Supplier flexibility and postponement implementation: An empirical analysis

Abstract

Postponement has been recognized as a strategy to manage uncertainties in demand. Its performance however depends on various prerequisites. Numerous technical factors that influence postponement such as product modularity and process redesign have been widely studied. Notwithstanding, the effect of external factors on postponement have been paid much less attention. This paper addresses the external factors which affect postponement application, and in particular, concentrates on the relationship between supplier flexibility and postponement implementation. Four constructs of flexibility and three constructs of postponement – namely volume flexibility, mix flexibility, new product design flexibility, product modification flexibility, manufacturing postponement, ordering postponement and product design postponement – are identified, and measured variables for each construct are extracted from the literature. Supported by a theoretical ground, built based on the literature, the positive relationships among supplier flexibility and postponement constructs are then tested through structural equation modeling (SEM) using empirical data from a sample of 219 manufacturing SMEs in one country. The results indicate that the supplier impacts on postponement implementation for the buying firm are not identical for all types of postponements and supplier flexibilities. While manufacturing postponement and ordering postponement are supported by supplier volume and mix flexibilities, design postponement is only related with product modification flexibility. These findings enhance the postponement knowledge with respect to external influencing factors from a general level to a more precise, specific level. The implications of the research outcomes are discussed and directions for future research are provided.