Postponement Optimization
Postponement is delay production and deployment commitments as late as possible to reduce inventory and inventory carrying costs and risks. Make-to-order is a production postponement strategy. Delayed labeling is a packaging postponement strategy. Central deployment is a deployment postponement strategy.
Speculation commits to inventory as early as possible to reduce the risk of out of stocks and minimize customer response times. Make to stock (aka make to forecast) is a production speculation strategy in which product is produced before firm orders have been received. Local deployment is a deployment speculation strategy that minimizes customer response time and last leg transportation costs.
| LOGISTICS | |||
| SPECULATION | POSTPONEMENT | ||
| PRODUCTION | SPECULATION |
Full Supply Chain Speculation
Make-to-stock per forecast in production facilities near the customer base.
Example: Dairy |
Deployment Postponement
Make-to-stock per forecast in central production facilities.
Ex. L.L. Bean |
| POSTPONEMENT |
Production Postponement
Make-to-order in production facilities near the customer base.
Example: Newspapers |
Full Postponement
Make-to-order in central production facilities (aka deploy to order.
Example: Dell Laptops |
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Production and Deployment Postponement and Speculation
Postponement optimization example for a large cosmetics company