Download Postponement - Georgia Tech ISyE

Postponement
How to respond to demands for
– Customized products
– Rapid delivery
– Competitive prices
in the face of short product lifecycles.
The Issues
• To provide rapid delivery need to have
– capacity to make to order quickly or
– inventory of finished goods
• Capacity means high capital costs
• Inventory is expensive because
customization means many skus.
Example
Auto manufacturers could cut 2 weeks out of
delivery time by
• building many small assembly plants with
capacity to meet regional demand. Why
don’t they do this?
• Positioning inventory of finished vehicles
closer to the customers. What are the
consequences of this?
Other dangers from Inventory
• Extends time to market
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–
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Guess what products customers will want
Poor forecasts of demand volumes
Slower to bring new technologies to market
Obsolescence
The Third Way
• Modular design with postponement
– Modular design
• reduces the cost of customization
– Postponement
• delays the investment in customization
Consequences
• Aggregate forecasts for majority of product
• Detailed forecasts are restricted to
customization modules
• Investment in customization is delayed so
component forecasts are short
• Customization capacity needs are reduced -limited to adding customization modules
not building the entire product
Opportunities
• Move customization closer to customer
– What are the tradeoffs?
Apple imac
• 5 Colors. Built to forecast.
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–
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–
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Indigo
Ruby
Sage
Graphite
Snow
Compaq
• Special panels user can apply to change
color of the computer at home
Milliken Carpet
• Before
–
–
–
–
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Dozen Bases
Several Gun Bars
Change overs from Base to Base
Change overs from Gun Bar to Gun Bar
Down time on expensive printer
Milliken Carpet
• After
– 1 (or 2) bases
– 1 gun bar
– Changeover from one product to next requires
seconds
– No down time
What’s Involved
• Product Design
• Manufacturing Process
• Supply chain design
Modular Design
• Standardize Components
• Identify and postpone non-standard ones
• Simultaneous assembly of different modules
reduces critical path
• Localize problems and re-design efforts
Power Supply
• Option 1: More expensive supply that can
convert voltage
• Example: HP LaserJet
– Manufactured in Japan and shipped to the
world.
– Change to a versatile power supply saved 5%
on cost to manufacture, stock and deliver
Power Supply
• Option 2: More specialized supplies that
cannot convert voltage installed late.
• Example: HP Deskjet
– Made in Singapore
– Designed with country specific external power
supply
– Shipped to Stuttgart
• where power supply is purchased and added
• adds manuals and packing material
Consequences
• Higher manufacturing costs
• Bottom line: 25% lower manufacturing,
shipping and inventory costs.
• Where did the savings come from?
Trade-offs
• Increased cost of materials and perhaps
manufacturing
• Savings in inventory depend on:
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–
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Variability and uncertainty in demand
lead time to markets and from suppliers
life cycle
...
Conflicting Objectives
• Marketing: every possible product option
• R & D: most functionality at lowest cost
• Manufacturing: Few products and stable
volumes
• Resolution should be system wide view
Example
• Generic Deskjet for Mac and PC rather than
two models
– What were the arguments
Manuals and Information
• Printer manuals can be printed in several
languages
• Software versions make this even simpler
• Pharmaceutical products require countryspecific labels:
– dosing info and warnings must be in local
language
– country specific information
– what to do?
Home Depot Paint
Mix and Add the Colors to Order
• What are the benefits and costs?
Re-sequencing
• Traditional Clothing manufacture
– Dye the yarn
– Knit with the dyed yarn
• Benetton
– Knit with grey yarn
– Dye the sweaters
• Trade-offs?
Standardization
• HP Disk drives
– Add customer-specific driver boards
– Test (time consuming)
• Revised process to
– Test drive
– Insert customer-specific boards
– Test board
• Trade-offs?