Master’s Thesis in Logistics and Supply Chain Management _____________________________________________________ Title:                 Postponement in Retailing Industry- A case study of SIBA Authors:         Ahmed Kemal & Naqvi Syed Mohammad Tutor:               Helgi Valur Fredriksson, Dr. Date:               May, 2010 Key Words:   Speculation, Postponement, Customer Order Decoupling point, Retailing, Supply Chain Flexibility, Agility ______________________________________________________________ Abstract Problem: Today's business environment is characterized by changing customer demands, increasing cost pressures on retailers, shorter product life cycles and products becoming obsolete shortly after their introduction. The above factors make it difficult for electronics retailers to balance the costs of dealing with excessive inventory and not be out of stock. To be competitive, retailers should delay some of their activities until customer demand becomes visible. This brings us to the phenomenon of postponement. Electronics market in Sweden faces continuous growth, although at a declining rate. This is indicative of a saturation that this sector, as a whole, is approaching to. The above problems are due to the speculative approaches and standardized products policies that are in practice. Loss of sales and customers result from these practices. The current study analyses the importance of postponement strategy and the benefits it offers. This study also tries to explore the potential solutions for retailers that postponement may relate to.   Purpose: The scope of this study is to identify possible postponement strategies needed for SIBA. Method: A case study approach has been taken. The choice of the method is qualitative with an inductive approach. This involved personal communications during interviews with the managers of SIBA, using semi structured questions to collect data.   Results: The concepts of postponement, supply chain flexibility, agility and customer order decoupling points (CODP) are closely related to one another and it has been shown that as the depth of postponement increase from right to left in the CODP continuum, the CODP changes its position, moving along the CODP continuum from right to left and towards the upstream. With this movement, the flexibility and agility in the chain increases. Our finds suggest that postponement is rather underutilized and that wastes (by way of lost sales and customers, obsolete inventory costs and storage costs) in the retailing process occur due to speculative approaches in application at the retail level. We have suggested logistics postponement for two out of three product categories and enumerated the ensuing benefits that the retailer can derive by way of enhanced flexibility, agility and reductions in wastages and satisfied customers.

This paper focuses on four interrelated strategies: postponement, mass customization, modularization and customer order decoupling point. The goal of the postponement is to delay the customization as late as possible in the supply chain. It is also known as delayed differentiation. Mass customization is a relatively new term, which began to gain attention in the industry a decade ago. It was an obligatory invention as a response to the global market which becomes more turbulent day by day for the last two decades. Its goal is to produce customized products at low costs. Modularization is a common term that is used in many areas. In this study, we will focus on product architecture modularity and process modularity. Customer order decoupling point, which is also known as order penetration point, is used to distinguish the point in the supply chain where a particular product is associated to a specific order. Our target is building a model that explains how these four concepts are related. In order to achieve this, we will, first, research every concept individually; we will state the definitions, levels, benefits, enablers, success factors, drivers, etc. of the concepts. Then we will study the pair-wise relationships of these strategies. We will build our model according to the findings we have found in the literature. After building our model, we will explore it in Autoliv Electronics to see how it works in practice. Briefly, our model states the following: Modularization is an enabler of customization and it is necessary for the success of mass customization where set-up costs are critical. Product architecture modularity provides rapid assembly and cost efficiency that is required for postponement and mass customization. In addition, it is used to measure the mass customization degree according to some others. Postponement requires process modularity, and it moves the customer order decoupling point downstream in the value added material flow. It contributes the mass customization by increasing both the leanness and agility. Customer order decoupling point uses the customer requirements and existing capabilities of the mass customization for optimizing the flexibility-productivity balance.

