Coping with product variety in the food processing industry: the effect of form postponement

Abstract

Form postponement (FP) is an operations design approach that has been proposed in the literature as a solution for companies to handle increasing product variety and demand uncertainty. FP is possible in food, but the few authors that studied FP in food stress that food characteristics limit the benefits of applying FP. In this paper, we study how characteristics of the food processing industry affect the operational performance of implementing FP based on a case in a dairy company and a simulation model. We found that substantial operational performance improvements could be achieved when implementing FP diminishes the negative effects of some typical food processing industry characteristics. Large gains are possible in production settings with restricted batch sizes and cyclical plans that heavily influence the timing of production. However, a premise to maximise the FP benefits is that the other planning activities should match the new capabilities. Benefits are lower if the company cannot or does not adapt its organisational procedures.

Keywords:

• food processing
• form postponement
• case study
• simulation