Supply Chain Postponement for a New Age
In the 1990s and early 2000s, postponement—the practice of delaying customization of a product—helped many companies respond to the increasing demand for personalization while still driving efficient inventory management.
Sooner or later, everything old is new again—even supply chain strategies.
With this tactic, a company begins the manufacturing process in one location and sends a partially completed, generic product to another location to be further customized or finalized—delaying product completion until later in the supply chain when it is closer to the actual sale (and the consumer).
In the years since postponement first became popular, consumer tastes have changed, leading to a decline in the practice: many now prefer speed over personalization, often making it more efficient to manage inventory from more central locations, rather than in a network of scattered, more local warehouses.
But brands that dismiss postponement merely as a strategy of the past that brings no value to today’s supply chain might be jumping to a hasty conclusion.
Why brands still need postponement
A sound shipping strategy that prioritizes speed has become the open secret to driving customer satisfaction.
According to Temando’s State of Shipping in Commerce report, 66 percent of consumers will opt for brands with convenient shipping options, and 96 percent of consumers will become repeat customers because of a positive shipping experience.
But fast shipping turnarounds can be difficult for companies that want and need to drive sales globally; having a handful of warehouses, no matter how centrally located, will still result in slow shipping times for at least a few regions worldwide.
The network of smaller warehouse hubs created by a postponement strategy helps companies keep the right amount of product in additional locations, making it easier to guarantee delivery dates.
There’s no one specific model for how to best implement a postponement strategy across the supply chain.
But what is clear is that, despite the need for postponement being different than it once was, it is still a vitally important supply chain strategy for businesses looking to reduce costs and meet customer expectations.
With the market constantly changing, consumer preferences evolving and product lines maturing, brands should rethink their supply chain strategy to see if postponement can help deliver the kind of experiences their customers have come to expect.
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