Globalisation And Fierce Competition Leading to Shorter Product Life Pattern Business Essay

In a time of globalisation and fierce competition, the intro of products with shorter and shorter life circuit and the heightened expectations of customers have required companies to invest in and target attention on their supply string. Companies must have the ability to configure and utilize worldwide resources to keep up with your competition. It includes sourcing products from most appropriate manufacturing facility, keep balance between inventory, transportation and creation cost and match source and demand under doubt (Simchi-Levi, Kaminsky & Simchi-Levi 2003). Together with the significant increases in different products, in conjunction with needs for higher throughput and reduced inventory, postponement will be one of the strategies utilized by the companies. The aim of this essay is to examine into the hyperlink between postponement and warehousing. The goal of this article is to discuss how a warehouse may play a role in postponement. This article will start by understanding the concept of postponement, the need and consumption of postponement and types of postponements with different postponement activities and its own lead time and pattern time restrictions. It'll then check out the issues of inventory and warehousing such as the tasks of the warehouses and the syndication methodologies. It will conclude by linking the use of warehouses in the practice of the postponement strategies.

Concept of postponement

Postponement is first applied in manufacturing operations to reduce cost of inventory and improve service level within the company while the product variety boosts. The idea of postponement is to hold off the change in form, personal information and location to the latest possible point until customer commitments have been obtained (Battezzati & Coletta 2008). It is by exploiting the commonality between items and by planning the creation and circulation process to be able to delay the point of differentiation (Tayur, Ganeshan & Newspaper 1999). Postponement is meticulously intertwined with modularization where products in a certain product family were created where most of them contain different standardized units. With modularization, blend of different standardized sub-components allows the producing of different end products (Dekkers 2009). The form, function and place of the merchandise are altered and is in contra with the drive systems where goods are manufactured entirely in anticipation of future customer purchases and stored downstream without customer's formulated requirements (Hoek 1997). Anderson (2004) published that postponement is a mass customization technique that does apply for several products that can have their variety postponed until just before shipment. Hoek (1997) illustrated a list of methods for obtaining mass customization

Create products and services that are customizable by customers (concerning design function)

Modularize components to personalize completed products and services (involving the manufacturing, distribution, marketing function and the product design).

Provide quick response throughout the value chain (involving the design, manufacturing, circulation and marketing function).

Customize services around standard products or services (involving the circulation and marketing function).

Provide point of delivery customization (involving the marketing function).

The need and use for postponement

Hoek (1997) stated that the application of postponement strategies is increasing in the practice of international business. Final processing or creation activities are moving either upstream from national businesses or downstream from global development plants. The natural products' life circuit of product is the matter in respect to inventory risks and this is on the other hand with electronics market sectors where brief product life cycles on the market are a key drivers of postponement. Postponement reduces the uncertainty and risks in conjunction with product variety. In additional, it saves costs and gives worth to the resource chain by eliminating outdated inventory and making the product to customer's specification more easily (Baluch 2006). The accelerating need for simultaneous product differentiation, quick delivery, regional product deviation and competitive cost levels are also the factors that led to the utilization of postponement strategy (Hoek 1997).

Types of postponements

Bowersox and Closs (cited in Hoek 1997) stated that we now have three common types of postponement: form, time and place postponement. Form postponement identifies the postponement of final manufacturing or handling activities; time postponement identifies the delaying of the ahead movements of goods until customer orders have been received; place postponement identifies the positioning of inventories upstream in centralized creation or distribution operations to postpone the ahead or downstream movements of goods. While using combination of energy and place postponement, it is referred to as logistics postponement. A good example is whereby in centralized Western distribution buildings where goods are stored at a limited quantity of central locations and transported to customers on the basis of actual purchases.

