Implications of form postponement to manufacturing a customized product

Abstract

Postponement is an approach that helps to deliver more responsive supply chains. Form postponement (FPp) involves the delay of final manufacturing until a customer order is received and is commonly regarded as an approach to mass customization. However, while much is written in the literature about the benefits and strategic impact of FPp, little is still known about its application. The paper presents the second in a series of three studies, using a common research methodology, that address ‘how’ FPp is applied in terms of its operational implications within a manufacturing facility. It is a retrospective study of the application of FPp in a manufacturer of industrial electric motors referred to here as ‘Motorco’. Operational measures for products selected for FPp are compared with those for products that continued to be made under engineer-to-order and make-to-stock regimes. Propositions were tested that address operational implications of FPp within the manufacturing facility, as well as the impact of FPp on selected performance metrics and the demand profile for which FPp was the preferred regime. Multiple data collection methods were used whereby documentary, archival and database evidence were used to measure operational characteristics across a broad front. The findings show that FPp improved responsiveness of manufacturing, but it is involved in the removal of components and often time-consuming invasive modifications. This suggested that the Customer Order Decoupling Point (CODP) would be better located further up stream in the manufacturing process. Two alternative CODP locations are evaluated that prevent the removal of components, provide the same level of responsiveness and potentially improve delivery reliability. The production planning system was sufficiently responsive to support FPp. However, the bills of materials were inflexible, preventing the system from being used to process FPp orders. This case illustrates many of the operational implications of applying FPp to a complex (i.e. many part numbers) and truly customized product. A third and final study of a FPp application in a different production context has been completed that will provide further evidence of its operational implications.