The elementary principle for this assignment is basically to evaluate how the corporations are faced with the warehouse constraint and how they play the role of postponement. Postponement is usually in business referred to as pushing a pressing matter to a later date, usually, this happens due to a lack of funds to support that venture or when the resources needed are urgent, and implementing them may halt the process (Appelqvist and Gubi, 2005). This assignment will analyze critically the development of postponement and its strength and weakness.
Universally the concept of postponement is usually viewed as a phenomenon that is used to eliminate restrictions of storage in the warehouse and to create capacity through inventory in the warehouse to support more storage as echoed by Boone, Et al (2007). This has been a headache that many major corporations have been facing in the chain of productions. The issue of warehouse expansion would, all the same, seem the best practice that would resolve this dispute, although this is usually a very costly and complex situation given the short period that the warehouse is urgently required. Inventory management is responsible for more space created within the warehouse through standardization and utilizing the limited space. This is usually achieved through strategic planning and an array of storage and information sharing throughout the task force (Huq, Et al. 2007).
In most organizations, warehouse congestion has proved to be a dilemma that many resolves through outsourcing. However, some costs will be incurred by this mode of warehousing restraint in the chain of distribution. Another sought-after method although in the long run is effective is recreation or expansion of the warehouse structure. This, however, comes with a huge bill that many organizations while trying to reduce expenses would rather not venture, this is because the need arises amid the peak period of production when the order becomes paramount for the warehouse to handle.
What strategic management injects is a postponement, this management policy will require no extra hire hand and will enhance communication and resources accumulating revenue that will help the corporation evade taxes payment (Bates, 1977).
Material management usually utilizes the storage space through mechanical means that also enhance communication within the chain of command. Usually, the warehouse management is oriented about the procurement of the space that is used up by-products that may have no value or are indirectly in use through inventory management. Here the basic element that the management will try to outline is all around the chain of distribution all the resources and raw materials used how they are stored, where they are procured and the number of orders placed. This will be under the material manager who will authorize all transactions of purchasing, operation, and planning of the warehouse materials (Joshi, 1990).
This department would oversee that all prior orders are delivered after production and re-evaluate the current stock and all the obsolete and slow-moving items. The production of the items that are slow in the market would be halted, analysis is also to be conducted to evaluate the stock of the products that have less market and also discontinue their production.
According to Van Hoek and Commandeur (1998), inventory management should involve all the task force in a series of information sharing that would orient every task force on the proceeding and update the management of current development this will make the organization be unison and work by the required time phrase that each production may require this will save timer and also generate more income reducing the storage space for the orders that would have been produced and then stored in the warehouse without being utilized or delivered to their respective suppliers or customers. this also will help the management to evaluate the basic requirement that is fundamental in assessing ad evaluating the customer’s needs by quantifying customers’ needs and wants (Meshkat and Ballou, 1996).
One of the importances of postponement has been that there is a lot of revenue accumulation from this mechanism; this is by the fact that expanding a warehouse in a very short duration of time can be a very frustrating chore and need a lot of resources. However, postponement usually assists in eliminating this complex composition, after the expansion have been delayed and the warehouse inventory management established, the space in the warehouse utilized and production is customized according to the demand of the clients, then from the item sold that makes the organization to account for the loss will be the first profit accumulation from this juncture (Appelqvist and Gubi, 2005).
Production customization usually helps the organization to save the cost that they would have incurred in the end as most of the productions as they are done by the different organizations have little market value or are obsolete and their production is still engineered, this only consumes up the storage space in the warehouse as they are the products that are slow in the market, now the elimination of production or production of little amount f this products will not only increase the storage place in the warehouse but will also enhance profit margin as the organization will be concentrating on the production of the stuff that is on-demand in the market (Joshi, 1990).
All major cost that may have been incurred in the development of the products is reduced to only cot from the potential products that have high demand in the market. Usually, postponement is more cost-effective to the customer, this is because when production is centralized on products that are flowing in the market this means that the product will be plenty and may exceed the demand so to combat this the organization will have to implement new incentives that will lure more consumers to use this product this will be to the benefit of the customers who in turn will appreciate by being loyal to the brand (Huq, Et al. 2007).
