Operationalising form postponement from a decision-making perspective

Abstract

Form postponement means delaying the commitment of inventory to the final configuration of a product as long as possible. Many firms today are striving to redesign their products and/or their manufacturing and supply chain processes to implement form postponement. Opportunities for form postponement, however, are sometimes lost in the companies’ production-planning processes. By focusing on the deferring of product mix decisions in the master production scheduling process, this paper shows that form postponement opportunities can be divided into two components: one whose pursuit necessarily requires product and/or transformation process redesign, the other that can be pursued by changing the sales forecasting and master production scheduling process alone. We develop an operational procedure to identify and quantify, for a given product family, all opportunities for form postponement and their two respective components. Then, we discuss and empirically illustrate how the proposed measurement procedure may support companies in changing their decision-making routines to implement form postponement. Finally, we set future research directions on form postponement suggested by our results.