供应链管理第3版 postponement.docx

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1、Kellogg Graduate School of ManagementNorthwestern UniversityTeaching Note: PostponementThe first objective of this note is to outline the concept of postponement and its applicability to supply chain management. In outlining the concept of postponement, we will show that this concept works best unde

2、r specific demand, product, and production preconditions. We will further explore the impact of postponement on company strategy, capabilities, processes, resources and infrastructure. Also, we will outline the type of cost - benefit trade offs involved.Second, this note will illustrate the postpone

3、ment concept through a set of examples. In illustrating the functioning of the postponement concept, we will use five examples from a variety of industries. The companies in these examples used different approaches to make postponement work for them. The first three examples show companies who manag

4、ed favorably the trade offs between the costs and benefits of postponement. These examples include Hewlett Packard, who reconfigured its infrastructure to delay the point in the supply chain where products became differentiated to be able to better match supply with regional demand; Motorola, who re

5、designed its production process by delaying the point in which the most expensive module of the product was made part of the customized product; and a Large Chemical company, which changed the customer-supplier relationship to enable the full benefits of the concept to happen. Then we will show thro

6、ugh the example of a large consumer electronics company how the trade off between the costs and benefits of the postponement concept can be negative when the benefits to the customers do not exceed increased product cost. In the end, we will examine an example of a company where the outcome of the p

7、ostponement concept introduction is still unclear.Overview of PostponementThe concept of postponement lies in organizing the production and distribution of products in such a way that the customization of these products is made as close to the point when the demand is known as possible. Postponement

8、 belongs to a set of levers used in inventory management to attack the variability of demand and supply. This set of levers can be divided into proactive and reactive. Proactive levers directly attack the causes of variability, reactive levers help to cope with itsKellogg students Jeff Blount, Pete

9、Meindl, Marek Prach, Danny Su, and Fumi Takemura prepared this teaching note under the supervision of Professor Sunil Chopra as the basis for class discussion.Copyright 2000 (revised August 22, 2000) by Kellogg Graduate School of Management. To order copies, call (847) 491- 3603. No part of this pub

10、lication may be reproduced without the permission of the Kellogg Graduate School of Management. demand is more certain. This allows them to gain pooling effects and therefore, to better match supply and demand.Traditionally, most computer peripheral manufacturers have built one plant for a major mar

11、ket, such as the Americas, Asia, or Europe and then shipped product from this plant to regional distribution centers (DCs) around that market. In many instances, only one worldwide plant existed with shipments made from this plant to DCs around the world. These DCs provided quick response to custome

12、r orders for products and were needed in a major market to reach customers within a certain time window. This supply chain seemed to make sense since there were some economies of scale to having a centralized plant supplying an entire major market.Problem： However, there are certain problems with th

13、e traditional system that necessitated looking at the policy again. The first problem is the amount of finished goods inventory that must be carried in the local DCs. Since shipments come from a distant plant, not only did these DCs need to stock a large amount of inventory to compensate for the lea

14、d time, they also had to stock additional inventory to handle all of the product proliferation that took place. For example, in Europe, many different versions of a single printer model must be made due to the different power sources and sets of languages. Compounding this problem is the increasing

15、emphasize placed on speed. The lead time from when a customer orders a product to when they received it is being squeezed and HP had to find ways to reduce cycle time while trying to keep inventory costs low. This squeeze on lead times means that postponing back at the plant level is not an option.

16、Local DCs are needed to meet this short lead time demand. So how can the apparently contradictory goals of increasing service and reducing inventory be met?Management Decision and Outcome: The solution, following the postponement philosophy, was to actually build some assembly functions into their D

17、Cs. This way, the plant could send generic printers to the DCs and they could be customized there for the local markets. This allowed HP to take advantage of inventory pooling at the DC level which dramatically cut inventory. Certainly, it seemed that this would increase costs since there are econom

18、ies of scale to these manufacturing processes. However, the decrease in inventory more than made up for the increased cost in creating some assembly functions at the DC level. Essentially, what HP did was postpone the customization of the printer until the printer was actually in the geographic area

19、 where the demand was coming from and until orders were more certain. Implementing this type of supply chain is not easy because it takes coordination and investment, but the payoffs can be quite large.MotorolaOverview: Motorolas Land Mobile Products Sector/Radio Products Americas Group (RPAG) has r

20、ecently adopted a postponement manufacturing and distribution strategy for its two-way radio (pager) business. The shift towards postponement allows RPAG to carry more variety without increasing inventory. But on the other hand, the shift in strategy also requires additional investment in its wareho

21、use system.Problem: RPAG builds radios for many national, regional, and local retailers. These retailers often demand many different varieties in packaging, housing, and frequency because the ultimate end users demand variety. In the past, products would be manufactured to stock from different plant

22、s and then sent to the Atlanta DC.Management Decision and Outcome： The recent shift in strategy is making to order. The most expensive part of the radio, the circuit board, is still manufactured at various plants and sent to the Atlanta DC. At the DC level, pre-manufactured circuit boards are now pu

23、t in different housing, label, and packaging only after an order is received. With the new strategy, the DC can carry more variations of finished good products without tying up additional money in inventory. Furthermore, customer service also improves because the DC no longer needs to rely on the fa

24、ctory to ship special ordered products. The DC is able to customize packaging for short runs of special products.However, the new strategy also requires the DC to take on additional responsibilities. RPAG has evolved from a push to a pull operation. Consequently, the DC must now be able to track and

25、 move inventory more efficiently to meet customer demands. Thus, RPAG had to install a warehouse management system (WMS) to control the flow of inventories. Furthermore, RPAG also adopted vendor-managed inventory (VMI) for retail customers to better manage its inventory.The Large Chemical CompanyOve

26、rview: The polycarbonate business unit of this large chemical company manufactures a high-tech plastic that is used in many applications, ranging from car panels (e.g., Saturn cars) to bulletproof glass to Legos. Just as the applications vary significantly, the needs of the customers vary as well. S

27、ome customers require ignition-resistant plastic while others require transparent plastic. Many of these needs must be addressed in the manufacturing process through the addition of special chemicals to the mixture. Polycarbonate is not yet a commodity and is priced high relative to other plastics.