The cost of outsourcing for a storage facility as many of the corporations would resolve to in the event of the high season of production. According to Meshkat and Ballou (1996) notes that this would although many consider outsourcing being eminent in many sectors as the organization would only encounter just storage costs, other hidden charges are placed in the cost. These costs exceed those that would have been eliminated if the organization would have postponed and utilized the storage space that is within that organization.
Inventory and stocking
For the organization to fully impact inventory management they have to encompass various inventory control and stocking policies, these policies are fundamental in establishing that what items are valuable in the chain of production and those that are irrelevant and obsolete. This classification is very essential as it eliminates the space the obsolete product had occupied and creates storage space for a new and movable product as voiced by Boone, Et al (2007). This is usually achieved through warehouse analysis of the products that are ordered and have not been collected or the orders that were canceled and the supplier is not available.
Elimination of machinery that does not have any chore in the production, this would be sold. On material planning, each of the machinery would be consolidated and each part that is needed will be bought on small scale from the vendors that supply them. These orders would be placed in collaboration with each production requirement, this is aimed at reducing congestion of spare material and raw material in the warehouse (Chiou, Et al. 2002).
Then the items in the warehouse would be labeled by their use whether regular used direct and indirect materials. The listing of the importance of the materials and evaluation of how frequent they are consumed will enable the inventory management to be able to determine the extent of the amount of order to be placed with the vendor of the raw materials, this will also document the time table for deliveries at various intervals to reduce storage congestions on material that consumption is not due on the production chain (Van Hoek and Commandeur, 1998).
The delivery interval would be evaluated according to the time phrase demand of the finished product and according to the order placed by the suppliers. This evaluation of consumption would be based on the income of the products; this is where an item that has high demand in the market would be given high priority and first chance in the production phase. Items that are obsolete or indirect consumption in the market would be excluded from production and the organization would sell them at a relative price and account for a loss and gain profit over tax payment as cited by Bates (1977).
A whole evaluation of the warehouse will then be evaluated and all items would be analyzed again on the importance and this would include all departments so that they may point out the importance of each item or materials and the ones that need to be disposed of and those that need restocking. This would eventually increase the frequency of delivery as the vendors that supply these items would be delivering them before production and the exact amount that is needed, this includes items that are slow in consumption including office stationeries which would be ordered in small amounts from the vendors.
Modification of the ordering mechanism that the organization used will be evaluated to determine quantity calculation; this will enable the reduction of inventory which will result in saving space in the warehouse. The result derived from this reduction is mostly in the aspect of saving the space in the warehouse and the best thing that usually there is no extra task force needed to execute these tasks (Huq, Et al. 2007).
The elementary significance of mass customization in postponement strategy is basically to unify production and make it be aligned with the demand of the customers; this eventually leads to the elimination of space that would have been utilized through storage in the warehouse. This is also a strategy that also increases cost efficiency when goods and services are mass-produced according to their market demand (Appelqvist and Gubi, 2005).
This usually occurs in various stages of chain production and assists postponement in reductions of the storage space that could have been used by the production of goods that are not flowing in the chain distribution of delivery and sales. Five elements have to execute to achieve mass customization this include; development of consumer customizable products, end products customization through postponement distribution and manufacturing phrase, quick response provision in the value chain, standard customization during the production progression, and customization of delivery point (Meshkat and Ballou, 1996).
From the five elements that favor customization, it is then considered that postponement manufacturing is the basic that will result in mass customization. This mechanism usually entails a logistics function that evolves around the production chain and value chain. Low processing rates are mostly enjoyed through postponement manufacturing, this occurs when there is the separation of the products processes (Joshi, 1990).
One of the major enhancers of mass customization is information technology. This is by the fact that the application of mass customization usually evolves around information sharing among all departments of production. The operating bases of production are all very alert and they articulate there has to be a reconfiguration of the whole warehousing and the production processes. However, according to Huq Et al (2007), this is combated through effective inventory management although some of the problems that arise when the management fumble with this mechanism has no permanent solution as the mechanism are still in its infancy progression and implementation so remedial for major complexities are still be diagnosed.
