Postponement

N I G G A

For postponement of sporting events, see Rainout (sports).

Postponement is a business strategy that maximizes possible benefit and minimizes risk by delaying further investment into a product or service until the last possible moment. An example of this strategy is Dell Computers' build-to-order online store.

Among the earliest reference to the concept was in a paper by Zinn and Bowersox in the Journal of Business Logistics. They highlighted five types: Labelling, Packaging, Assembly, Manufacturing and Time postponements.

Postponement in SCM

Postponement is a concept in supply chain management where the manufacturer produces a generic product, which can be modified at the later stages before the final transport to the customer. Take for example an umbrella manufacturer who does not know what the demand will be for different colored umbrellas. The manufacturer will manufacture all white umbrellas and dye them later when umbrellas are in season, and it's easier to predict demand of each color of umbrella. This way the manufacturer can stock up on white umbrellas early with minimal labor costs, and be sure of the demand before he dedicates time and money into predicting the demand so far in the future.

References

• Friedman, Thomas (2006). The World is Flat. Farrar, Straus, Giroux. p. 593. ISBN 0-374-29279-5.