenessnts are practiced to use of goods and servicesize the work-in-process, which was a common ( generic wine) product up to that assign in the process, into the assorted end-products. This orchestrate is referred as grade of product non-homogeneousiation. delay refers to re numbering the process to break the point of specialty. The point of eminence may occur in two stages of bring home the bacon stove, first it may occur in early stage which is referred as early level of handle and in the other representative it may occur in the late in the supply chain which is referred as late level of detainment. This concept had actu ein truthy been closely used in the logistics business (Shapiro and Haskett, 19 85). Even consumer products industries started using this type of concepts in their process to ameliorate their value for clients raises.In every scenario we need to follow a peculiar(prenominal) dodging for effective results. In Manufacturing and dispersion of products, we need to use the pastime structure, which describes the process in which product variety is proliferated. Lets go through the 5 important steps of a product in its supply chainManufacturing (2) Integration (3) Customization (4) Localization (5) PackagingHere these sequence of steps matches to most of the process flow in the industries.Manufacturing This is the initial step where the core of the product is made. Usually small numbers of products or a single generic product are made at this stage.Integration This is the step where all the main core products are assembled with the sub assemblies. For modelling in the case of information processing systems, the body ordain be made in the manufacturing stage and it ordain be assembled with the Mother board and circuits in this integration stage.Customization This stage refers to the tho assembly of the product with different accessories to form distinct product choices. For example in the case of computers, this is the stage where they insert all the necessary I/O cards, prove all necessary software systems and accessory boards constitute different end product options.Localization Here all the products are localised to suit the local requirements of different regions or countries. For example different countries may expect different power supply requirements and different languages for their manuals. We can count that each of the product options gets raised into more different end products for different places.Packaging This step sounds meaningful only for the few products, those requires some special agreeable of packing. For example in the case of Computers, monitors need to be packed properly so that they dont damage when th ey are in transit.Here the on a lower floor figure shows the product variety proliferation tree that branches out at various stagesDiag from pg 6http//e3associates.com/files/Article%2520-%2520Designing%2520Products%2520and%2520Processes%2520for%2520Postponement.pdfIn this context of product variety structure, postponement as a dodging to defer, it can be of two types assess Postponement and Form Postponement.Time Postponement This refers to delaying the various product differentiation tasks as late as possible. It is something like switching from Build-to-Stock to a Build-to- order mode (Zinn 1990).One more great advantage of this time postponement effectuation is related to the geographical perspective in which the differentiating tasks are performed. Usually these tasks will be performed at manufacturing factory, Distri exactlyion centers or scattering channels and customer sites. Here the earliest level of postponement refers to the case, when all the tasks are performed at the manufacturing factory. And the latest level of postponement refers to those, where the tasks are performed at the customer sites.This strategy is usually helpful in the case where bringing or distribution of a product is delayed until customer demand is known. This allows take stock to be reduced as it reduces the necessity to maintain inventories or stocks at distribution centers. Lets go through some case, which can give a kick the bucket idea of this strategy being used. Whirlpool, washing machine manufacturer has enforced this strategy very effectively in their US operations (Waller, et al, 2000).By one of their market re anticipate, they have found that most of the consumers dont expect their order to be delivered immediately, as most of them will be ordering for their new houses, into which they cannot coin immediately. So they redesigned their supply chain in such a bearing that the inventories in the department stores are kept to minimum and this delayed delivery until the orders have been sure. This reduces the need for cross docking to a great close and reduces stock list and transportation costs dramatically. In overall it improves customer operate and decreases stock outs.Form Postponement This strategy delays trusted stages in manufacturing process of a product until a customers order has been received (Zinn and Bowersox, 1988). This mainly aims at standardizing the upstream stages to the maximum extent.Here they follow a different kind of manufacturing strategy. At first, parts or components that are common to more than a model are used to build a generic platform. nowadays these semi finished items will be shipped to separate markets and specific countries or items are added when a customer order is received.Most of the computer manufacturers use this strategy in their operations. Most of the components of a computer are relatively generic and common to many markets (e.g. casing, mouse, board), while other components restricted to certain markets (e.g. power supply, differs from one country to the other) (Aviv and Federgruen, 1999).Usually demand in few places may be stable, demand in specific places may be unenviable to predict. Thus using Form postponement strategy, all the basic components of a computer are assembled at a central location. As these components have longer life cycle, compared to other components, the inventory risk is reduced at this stage. Then modules are sent to different markets and country specific or high value components are inserted, once the customer orders are received.Markets loss leader Dell is a classic example of this. By taking up a build to order (BTO) approach, the gild started maintaining very low levels of inventory (Radstaak, 1998). This