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Coping With High Product Variety and Uncertainty • Like lean manufacturing in that the objective is to cope better with high product variety • “Brute force” means coping the old fashion way -inventory • EDI, FMS, computer-aided ordering help, but it’s not enough • The idea is to postpone customization or differentiation for as long as possible – even to the point-of-sale Three Enablers Product Modularity Process Modularity Agile Network Design Design For Customization Framework ENABLERS DESIGN PRINCIPLES Product Modularity • Commonality • Postponement of modules (product configuration) Process Modularity • Resequencing of processes • Postponement of processes • Process standardization Agile Network Design • Postponement of modules and processes • De-coupling points by inventory stocking Modularity Enhances Flexibility in Distribution Design • Centralized distribution center for common components • Local distribution centers for customized components • Design for localization • Assemble and test product, “bundle” accessories at distribution centers Cost Trade-offs Costs Equipment costs may be higher Maintain more local sites Some common modules cost more Benefits Less Inventory Less stockouts and markdowns Lower transportation and duty costs