Evaluating the role of the warehouse in postponement strategies

Aside from managing dangers and doubt, postponement helps the business to lessen inventory cost by delaying purchase of expensive components or in having semi-finished goods. However the labeling cost may increase marginally if the same is done at the individual localized warehouses since labeling in smaller lots at such warehouses would be more expensive than adopting to the policy of large-scale labeling done at the manufacturing end.

Role of the Warehouse in Postponement Strategies

As inventory handling and storage have been the basic functions of the warehouse, the handling functions are now extended to support the postponement strategies adopted by the companies periodically.

The economic benefits include seasonal sort-age as well as consolation of goods. Companies can obtain raw materials and other goods, which can be stored in their warehouses. This would include performing all finishing work at the warehouse facility which include kitting, assembly and packaging among other operations.

For example, food products may be sold by multi-national companies under different brands at various locations, the base manufacturing unit or central warehousing facility might use the original brand meant for the consumers of parent country.

On the other hand, companies failing to store their goods will lose their bargaining power as they are not able to demand higher prices for their products. Several soft drink companies will ship the basic syrups to the warehouse of bottling companies whereby other ingredients like sugar and water are added and mixed at the local warehouse to obtain the end product.

With centralized warehouses, the inventory costs would reduce as it would reduce the need for frequent stocking of products which are in more demand at the local warehouses.

This could be attributed to the corrosion that is eating deeper into our moral studies and our long-standing guiding principles each day. The assembly and production expenses are usually more at the warehouse level than at the manufacturing level.

The base product is required to be delivered to the warehouse whereby the additional attachments are being assembled to the base product as per the customer requirements.

By keeping inventory in a 'less-finished' condition and postponing the final product assemblage until genuine customer demand is well known; companies can react more quickly to the market and offer higher customization options.

Additionally inventories help to buffer the uncertainties and inefficiencies in the machine. Similarly, the concepts involved would include the point of differentiation and the level of postponement, which would refer to the warehousing facilities needed at different locations for storing the products.

This type of postponement strategy is suitable for the products that have number of differentiations. Other Postponement Strategies The time postponement strategy results in delaying the differentiation of product by many weeks thus saving the processing and transportation costs.

Dell Computers Dell's supply string is a style of excellence, someone to be emulated. Doing an research of its personal computer manufacturing, HP analysts discovered that the modular framework of the merchandise and the production process allows the business to postpone all steps of the non-public computer's final set up integrating the Computer board, processor, chassis, power supply, storage devices, and software.

Marketing of computers is an ideal example, where assembly is postponed till the last stage, when the final product is assembled as per the customer specifications. Another function of warehouse is to enable shipping of products to a particular destination.

As the whole strategy is related to the value of information, it can be maximized with delay in production decision time, giving more time to receive and analyze the customer requirement and demand.

In addition, the central warehouse plays an important role in this type of strategy. However, the packaging cost at the individual distribution centers may go up, while packaging in different sizes would consume more time as well Labeling Postponement This type of strategy is helpful for the companies which send out their products under more than one brand name hence different brand labels would be required to meet the customer requirements.

Conclusion Postponement is a widely used making strategy.

Role of the Warehouse in Postponement Strategies

The warehouse has to play a dynamic role to ensure service superiority and service levels aren't affected due to uncertainties and inefficiencies in the system. Making use of logistics postponement completed goods it looks for postponement opportunities in the ultimate movements of products, which have taken their final form in advance of customer purchases, to the client.

The strategy involves delay in the production process to the maximum possible time, while delaying the point of product differentiation. In the current competitive world of business, warehousing has emerged as a major part of modern organizations that aim to enhance their sales turnover and profits over a short span of time.Warehouses play an important role in enhancing organizational profits, as they receive, store, and preserve goods, which are shipped to various destinations.

Based on warehouse investment, organizations devise their strategies. Some organizations used postponement strategy to delay delivery of products to exploit business fluctuations. Evaluating the Role of the warehouse in postponement Strategies. Print Reference this.

Published: 23rd March, Warehouse role in supporting postponement strategies. The role of warehousing facilities has been traditionally limited to the stocking of inventory; the modern trends in warehousing policies have brought economic benefits. The Adaptive Supply Chain: Postponement for Profitability 1 Is Postponement Right examines postponement and the role it will play in the next generation of that drive successful postponement strategies.

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Evaluating the Role of the warehouse in postponement Strategies Introduction The rapid changes occurring in customer-supplier relationship has resulted in shortening the product life cycle along with the product variations, which could meet the complex customer satisfaction demands.

After that it explains the concept of postponement strategy, the several types of postponement and the purpose of postponement. This article provides some circumstance studies on the role of the warehouse in postponement.

Evaluating the role of the warehouse in postponement strategies
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