Evaluation of postponement structures to accommodate mass customization

Abstract

In order to meet increasing customer demands for more diverse product offerings, firms are revising their supply chain structures to accommodate mass customization. The revised structures often involve delaying the delivery of the products until after the customer orders arrive, termed time postponement (TP), or delaying the differentiation of the products until later production stages, termed form postponement (FP). We develop models representing possible implementations of the TP and FP structures and compare their performance in total supply chain cost and expected customer waiting times. We find that once the number of different products increases above some threshold level, the TP structure is preferred under both performance metrics.For the most general model, a numerical experiment was designed to investigate how different factors affect the performance of the TP and FP structures. Through this experiment we show that higher arrival time and process time variations make the FP structure more favorable while increases in the number of products and higher interest rates make the TP structure more favorable. We also offer guidance to managers using either structure on where to allocate resources for performance improvement. For example, to improve the customer waiting times under the FP structure, increasing the coverage of the generic component and reducing the number of products provide larger benefits than reducing the variability of the arrival and process times. #

Mass Customization in Supply Chain Level: Development of a Conceptual Framework to Manage and Assess Performance

“…Literature positions postponement differently. Some recognize it only in manufacturing operations [2], [11], [32,33] while some others take a broad view and distinguish it in supply chain level specially emphasize on differentiation in distribution point [39]. Within those who consider postponement in supply chain level, many discuss about issues such as the conflict between product variety and quick response time [16], or product growth and cost control at certain point [32,33].…”

“…Within those who consider postponement in supply chain level, many discuss about issues such as the conflict between product variety and quick response time [16], or product growth and cost control at certain point [32,33]. Generally literature discusses about postponement by either focusing on types of postponement (time, form and place), their evaluation and comparison [11], [17], [39,40]; or targeting management of inventory to set optimal level of inventory [2], [8], [24], [32,33]. In both of these groups modularization has been recognized as an enabling method for efficient customization.…”

“…Partners characteristics Cost of postponement [8], [10], [17], [32], [33], [39] This factor refers to the cost associated to customization and is faced by supplier [2], [9], [12] This factor refers to the inventory level of partners. It is assumed that the inventory is used for uncertainties and it highlights the impact of penetration point on partners…”

An analytical framework for evaluating the value of enhanced customisation: an integrated operations-marketing perspective

“…Gupta and Benjaafar (2004) consider the capacitated production system and model the system employing form postponement as a two-stage system. Another study incorporating the queuing effect is by Su et al (2005). In this paper, the authors compare two specific configurations.…”

Concurrent Design of Product Modules Structure and Global Supply Chain Configuration

“…They define the scope of supply chain configuration decisions quite broadly to include supplier selection, selection of transportation delivery modes, determination of inventory quantities and stocking points, manufacturing processes to use and production time. Su et al, (2005), applied queuing theory to evaluate time and form postponement structures in a supply chain. Blackhurst at al., (2005), deployed a networkbased approach to develop and formalize the Product Chain Decision Model (PCDM), for describing the operation of a supply chain while considering decisions related to product design and manufacturingprocess design and the impact of such decisions on the supply chain.…”