Depending on the kind of final manufacturing operation, the sort of product and market, Cooper (cited in Hoek 1997) specified four possible last manufacturing structures in postponement: unicentric production, bundled making, deferred assemblage, deferred presentation. In unicentric developing, the final level of creation is delayed before point of intake (Tayur, Ganeshan & Publication 1999). This sort of postponement is used through integrated manufacturing in a worldwide manufacturing plant, distribution to order, for global brands with standard formulation and peripherals for example CPUs. In bundled making, it is forecast-driven where last creation in a continental place, for products with a global brand, standard peripherals and different formulation, for example Tv sets. In deferred assembly, it is order-driven where final manufacturing or processing in the international circulation route, for products with a worldwide brand and various formulation and peripherals. Lastly on deferred presentation, it refers to presentation and configuring shipments in a local warehouse, for products with a worldwide brand, standard formulation and various peripherals (Hoek 1997).

Postponement activities

Zinn and Bowersox (cited in Hoek 1997) shown in another fashion that give attention to the actions. Five types of postponements are stated: labelling postponement, presentation postponement, assemblage postponement, processing postponement and time postponement.

According to Hoek (1997), labelling and presentation postponement is related to the amount of postponement in deferred presentation, both impacting the place and form of the finished product. For assemblage and developing postponement, it is at related to bundled production and deferred assemblage where both impacting the form and host to the done product and also its function. The variation between assemblage and making postponement is the utilization of various sourcing locations and the producing converging stream of goods. Making postponement operation is obligated to have a complete job-shop structure in production postponement which contrasts to assembly postponement systems where products are sourced mainly from one source, only some peripherals or additives may be sourced locally. And finally on time postponement, it is related to the amount of postponement in unicentric creation, in which the host to the finished goods in the resource string is impacted.

Examples of postponements strategies

Robeson, Copacino and Howe (1994) have shared some examples of different postponement strategies utilized by various companies. Benetton have used developing postponement or bundled production where the fabric are dyed after the conclusion of the stitching processes, in which these are more in a position to behave quickly and deliver products of higher variety. Dell Computer systems is one of the illustrations where its standardised sub-components are retained ranking by and the product is assembled after order within the set up postponement or deferred assembly buildings. Hewlett Packard is another company that uses the presentation postponement strategy or deferred packaging where it handles the multilingual requirements of its customers through presentation postponement by including an instruction manual relevant to the terminology of the customer at the point of sales. An example for labelling postponement is perfect for companies in food market sectors. Labelling is postponed until food marketing companies buy and brand it at differing times during the year matching to product and market conditions. Labelling postponement minimizes the risk of inaccurate forecasts on inventory and economizes on canning creation during a busy season.

Lead time and cycle time constraints in postponement

The evolution of any product's variety, quantity and weight throughout the procedure influences the amount to which you'll be able to save travelling and inventory having costs by postponing variety, amount and/or weight increase. Short lead times may not require anticipation if final processing can be performed within short pattern times. Making postponement is possible only when required lead times enable a number of days' additional lead time on top of travelling times. Products or activities can be performed with short business lead times or routine time for assembly postponement. Likewise on presentation and labelling postponement, it is more centered on rapid business lead times. However, because of pattern time restrictions on form postponement, very short lead times is impossible and could also require very localized syndication programs at the extreme setting inventories very near customers in local depots (Hoek 1997).

Inventory and warehousing

According to Baker (2007), inventory cost took up 13 percent of the total logistics costs while warehousing accounted for a further 24 percent in the study of logistics costs in Europe. Being significant in expense conditions, warehousing play an important role in modern resource chain for better customer service. Product availability is being a key service metric and warehousing is being critical to the success of failure of many supply chains. Waters (cited in Baker 2007) suggested that increasing globalisation has led to longer resource lead-times which classic inventory control theory resulted in greater levels of inventory to supply the same service levels. By adding more distant resource lines, there is a likelihood of increasing variation in supply lead-time and increased the quantity of safety stocks. Another factor is the move economies of long distance movements where cost economies are be performed by despatching in much larger amounts with full pot lots that increased pattern stocks.

