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.

Keywords:

• form postponement
• delayed product differentiation
• production planning and control
• forecasting
• mass customisation

Acknowledgements

We would like to thank three anonymous reviewers for their comments on this paper and acknowledge the financial support from the Spanish Ministry of Science and Innovation, project SEJ2007-30895-E-ECON, and from the University of Padova, projects CPDRO63848/06, 6OA10-1811/06, and 6OA10-5127/08.

Notes

Notes

1. The principle of FP ‘has also been termed as delayed product differentiation or late customization’ (Swaminathan and Lee 2003, p. 199).

2. In general, could vary across the M ₁ possible outcomes of PDA₁, for example, because different outcomes are produced at different locations, or because different outcomes require different processes with different cycle times. For the sake of simplicity, however, we assume in Figure 1 that is the same for all possible outcomes of PDA₁.

3. We assume that a period-based approach is used to re-plan the MPS, instead of an order-based approach. While the latter advocates that the manufacturer updates the MPS after executing a preset number of MPS orders, the former procedure requires that re-planning occur after rolling a specified number of time periods ahead (Sahin et al. 2008). Period-based re-planning approaches are easier to implement and often employed in industry (Zhao et al. 2001).

4. We assume that a period-based method is used to freeze the MPS, instead of an order-based method. While the latter advocates that a certain number of MPS orders placed in the planning horizon are executed as originally scheduled, the former method requires that all MPS quantities within a certain portion of the planning horizon be implemented according to the original plan (Sridharan et al. 1987). Period-based freezing policies are easier to implement in multi-product manufacturing environments with uncertain demand such as those considered in this study (Yeung et al. 1998, Xie et al. 2003).

5. We assume that the MPS quantities planned for a given time period must be available at the end of that period. We also set T _COMPLETION to the end time of the most distant future period in the MPS planning horizon just before a new re-planning occurs.

6. This can be formally shown by expressing (i = 1, …, I; j = 1, …, M_i ) in definition by means of Task 4 and subsequently minimising given the values of 's and T _CODP. When = 0, also O = 0 and no more opportunities for FP _DM can be found in redesigning the sales forecasting and MPS process without first redesigning the transformation process.