We are facing uncertainty due to a variety of factors but uncertainty in demands from customers is most hurting one. To incorporate operational flexibility in supply chain and to better match supply and demand, we have started working on postponement. By using delayed differentiation, can we reduce uncertainty in our supply chain?
top of page
HP by implementing postponement maintains the same service levels with an major reduction in inventory and saving millions of dollars. Delayed differentiation is superior strategy over early differentiation under cost minimization or profit maximization. The supply chain flexibility plays a pivotal role in deciding any strategy.
Flexibility, adaptability or capacity to adapt, is fundamental to face the dynamic and uncertain business environment. If integration and adaptation results in increase of process efficiency then postponement would be strategy to adopt.
Under demand uncertainty, a flexible firm has the ability to postpone production until the actual demand is observed, whereas an inflexible firm has to decide production before observing the demand.