Main role of warehouses

According to Frazelle (2002), there have been with all the initiatives in e-commerce, source chain integration, reliable consumer response, quick response and just-in-time delivery, the supply chain connecting production with end consumers can't ever be so well coordinated that get rid of the need of warehousing. The role and quest of warehouse operations are changing and can continue to change considerably in the present day source chains. Warehouses play several vital jobs such as

Raw materials and component warehouse: For positioning recycleables at or close to point of induction into a creation or set up process

Work-in-process warehouse: For holding partly completed assemblies and products at various things along an set up or production line

Finished good warehouse: For possessing inventory to balance and buffer the variation between development schedules and demand

Distribution warehouse and distribution centres: For accumulating and consolidating products from various things of manufacture within a single organization, or from several organizations, for combined shipment to common customers.

Fulfilling warehouses and fulfilling centres: For acquiring, picking and transport small requests for individual consumers

Local warehouses: For distributing in the field to be able to shorten transportation distance allowing rapid reaction to customer demand

Value-added services warehouses: For serving as a facility for product customization activities to be executed, such as product packaging, labelling, marking, rates and go back processing

Dekkers (2009) added these raw materials, work happening and finished goods are stored in the warehouse to supply into production or even to gratify customer needs. The need of hauling inventories is due to the doubt in supply, future demand and lead-times that companies are confronted with. Taking inventories is in order to be use as buffer between different demand and supply rates. Also in the problem where suppliers have problems with delivery or features of materials, raw materials organised in inventory can avoid stock-outs situations. Work in progress inventories are looked after because of the poor maintenance, unreliable working or fast schedule changes. Holding inventories is also to provide for anticipated changes in demand and offer where there could be a severe change in price of availability of raw materials or planned market promotion or where business is seasonal.

According to Bask (2001), all developing is executed prior to the products are distributed to the decentralized distribution system near customer in a full speculation postponement strategy. Companies can have a far more cost-effective production and purchase in producing or purchasing materials in lots. Due to buying costs, quantity savings and transport cost in large plenty, economies of range are achieved as large standardized product lot-sizes can be created and sent out. On the other had, the logistic postponement strategy differs from full speculation strategy with decentralised circulation system by using centralized inventory in which finalized products are sent out to a more substantial geographic area. Inventories were reduced with the good thing about high in-stock availableness. Thereafter, products are transported in large lot-sizes to centralized warehouse, through with an increase of onward distribution costs compared to the decentralised system.

Other roles of warehouses

According to Baker (2007), the role of warehouses is theorised in many content material books that the key warehouse functions are inventory positioning and the servicing of customer orders from that inventory. Drucker (cited in Baker 2007) have explained that other assignments for warehouses are being seen to be increasing important as they changed from "positioning yards" to "turning back yards". Higginson and Bookbinder (cited in Baker 2007) shown of the assignments of circulation centres as

Make/break-bulk loan consolidation centres for consolidating customer orders along into one delivery to get transportation economies.

Cross-dock centres for satisfying customer requests from another source (e. g. a manufacturing plant) by passing through the syndication centre inside a few hours

Transhipment facilities for changing move mode (e. g. from large line-haul vehicles to smaller delivery vehicles).

Assembly facilities which the final settings of the product to individual customer requirements can take place.

Product-fulfilment centres for responding right to product orders from the final consumer (e. g. as internet fulfilment functions).

Returned goods depots for handling unwanted and ruined goods, as well as goods coming back under environmental legislation such for product restoration and packaging waste products.

Miscellaneous functions, such as customer support, unit installation and repair services.

Baker (2007) commented that a number of the aforementioned jobs may be associated with a few of the concepts, such as agility, development postponement and time compression and are recognised as increasing tendencies in warehousing in current modern source chains.


Some business models especially applicable to fashion and high-technology market sectors, they are suitable for identify consumer developments and rapidly forcing product directly to the market. The usage of flexible manufacturing systems, development postponement and the centralisation of inventory are placed in place because of this cause. With postponement strategies in place, it would be possible to recognize the trade-offs between inventory and other supply string elements, such a purchasing (e. g. volume savings on goods at lower unit purchase prices), manufacturing (e. g. lower creation costs through less frequent change-over and therefore greater batch sizes) and transportation (e. g. full box load transportation at lower unit transport costs) by utilizing the functions of the warehouse that can include a mix of elements such as inventory keeping, order consolidating, mix docking and postponement activities.

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