The thesis study reveals that the position of bottleneck is a significant importance in supplychain process. The modern supply chain is characterized as having diverse products due tomass customization, dynamic production technology and ever changing customer demand.Usually customized supply chain process consists of an assemble to order (ATO) or make-to-order (MTO) type of operation. By controlling the supply constraints at upstream, a smoothmaterial flow achieved at downstream. Effective management on operational constraint willresults in speed up customer delivery. A throughout evaluation of demand constraints isnecessary to gain the competitive benefits over the entire market. The study is based on a conceptual model, comprises of engineer to order (ETO), MTO, ATOand make to stock (MTS) separated by decoupling point. All these represent the particularprocess in supply chain. The important perspective of this study is that the constraints areallocated in particular part of supply chain, which will become the supply chain moreversatile. This thesis study explains the use of detail capacity and material planningtechniques in upstream, midstream and downstream of the customer order decoupling supplychain. A shifting bottleneck concept has been studied in a better way, in order to keep relativestability and reduce the complexity in production management. This thesis study tries to findout some possible factors that reduce the bottleneck shifting in supply chain. This research provides the guideline about the implementation of lean, leagile and agility incustomized supply chain. Also key factors are discussed which are necessary to achieve theseparadigms. Basically leagile is the mixture of both lean & agile strategies. Leagile is inclinedtowards sustaining the flow for mixed-model production. Its intent is to achieve theefficiencies in mass production, while producing a medium variety of products. The focus inleagile strategy is to gain effective control at shop floor planning, including capacity andmaterial planning systems.Different relevant aspects of standardization and customization are considered through theproduction processes. In addition to this rate base, hybrid and time phase material planningtechniques are sorted in different supply chain parts through multiple level of bill of material.

<p><strong>Abstract</strong></p><p>In fashion industry, customer demand is constantly changing. One of the main reasons is due to the time of delicate fashion awareness among the consumers, which has come into larger variety and frequent assortment changes. The changing trends in fashion industry allow researchers to get into the postponement strategy as a customized operation in order to focus on quality and flexibility. In today’s fashion market the key for success is to keep an eye on and react to the customer demand. H&M is Europe’s second largest fashion retailer in terms of sales and our work will reflect on H&M supply chain particularly. We try to figure out business strategies such as mass customization and standardization, which H&M is using in their entire supplier chain and in his different processes. Keeping this view in mind, we design our research question, which is about mass customization and standardization and we try to relate these business strategies to the postponement. We try to find out the structure and implementation of these strategies in H&M supply chain with the help of our respondent answers in our proposed questionnaire.</p><p>For this purpose, an electronic interview with the H&M senior merchandiser in Pakistan liaison office was carried out. The questionnaire contains different questions related to postponement strategy, customization, and standardization and other processes which are used in the supply chain of any fashion industry. The questionnaire consists of 22 major questions. Our research is purely qualitative. We include both types of the data; namely secondary and primary. Secondary data was collected from earlier studies of the literature and related theories of postponement, customization, and standardization and certain areas of fashion retailing, whereas primary data was collected through the electronic interview with Mr. Syed Naqeeb who is working in H&M liaison office as a senior merchandiser in Pakistan.</p><p>After receiving the questionnaire, we have tried to highlight our research questions with the help of our proposed Frame of Reference in Chapter 2. The Frame of Reference consists of theories which will help the reader to get the clear picture of fashion retailing and the related theories.</p><p>In the Analysis section, we talk about the activities of H&M and its background followed by its business concept. We define H&M SCM model and draw a figure of H&M complementarities, which we developed by the help of electronic interview. In the Conclusion part, we come to the point that customization and postponement affect fashion retailing by choosing raw material, components, and apparel accessories plus logistic management. The other aspect of our research area is standardization. After the analysis we come to know that Standardization and postponement are also used together in the supply chain of H&M, in raw material, cotton and yarn, dying, packaging and in the care instruction of labels (washing instructions).</p>

