Postponement Strategies for Channel Derivatives
Topics: Operations
M. Eric Johnson
International Journal of Logistics Management, 11, 2000
The value of postponing product differentiation until final distribution for manufacturers who market a family of product derivatives through multiple channels is examined. A model is developed of a supply chain that distributes many short-lived products through different channels. Using the model, we find the postponement is particularly valuable for managing short-life products. Postponement increases distribution service levels while reducing costs and order fulfillment risk. Postponement is particularly valuable when there are many derivative products and forecast error is high. Trade-off curves are presented, that allow managers to evaluate the benefits of investing in postponement strategies.
