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What Is Postponement?

Postponement delays a product’s final assembly or production as close to the point of sale or delivery as possible. By postponing final production, companies can reduce the time and money spent on inventory storage and production process and increase the availability of products to customers. It also reduces the risk of obsolescence, as companies can quickly respond to changing customer demands.

Significance of Postponement in Logistics and E-commerce

Postponement allows companies to reduce inventory levels, save on shipping costs, and shorten lead times. The process has several other benefits, which are discussed below for better understanding.

  1. Postponement allows companies to remain agile and flexible to meet customer demands by halting the last step of production. 
  2.  It enables them to reduce costs and streamline the supply chain optimally. 
  3. Companies can focus on the most important tasks by postponing certain activities and improving customer satisfaction. 
  4. Businesses can provide customization options to customers by maintaining minimum inventory. 

Prerequisites of Postponement and How It Works

Consider these provisions for an effective postponement of products:

  • A reliable forecasting system: A business needs to accurately predict customer demand to make effective decisions about postponement accurately.
  • Flexible ordering and manufacturing processes: Postponement requires a more relaxed approach to ordering and manufacturing so that components and parts can be easily changed or added during the production process.
  • An efficient supply chain: Postponement depends on an efficient supply chain that can quickly react to changes in customer demand.

Use Cases of Postponement

A clothing company may keep a single inventory of basic t-shirts in plain colors and sizes and then customize them with different colors and designs once an order is placed. This way, the company can save on costs associated with stocking multiple variations of the same product. This way is highly cost-effective and saves inventory space and moving time.

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