<p><strong>Master’s Thesis in Logistics and Supply Chain Management</strong></p><p><strong>_____________________________________________________</strong></p><p><strong>Title:                 Postponement in Retailing Industry- A case study of SIBA</strong></p><p><strong>Authors:         Ahmed Kemal & Naqvi Syed Mohammad</strong></p><p><strong>Tutor:               Helgi Valur Fredriksson, Dr.</strong></p><p><strong>Date:               May, 2010</strong></p><p><strong>Key Words:   Speculation, Postponement, Customer Order Decoupling point,</strong></p><p><strong> Retailing, Supply Chain Flexibility, Agility</strong></p><p><strong>______________________________________________________________</strong></p><p><strong>Abstract</strong><strong> </strong></p><p><strong>Problem: </strong>Today's business environment is characterized by changing customer demands, increasing cost pressures on retailers, shorter product life cycles and products becoming obsolete shortly after their introduction. The above factors make it difficult for electronics retailers to balance the costs of dealing with excessive inventory and not be out of stock. To be competitive, retailers should delay some of their activities until customer demand becomes visible. This brings us to the phenomenon of postponement. Electronics market in Sweden faces continuous growth, although at a declining rate. This is indicative of a saturation that this sector, as a whole, is approaching to. The above problems are due to the speculative approaches and standardized products policies that are in practice. Loss of sales and customers result from these practices. The current study analyses the importance of postponement strategy and the benefits it offers. This study also tries to explore the potential solutions for retailers that postponement may relate to.</p><p> </p><p><strong>Purpose:</strong> The scope of this study is to identify possible postponement strategies needed for SIBA.</p><p><strong>Method: </strong>A case study approach has been taken. The choice of the method is qualitative with an inductive approach. This involved personal communications during interviews with the managers of SIBA, using semi structured questions to collect data.</p><p> </p><p><strong>Results: </strong>The concepts of postponement, supply chain flexibility, agility and customer order decoupling points (CODP) are closely related to one another and it has been shown that as the depth of postponement increase from right to left in the CODP continuum, the CODP changes its position, moving along the CODP continuum from right to left and towards the upstream. With this movement, the flexibility and agility in the chain increases. Our finds suggest that postponement is rather underutilized and that wastes (by way of lost sales and customers, obsolete inventory costs and storage costs) in the retailing process occur due to speculative approaches in application at the retail level. We have suggested logistics postponement for two out of three product categories and enumerated the ensuing benefits that the retailer can derive by way of enhanced flexibility, agility and reductions in wastages and satisfied customers.</p>

<p>This paper focuses on four interrelated strategies: postponement, mass customization, modularization and customer order decoupling point. The goal of the postponement is to delay the customization as late as possible in the supply chain. It is also known as delayed differentiation. Mass customization is a relatively new term, which began to gain attention in the industry a decade ago. It was an obligatory invention as a response to the global market which becomes more turbulent day by day for the last two decades. Its goal is to produce customized products at low costs. Modularization is a common term that is used in many areas. In this study, we will focus on product architecture modularity and process modularity. Customer order decoupling point, which is also known as order penetration point, is used to distinguish the point in the supply chain where a particular product is associated to a specific order.</p><p>Our target is building a model that explains how these four concepts are related. In order to achieve this, we will, first, research every concept individually; we will state the definitions, levels, benefits, enablers, success factors, drivers, etc. of the concepts. Then we will study the pair-wise relationships of these strategies. We will build our model according to the findings we have found in the literature. After building our model, we will explore it in Autoliv Electronics to see how it works in practice.</p><p>Briefly, our model states the following:</p><p>Modularization is an enabler of customization and it is necessary for the success of mass customization where set-up costs are critical. Product architecture modularity provides rapid assembly and cost efficiency that is required for postponement and mass customization. In addition, it is used to measure the mass customization degree according to some others.</p><p>Postponement requires process modularity, and it moves the customer order decoupling point downstream in the value added material flow. It contributes the mass customization by increasing both the leanness and agility.</p><p>Customer order decoupling point uses the customer requirements and existing capabilities of the mass customization for optimizing the flexibility-productivity balance.</p>

