Postponement is a business strategy employed in manufacturing and supply chain management which maximizes possible benefit and minimizes risk by delaying further investment into a product or service until the last possible moment, or where a manufacturer produces a generic product, which can be modified at a later stage before the final distribution to the customer.
One of the earliest references to the concept was in a paper by Walter Zinn and Donald J. Bowersox in the Journal of Business Logistics in 1988, which highlighted five types: labelling, packaging, assembly, manufacturing and time postponements.
One of the most modern definitions today is the following, suggested by Christopher (2005):Postponement refers to the process by which the commitment of a product to its final form or location is delayed for as long as possible.
The three key interrelated decisions are: (a) how many different types of vanilla boxes to stock, (b) in what quantities, and (c) how to finish to meet the order most effectively.
He argued that previous theories developed in the 20th century had gaps in their research on postponement, and identified 5 challenges: 1.
Professor Van Hoek states that “specific study should be undertaken to assess what extent postponement is applied at various positions in the supply chain”.
This is what exactly was lacking in the 20th century because you did not know whether physical inventory, semi-finished, or finished products would work best as it was uncertain due to fluctuating consumer demands.