Expanding product variety and high customer service provision are both major challenges for manufacturers to compete in the global operating environment. In addition to reduce cost and response customers¡¦ needs quickly, redesigning products and processes so as to delay the point of product differentiation is becoming an emerging means to meet these challenges. Consequently, this is the concept of postponement.
The principle of postponement calls for redesigning products and processes so that the stages of the production process in which a common process is used are prolonged. Once orders are received, manufacturers finish the final operation to address the demands of mass customization. However, the product / process redesign will produce additional costs and the trade-off between costs will make enterprises hesitate to change the points of differentiation. Moreover, when the outside conditions change, the framework of total costs also changes and the operating decisions must be reconsidered again.
In this paper, we develop a simple model that captures the costs and benefits associated with the redesign strategy in various scenarios. We apply this model to discuss the following three key questions: (1). In each scenario, where is the point of differentiation in the production process¡H (2). How should a firm design its processes to lower the total cost when changing is impossible or too costly in the fast changing environment¡H (3). If an agile firm can change its mode of production to respond to the ever changing environment, how should it adjust the pattern of postponement to lower the total cost¡H
Since there are wide varieties of postponement, we focus our model to analyze two different product / process redesign approaches, namely, standardization and modular design, that are motivated by many real examples. We also compare these two approaches in all respects to provide more explicit principles and directions for enterprises.
Finally, we draw the following conclusions. First, in determining the stage at which the point of differentiation should occur, the key variables are the investment cost per operation and the additional cost, including the processing cost and inventory holding cost, that are resulted from postponement. The trade-off between those variables will determine the optimal postponement strategy. In the case when outside condition is unfavorable for firms, it may not be advisable to apply the principle of postponement. On the hand, when the condition is beneficial, postponement is a better choice.
| Identifer | oai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0619102-104346 |
| Date | 19 June 2002 |
| Creators | Huang, Yu-Ing |
| Contributors | Yi-Ming Tu, Iuan-Yuan Lu, Huei-Mei Liang, Ping-Yi Chao |
| Publisher | NSYSU |
| Source Sets | NSYSU Electronic Thesis and Dissertation Archive |
| Language | Cholon |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0619102-104346 |
| Rights | unrestricted, Copyright information available at source archive |
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