Abstract In fashion industry, customer demand is constantly changing. One of the main reasons is due to the time of delicate fashion awareness among the consumers, which has come into larger variety and frequent assortment changes. The changing trends in fashion industry allow researchers to get into the postponement strategy as a customized operation in order to focus on quality and flexibility. In today’s fashion market the key for success is to keep an eye on and react to the customer demand. H&amp;M is Europe’s second largest fashion retailer in terms of sales and our work will reflect on H&amp;M supply chain particularly. We try to figure out business strategies such as mass customization and standardization, which H&amp;M is using in their entire supplier chain and in his different processes. Keeping this view in mind, we design our research question, which is about mass customization and standardization and we try to relate these business strategies to the postponement. We try to find out the structure and implementation of these strategies in H&amp;M supply chain with the help of our respondent answers in our proposed questionnaire. For this purpose, an electronic interview with the H&amp;M senior merchandiser in Pakistan liaison office was carried out. The questionnaire contains different questions related to postponement strategy, customization, and standardization and other processes which are used in the supply chain of any fashion industry. The questionnaire consists of 22 major questions. Our research is purely qualitative. We include both types of the data; namely secondary and primary. Secondary data was collected from earlier studies of the literature and related theories of postponement, customization, and standardization and certain areas of fashion retailing, whereas primary data was collected through the electronic interview with Mr. Syed Naqeeb who is working in H&amp;M liaison office as a senior merchandiser in Pakistan. After receiving the questionnaire, we have tried to highlight our research questions with the help of our proposed Frame of Reference in Chapter 2. The Frame of Reference consists of theories which will help the reader to get the clear picture of fashion retailing and the related theories. In the Analysis section, we talk about the activities of H&amp;M and its background followed by its business concept. We define H&amp;M SCM model and draw a figure of H&amp;M complementarities, which we developed by the help of electronic interview. In the Conclusion part, we come to the point that customization and postponement affect fashion retailing by choosing raw material, components, and apparel accessories plus logistic management. The other aspect of our research area is standardization. After the analysis we come to know that Standardization and postponement are also used together in the supply chain of H&amp;M, in raw material, cotton and yarn, dying, packaging and in the care instruction of labels (washing instructions).

Syfte – Examensarbetets syfte  är att beskriva utvecklingsprocessen för utbildningar inom en konsultverksamhet utifrån kundorderpunktsmodeller som används inom tillverkande verksamheter. Syftet har brutits ned i två delmål: Delmål: Att beskriva utvecklingsprocessen för utbildningar inom en konsultverksamhet. Delmål: Att placera in utvecklingsprocessen för utbildningar i kundorder­punkts­modellerna. Metod – För att uppfylla examensarbetets syfte genomfördes en fallstudie på teknikkonsultföretaget Combitech AB i Jönköping. För att ge en grund till det teoretiska ramverket gjordes en litteraturstudie. Empiri samlades in genom en fallstudie, innehållande intervjuer och dokumentstudie. Empirin har sedan analyserats mot det teoretiska ramverket och genom mönsterjämförelse placerades kundorderpunkterna in i modellerna. Analysen har bidragit till att uppnå examensarbetets syfte. Resultat – De utvecklingsprocesser som identifierades för de tre utbildnings­kategorierna saknade ett standardiserat arbetssätt. I stället var utbildningarna ofta enskilt framtagna och hårt knutna till de enskilda konsulterna. Examensarbetet visar att de två kundorderpunktsmodellerna från tillverkande verksamhet fungerade olika bra för att visualisera graden av kundorderstyrning i utvecklingsprocessen för en konsultverksamhet. Som visualiseringsverktyg fungerade den tvådimensionella kundorderpunktsmodellen lite sämre då den inte visade så stor skillnad mellan de beskrivna processerna. Modellen för utvecklings- och designprocessen var mer nyanserad och fungerade bättre för att indikera vilken aktivitet i utvecklingsprocessen som var kundorderdriven. Implikationer – Kundorderpunktsmodellerna är skapade för en tillverkande verksamhet som producerar fysiska varor och genom att testa modellerna på en tjänsteverksamhet utmanas modellens ramverk och funktion. Detta examensarbete har bidragit till att täcka en del av det identifierade teoretiska gapet i användningen av kundorderpunktsmodeller mellan tillverkande verksamhet och tjänsteverksamhet. Vidare forskning – För att bidra till att täcka det teoretiska gapet kan förslagsvis den tvådimensionella kundorderpunktsmodellen vidareutvecklas och anpassas helt för tjänsteverksamhet. En person med akademisk kunskap om tjänsteverksamhet och kundorderpunktsteorier skulle kunna bidra med ny teori inom området. Det skulle också vara intressant att undersöka om det går att kombinera de två kundorderpunktsmodellerna som presenterats i detta examensarbete. / Purpose – The purpose of this thesis is to describe the development process for educations within consulting with customer order decoupling point models commonly used within manufacturing operations. The purpose has been broken down into two parts: Objective: To describe the development process for educations within a consultancy. Objective: To position the development process for educations based on the customer order decoupling point models. Method – In order to meet the thesis purpose, a case study was conducted on the engineering consultancy Combitech AB in Jönköping. To provide a basis for the theoretical framework a literature study was performed. To collect empirical data a case study including interviews and a document study was conducted. The empirical data were then analysed against the theoretical framework, and through pattern matching the customer order decoupling points were positioned into the models. The analysis has helped to achieve the thesis purpose. Findings – The engineering process that was identified for the three educational categories lacked a standardized approach. Instead, programs were often individually designed and tightly tied to the individual consultants. The thesis shows that the two customer order decoupling point models from manufacturing operations varied in usefulness to visualize the degree of customer order management in the engineering process of a consultancy business. As a visualization tool the two-dimensional customer order decoupling point model was of limited value because it didn’t show much difference between the processes described. The model for the engineering and design process was more nuanced and worked better to indicate which activities in the engineering process that were customer order driven. Implications – The customer order decoupling point models are created for manufacturing operations that produce physical goods and by testing these models on a service, the model framework and function is challenged. This thesis has helped to cover a part of the identified theoretical gap in the use of customer order decoupling point models between manufacturing operations and service operations. Limitations – To help cover the theoretical gap the two-dimensional customer order decoupling point model can tentatively be further developed and fully customized for service operations. A person with an academic knowledge of service and customer order decoupling point theories could help create new theory in the field. It would also be interesting to investigate whether it is possible to combine the two customer order decoupling point models presented in this thesis. / KOPtimera

