Evaluation of postponement strategies in mass customization with service guarantees

Abstract

Postponement is one of the practical methods to mass customization. Product redesign approach and process reversal approach are two strategies applied to delay the point of differentiation in mass customization systems. In the existing literature, analytical models explaining and quantifying the benefits of delayed differentiation have been developed. These models focus on analysing the costs and benefits of certain postponement strategies. In this paper, we analyze and compare two different postponement strategies applied in a mass customization system with service time guarantees. The goal is to determine the right strategy and to identify the key influencing factors. We formulate a cost-minimisation model with general distributed demand. We show that it is not beneficial to delay the point of differentiation when the considered stage is a high value-added process. We also show that processing time and value added at the considered stages are two main factors determining the choice of the right strategy.

Keywords:

• Postponement
• Mass customization
• Product redesign strategy
• Process reversal strategy

Acknowledgments

This research is sponsored in part by National Natural Science Foundation of China under grants No. 70402005 and Philosophy & Social Science Foundation of Shanghai under grants No. 2005BJB018. The authors thank the referees for valuable suggestions and comments.