strategy allowed the connection to improve their customer service, as their products can be customized on demand.Place PostponementThis strategy is used to redesign the location of process, in order to postpone the product differ entiation. HP had used this strategy in their operations in this case they put off their lowest assembling activities and made the final product at the distribution centre. This reduces the scrutinise costs and response time to the customer. This strategy can be utilise in seven different ways. The first one focuses on delaying the differentiation tasks to downstream in the final processing and manufacturing.Zinn and Bowserox 1988(manufacturing, labeling, assembly, packaging) postponement, lee(prenominal) and Billingtons(1994) time postponement, Lee and Tangs (1997) operations postponement, Lees (1998) Logistics postponement and van hoeks (1999) Place postponement all deals with the kindred strategy. Here are some places, where these strategies are utiliseed successfully.European computer manufacturer implemented this strategy they started assembling all their personal computers in their local distribution centre to the response of customers order, instead of completing in the factory. Then their focus turned in delaying the downstream movement of goods which is discussed by time and place postponement.Logistics postponement discusses about the movement of goods, which is a delay in deployment of inventory. Rover car manufacturer had implemented this strategy, which centralized the inventory from all his dealers, so that he can respond to customers quickly.If a company does not start manufacturing or assembly before customers order is received then it is existed the highest possible level of postponement. On the other hand if company is able to meet customer requirement as close as end user then it is the lowest possible level of postponement where maximum flexibility is existed.Decoupling Pointhttp//www3.unicatt.it/unicattolica/centriricerca/cersi/allegati/wp12009.pdfApplications of PostponementInventory reduction give way depend accuracyLogistics Cost reductionImproved Customer service levelsInventory Cost reductionMore VarietyRisk minimisationProcur ement cost reductionTransportation cost reductionManufacturing and procural cost reductionChallenges in PostponementProduct ModularityAbility to evaluate benefitsMisperception with risks, costs, benefits and general lack of understandingCompeting InterestVisibility into Supply ChainChange ManagementWhich signifies Top-down supportAbility to recognize Postponement Opport social unityFundamental changes to manufacturing and logistics processesToo costly to implementComplex to implementConsumes too much of management timeToo difficult to dress organizationallyCritical Success FactorsBusiness process reengineeringProduct design standardizationEnabling supply chain technologyCollaboration with Customers / Suppliers organizational design and accountabilityEnabling collaborative internet technology inherent cross-functional collaborationIssues relating to PostponementConclusionCase studyWhen we think of postponement and their advantages, Auto industry is the one which strikes the mind fi rst for many reasons. first of all a car can be described as a modular system of components. This shows that there is an opportunity for commonality by producing a platform and adding modular subassemblies customized according to the customers demand. Then secondly, individually customized vehicles have higher(prenominal)(prenominal) forecast variability. Since this case shows that there are too many varieties to be forecasted accurately of each combination, there is typically disagreement on the forecast within the different divisions of a company. Finally is high inventory holding costs. It is much riskier to hold a finished vehicle in the salesroom floor than to hold a partly finished one hold for final customization because of high forecast variability for end products and high obsolescence. popular Motors (GM) offers over 600 million combinations, when different combinations are considered. Because of these many options, forecasting be set abouts very difficult. Excess inven tory on the field is evidence of this. So they started to search for a way to create variety and mass customize beyond the idea of the platforms, GM looked at software configuration as a different way to use postponement. From software view, each of the systems in a vehicle can be considered as central processing unit (CPU) made up of several electronic control units (ECUs).At present they are using 30-35 ECUs per vehicle because software is becoming essential in railway carmobiles for many reasons. Before postponement, GM faced many problems regarding product variety proliferation and higher inventory costs of storing ECUs for individual models. Usually these ECUs come to GM in finished form with all the softwares pre-loaded. And each of this is assigned to a specific vehicle but they all looked same from outside. Suppliers charged GM for custom software installation which not only raised the price but also resulted in problems with repair and maintenance. Then GM decided to come to the responsibility for software configurations and postpone the installations till the latest possible point in the assembly process. Foe this to be executed, GM had to redesign some(prenominal) assembly process and the ECU hardware. Then in mid 1990s they achieved to install the custom softwares for individual orders at the end of the assembly process. direct the ECUs come from suppliers to GM in a generic form. After realizing that even software can be postponed, they started looking for other systems that could be delayed until purchase. Now GM offers 99 % guarantee to deliver the vehicle within one day of the projected delivery day to a dealer enveloping(prenominal) to the customer. In a study done by GM to measure the benefits of postponement, they have projected inventory cost savings to be 10-15 pct and even maintenance cost savings...Here GM has taken benefits of both outsourcing and postponement. All the subassemblies are outsourced to suppliers with the comparative a dvantage of expertise and quality. As auto industries go with predominately build-to-order manufacturing system, their suppliers need to commit to the increase demand for customized features instead of substance orders.