Nowadays firms must develop inventory policies that enable them to cope with the changing marketplace. Determining proper inventory locations can help decrease costs related to inventory holding and transportation. Moreover, this allows firms to respond in a timely manner to customers’ requirements. As a result profit margins can be enhanced as well as the competitiveness of a firm. However, the decision of where to locate inventory in a supply chain is difficult since many companies are managed independently. The present research is developed as a case study where product classification, customer and supplier segmentation schemes are reviewed in order to determine appropriate inventory locations along the supply chain. The thesis is written upon literature and empirical research, where most of the data was collected through personal interviews and observations at the supply chain management offices of a distributor for sealing material parts in Europe. Our conclusion shows that product classification has an important impact on inventory location decisions. Also, we conclude that products should be classified based on both physical characteristics and demand factors, as well as according to customers’ requirements. Another factor to be considered when deciding on inventory location is supply risks, due to issues related to raw material availability and capacity. Nonetheless, the selection of classification variables is challenging as it is hard to determine which factors are more relevant than others as this varies depending on each firms’ needs. In addition, we find that supply chain strategies are not realistic due to the constant changes in the business environment and the inability of a firm to manage whole supply chains. Furthermore, a high level of communication among supply chain partners is fundamental, especially when a centralized inventory policy and a postponement strategy are in place.

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.

Customer Demand Uncertainty is a big obstacle for companies to sustain their competitiveness in the market that responding customer requirements becomes essential. Besides companies need to consider also their cost structures which should have in high consistency to survive as well. Lean and Agile terminologies have been investigated so far in cost and responsiveness to customer manner within internal system perspective i.e. product volume and variety. This thesis aims to link lean manufacturing steps with customer demand uncertainty condition following information systems, marketing issues and human factor for management level in framework that firm’s (manufacturer) current condition can be tested according to answers from questionnaires and implementation of assessment tables since it is used as guideline and provides on which level firms are in demand uncertainty, lean and agile manufacturing. This support enables to firms to create their own flexible leagile decoupling point according to their interior characteristics and capabilities in the market.

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>Customer Demand Uncertainty is a big obstacle for companies to sustain their competitiveness in the market that responding customer requirements becomes essential. Besides companies need to consider also their cost structures which should have in high consistency to survive as well. Lean and Agile terminologies have been investigated so far in cost and responsiveness to customer manner within internal system perspective i.e. product volume and variety. This thesis aims to link lean manufacturing steps with customer demand uncertainty condition following information systems, marketing issues and human factor for management level in framework that firm’s (manufacturer) current condition can be tested according to answers from questionnaires and implementation of assessment tables since it is used as guideline and provides on which level firms are in demand uncertainty, lean and agile manufacturing. This support enables to firms to create their own flexible leagile decoupling point according to their interior characteristics and capabilities in the market.</p>

<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).