Purpose: The purpose of this research is to analyze the CDP-method in order to develop and refine the method. The method is developed and presented in Bäckstrand (2012), with the aim to strengthen the competitiveness of manufacturing companies. Someone outside of the development context has never, until now and to the researchers knowledge, refined the method. Methodology: A multiple case study with four companies where used. The empirical data collected within the study where used to evaluate the CDP-method and to refine the method. The presented improvement is based on the empirical data and conceptual models developed from theory. Findings: Three improvements were developed. The first of them changed step 8 of the method, the second can´t be tied to a single step and is therefore an overall suggestion, whereas the third provides a new type of analysis within step 6 of the method. Research limitations: The research was conducted at companies where the CDP-method was already implemented. An implementation at a new company could possibly reveal another type of empirical data, which could be interpreted in a different way. The researchers have also detected areas that couldn’t be investigated within this research, these are identified and left for further research. Theoretical implications: Results from this thesis connect the classification of supply risk by Kraljic (1983) with supply chain strategy by Fisher (1997) to enable a new type of analysis. Furthermore, theory within the standardization and over-specification (e.g. Burt, Petcavage &amp; Pinkerton, 2010; Geldeman &amp; van Weele, 2002) is introduced and incorporated in the CDP-method. A third implication is a reinforced focus on strategy in combination with the CDP-method, which is based on theory regarding strategic alignment (e.g. Gattorna &amp; Walter, 1996; Hines, 2004). Managerial implications: The new analysis should, together with the CDP-method as a whole, strengthen adopting companies supply chain and improve internal and external communication. Originality/value: This thesis provides a new set of analysis in the CDP-method that could benefit practitioners.

In vehicle industry, it has been trends towards focusing on pull-basedsystems and elimination of waste (Lean), which decrease the tied-up capitallevel in the focal factory. Research by Holweg &amp; Miemczyk (2002)showed that the relevant supply chain has low inventory level in the focalfactory, but at upstream and especially downstream; the tied-up capitallevel is dramatically higher in comparison to the focal factory.By conducting research and extensive literature reviews, this volatilityof tied-up capital level has been studied and analysed with regard topush and pull systems. As the three main causes of this unevenness; bullwhipeffect, CODP position in supply chain and intensity level of supplierrelationship have been identified and explained.As a practical solution for decreasing the tied-up capital level of finishedvehicles, implementation of centralised warehouse structure hasbeen suggested and discussed.Moreover, as an application of game theory in logistics, iterated prisoners’dilemma has been discussed as the base for a progressive relationshipwith suppliers (upgrading to win-win game) which is requisite for the successof pull-based supply chains. / Program: BSc in Industrial Engineering - International Business Engineering