28、However, margins are still thin enough that small decreases in cost will lead to large increases in profit. The company is one of the three key players in Europe.Problem： The cost structure of the manufacturing process is higher if you produce many different products. Large set-up costs and run-size

29、 drive this higher cost. First, setup costs can be significant for products produced in small batches. The machinery used in the production process must be thoroughly cleaned before another product can be run, or chemicals will interact and the final product will not perform as designed. In addition

30、 to setup costs, smaller run-sizes lead to higher costs due to inefficiencies throughout the manufacturing process. Thus, the company is able to produce the same product at a significantly lower cost if it is produced in large-run sizes with minimal setups. Assuming that the pricing in the market is

31、 stable and margins are narrow, a small decrease in costs can have a large impact on profit. The companys Europe division wanted to find ways to use postponement in the manufacturing process in order to achieve the cost economies while offering the customers a full-range of products.Management Decis

32、ion and Outcome: The largest single product manufactured by the polycarbonate business unit was the standard clear transparent plastic. The remaining plastic products varied in units manufactured, but most were relatively small and, as a result, relatively high cost compared to competitors who sold

33、larger volumes. Management felt that the best opportunity for reducing costs was presented by the color compounds. These items were chemically similar to the clear product, but had a dye added in the final stages of the process. Though the dye was added in the later stages, it still required these p

34、roducts to be produced in a separate run. Management contacted key customers and explored the opportunity of selling the clear plastic and the color dye to customers and allowing them to mix it in their molding process. The key was that the dyeing process required certain skills from the customers,

35、and the company found that not all customers possessed these skills. However, a large enough number did that a significant portion of the volume could be sold in this manner.Customers benefited from the new system by paying a slightly reduced cost. The company benefited by reducing its costs more th

36、an what they passed on to customers. By postponing the coloration until the customer uses the product, significant value was created in the value chain. The companys manufacturing costs and safety stock both decreased as a result of the new system, and profit margins increased.The Large Consumer Ele

37、ctronics CompanyOverview: This large consumer electronics company entered the photocopier business in the 1980s, five to ten years after other Japanese copier manufacturers. At that time, other Japanese companies dominated the Japanese market and had considerable market share in the US and Europe. T

38、he dealer network was the key to success in this business since products require periodic maintenance and service. As a late comer, the company had difficulty in growing the business. Its world market share was less than 3% in the early 1990s.Problem： Copier machines are segmented mainly on copy spe

39、ed (copies per minutes, CPM), paper volume (number, volume and size of paper cassettes) and specification (zoom, etc). To establish a strong distribution network, it is very important to hold a full line of products because dealers tend to carry only one or two brands. The variety of products, acces

40、sories and consumables increased inventory throughout the supply chain from the factory to sales companies to dealers. Due to low volume sales, the companys production cost was higher than competitors. Its lead-time was longer because the company had to use a limited number of production lines for a

41、 variety of product segments.Management Decision and Outcome: To improve economy in production and lead-time, without reducing product line variety, the company introduced in the early 1990s a modular product design (see Exhibit 4) Number of main frames was reduced from seven to three. Two of them w

42、ere outsourced. High durability and speed adjustable (in factory) engines (which determines copy speed and durability volume) were designed for products from a low speed of 15 CPM to a high speed of 40 CPM. The number of engines was reduced from seven to four, and two engines were outsourced. Produc

43、ts were separated into subassemblies and accessories. Increased common components and consumables across the product line. Prices of each product segment were adjusted using product cross-subsidizingThere were four main benefits. First, standardization increased economies of scale in production. Sec

44、ond, it reduced lead-time. Third, it reduced components, work in process, and finished products inventory in the supply chain. Fourth, this increased the variety of configurations and allowed the configurations to be easily customized at the dealer level.This strategy was not successful, however, in

45、 expanding the dealer network and increasing market share. This strategy would have been more beneficial if variety in configuration was important. Although dealers needed variety in copy speed and volume durability, variety in configuration was not critical because most customers9 configuration req

46、uirements were similar. Modular design and expandability increased product costs at the highest selling configurations. Moreover, although the company tried to reduce cost by cross subsidizing across product lines, its low speed machines (less than 15 CPM) were not competitive because they had high

47、costs due to their high durability engines. Further, its low speed machines were too bulky for the rapidly growing small office and home office market segment. Finally, lower inventory costs were not persuasively communicated to dealers and was not enough of a reason for dealers to switch from other

48、 brands. The company had to modify its strategy and introduced low speed products separately from the modular type product line in the mid 1990s.Long Grove Confectionery Co.Overview： Long Grove Confectionery is a local, family-owned chocolate manufacturer that specializes in designing and manufactur

49、ing creative, high-end chocolate products. They sell a significant amount of their product through company-owned stores, though the majority is moved through wholesale channels. The wholesale product is sold primarily through catalogs, mainly the Christmas edition.The large product diversity, however, has led to some issues that detract from the firms potential financial performance. First, they incur costs when left with unused packaging inventory that must be discarded. Second, instead of discarding the produ