Postponement
Postponement Strategy
Materials Management
End Term Project
(Term –IV)
Date: 15th September 2009
Submitted To: Submitted By:
Prof. Vivek Kumar Namrata Agarwal(81031)
Prof. Kaushik Paul Neha Gupta(81034)
Contents
Chapter 1 4
Introduction 4 1.1 What is Postponement? 4 1.2 A specific example 5 1.3 Postponement in operation 7
Chapter 2 9
Literature Review 9
Chapter 3 14
When is Postponement Appropriate? 14 3.1 The Postponement/Speculation (P/S) Matrix 14 3.2 Costs & Benefits of Postponement 15 3.2.1 More variety 15 3.2.2 Inventory reduction 18 3.2.3 Better forecast accuracy 19 3.2.4 Inventory cost reduction 20 3.2.5 Logistics cost reduction 22 3.2.6 Improved customer service levels 22 3.2.7 Increased product development cost 23 3.2.8 Increased manufacturing cost 23
Chapter 4 24
Case Studies 24 4.1 Automobile Manufacturing: GM 24 4.2 Aircraft Manufacturing: Embraer 26 4.3 Clinical Equipments: Dade Behring 29 4.4 Sports Goods Manufacturing: Reebok 32 4.5 Xilinx 34
Chapter 5 36
Conclusion 36
Chapter 6 38
Future of postponement 38 6.1 Services and postponement 38
References 40
Chapter 1
Introduction
Over the past 2 decades, logistics activities have gained increasing strategic importance for most companies. Fixed costs of production have increased, consumer demands have become more complex and are harder to predict, both in time and place. Technology is rapidly changing and product life cycles have shortened while product range has increased. Now more than ever, companies are faced with the challenge of producing an increasingly large variety of products in a responsive manner while keeping materials and inventory to a minimum.
These issues represent significant challenges for companies producing and selling in a variety of international markets. Not only does
Materials Management
End Term Project
(Term –IV)
Date: 15th September 2009
Submitted To: Submitted By:
Prof. Vivek Kumar Namrata Agarwal(81031)
Prof. Kaushik Paul Neha Gupta(81034)
Contents
Chapter 1 4
Introduction 4 1.1 What is Postponement? 4 1.2 A specific example 5 1.3 Postponement in operation 7
Chapter 2 9
Literature Review 9
Chapter 3 14
When is Postponement Appropriate? 14 3.1 The Postponement/Speculation (P/S) Matrix 14 3.2 Costs & Benefits of Postponement 15 3.2.1 More variety 15 3.2.2 Inventory reduction 18 3.2.3 Better forecast accuracy 19 3.2.4 Inventory cost reduction 20 3.2.5 Logistics cost reduction 22 3.2.6 Improved customer service levels 22 3.2.7 Increased product development cost 23 3.2.8 Increased manufacturing cost 23
Chapter 4 24
Case Studies 24 4.1 Automobile Manufacturing: GM 24 4.2 Aircraft Manufacturing: Embraer 26 4.3 Clinical Equipments: Dade Behring 29 4.4 Sports Goods Manufacturing: Reebok 32 4.5 Xilinx 34
Chapter 5 36
Conclusion 36
Chapter 6 38
Future of postponement 38 6.1 Services and postponement 38
References 40
Chapter 1
Introduction
Over the past 2 decades, logistics activities have gained increasing strategic importance for most companies. Fixed costs of production have increased, consumer demands have become more complex and are harder to predict, both in time and place. Technology is rapidly changing and product life cycles have shortened while product range has increased. Now more than ever, companies are faced with the challenge of producing an increasingly large variety of products in a responsive manner while keeping materials and inventory to a minimum.
These issues represent significant challenges for companies producing and selling in a variety of international markets. Not only does
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