Ideal Supply Chain Postponement Strategy
With rising customer expectations for customized products and demand for new innovative products all the time is making industry and market leaders jittery as they need to find ways to improve efficiency while remaining agile enough to respond to changes in the global marketplace. As a result, they are facing shortened product life cycles, with products becoming obsolete faster, companies are creating lesser quantity of goods as they are not willing to hold on to inventory for long.
One innovative response to this challenge is postponement, also known as “delayed differentiation.” Postponement is an adaptive supply chain strategy that enables companies to dramatically reduce inventory while improving customer service. Enterprises today are finding themselves warehousing finished goods that are just lying around without generating any revenue, affecting the bottom-line.
Most companies are today adopting the postponement model i.e. a demand-driven supply chain model wherein firms postpone the creation or delivery of the final product for as long as possible or till they get a confirmed order. This is having a positive impact on the bottom line as the decisions about the transportation of products or the conversion of products is postponed until an order is received. Thus companies work on a lean and mean supply chain.
To address the complexities of change related to postponement implementation, many companies are looking to outsource their supply chain with final assembly, configuration, test and packaging closer to the consumers. This helps to minimize the increasing occurrences of demand volatility. This increases profitability by reducing the inventory overheads, do away with obsolete inventory, increases intellectual property protection at the same time reducing warehousing, rework, freight etc.
Many companies are not open to accepting postponement as an option due to the mis perceptions that exist in the marketplace regarding the risks, costs, and benefits of implementing postponement strategies. Many of them do not understand the postponement strategy.
To successfully implement supply chain postponement and improve customer satisfaction while minimizing inventory costs, companies need to improve their ability to respond to changes in demand from local and global markets.
Learn more about :- warehousing services
Processing your request, Please wait....