Strength and Weakness
One of the major strength that these modules help the organization achieve is that it offers the logistics that are mainly concerned with sustaining sales and marketing royal programs. This is usually achieved when the organization executes inventory management and mass customizing of products. The accumulative facet that follows this cost-effective customization through postponement manufacturing, is that it enables also the organization to save revenues when they are executing postponement. This usually occurs when the organization is clearing stocks in the warehouses that have not been collected or their orders were canceled, through this channel the organization would sell them and account for a loss this will enable them to evade paying taxes that particular period (Van Hoek and Commandeur, 1998).
One of the key importance that postponement manufacturing fosters is the fact that there is no incurrence of transportation as it is reduced and the carrying cost of inventory is solely left to the vendors that supply them. This aspect also enhances the value density of the final products and this w3ill automatically trigger higher sales fluctuations because of the abridged inventory levels in the product manufacturing.
The products that are produced through this module harbor the following beneficial elements in the market. They have the shortest production life cycle this is because some of the elements that may be slowing the process down are eliminated and the production is customized by the ordered consignment, this helps in mitigating obsolete inventory risks.
One of the major weaknesses of this module is the fact that not all products and processes may be able to foster postponement. This mostly affects the chemical organization where the whole production cannot be separated at any moment (Chiou, Et al. 2002).
Another facet that also my halt this process is the fact that it does not concentrate on balancing the cost and services which are the head of designing the supply chain. The difficulty to establish and evaluate the strategic cost has brought about worries of this module that was invented in the 1920s and has only mushroomed because of the warehousing complexities.
Logistic system implementation has also been another standing block to the postponement manufacturing process, this has been viewed that modification of the products has been a tricky affair, this has led the production to differ from the original design and this has relented customers from hating the brand they are accustomed to this was noted by Joshi (1990).
One of the best elements of postponement is the fact that when it is properly executed can help generate a lot of revenues from the sales that are garnered from these facets. Postponement usually provides a platform to help the organization to have information and production flow that is a requirement of management. The production chain is made to accelerate the production and this will help the customer demand be customized and production is effected through orders and there is no production of obsolete items as this module helps reduce this kind of production. According to Appelqvist and Gubi (2005), warehouse inventory management also creates space for mostly raw materials as the production is done through the orders that are placed.
The question now remains is that will the organization embrace this form of postponement to eliminate congestion of the warehouse or will they evaluate on expansion and not assess the production value chain? This module has the answers to many of the organization’s dilemmas and if properly executed would save the organization lot of future problems. As advancement in information technology escalates there is a dire need for the organizations to foster the idea of postponement not only for warehouse space recreation but for the benefits that are expected from this module of production.
- Appelqvist, P., and Gubi, E. (2005) Postponed Variety Creation: Case study in Consumer Electronics Retail. International Journal of Retail & Distribution management, 33 (10), 734.
- Bates, A., (1977) Warehouse Retailing: A Revolutionary Force in Distribution. California management Review, 20 (2), 74.
- Boone, C. Craighead, C., and Hanna, J. (2007) Postponement: An Evolving Supply Chain Concept. Web.
- Chiou, J. Lei-Yu, W., and& C Hsu J. (2002) The adoption of form postponement strategy in a global logistics system:The Case of Taiwanese Information Technology Industry. Journal of Business Logistics. 23, (1). 107.
- Huq, F. Cutright, K. Vermon, J., and Hensler, D., (2006) Simulation Study of a two-level Warehouse inventory replenishment system. International Journal of Physical Distribution & Logistics management, 36, (1) 51.
- Joshi, K., (1990) Materials Management Policies and Warehouse Requirements: A Case Study. Journal of Purchasing and Materials Management, 26 (2), 27.
- Meshkat, H., and Ballou, R., (1996) Warehouse Location with Uncertain Stock Availability. Journal of Business Logistics, 17 (2), 197.
- Van Hoek, R., and Commandeur, H., (1998) Reconfiguring Logistics System through postnement strategies. Journal of Business Logistics, 19 (1), 33.