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Effects of product postponement on the distribution network: a case study

Author

Listed:
  • S Kumar

    (University of St. Thomas)

  • D A Nottestad

    (3M Company)

  • E E Murphy

    (3M Company)

Abstract

This case study is based on a supply network analysis conducted at 3M Company, a large multi-national company headquartered in Maplewood, Minnesota. The company has developed product colouring technology that enables product postponement. This study focuses on the development of a discrete-event simulation model and inventory management equations to accurately portray the behaviour of the proposed distribution network that supports product postponement capability. The paper describes, in detail, the modelling process in the context of this actual case study. In this study, it is shown that properly devised product postponement strategy allows for best-in-class delivery within a specified lead-time. The reasons for choosing this inventory management practice are discussed. The benefits and drawbacks of product postponement are reviewed in general terms. Simulation as a tool for analysing supply networks is developed and evaluated for its ability to support a data-driven decision process.

Suggested Citation

  • S Kumar & D A Nottestad & E E Murphy, 2009. "Effects of product postponement on the distribution network: a case study," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 60(4), pages 471-480, April.
    • Handle: RePEc:pal:jorsoc:v:60:y:2009:i:4:d:10.1057_palgrave.jors.2602572
    DOI: 10.1057/palgrave.jors.2602572
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    References listed on IDEAS

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    1. Ernst, Ricardo & Kamrad, Bardia, 2000. "Evaluation of supply chain structures through modularization and postponement," European Journal of Operational Research, Elsevier, vol. 124(3), pages 495-510, August.
    2. Hau L. Lee & Christopher S. Tang, 1997. "Modelling the Costs and Benefits of Delayed Product Differentiation," Management Science, INFORMS, vol. 43(1), pages 40-53, January.
    3. Zinn, Walter, 1990. "Should you assemble products before an order is received?," Business Horizons, Elsevier, vol. 33(2), pages 70-73.
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    Cited by:

    1. Xiong, Yixuan & Du, Gang & Jiao, Roger J., 2018. "Modular product platforming with supply chain postponement decisions by leader-follower interactive optimization," International Journal of Production Economics, Elsevier, vol. 205(C), pages 272-286.
    2. Elia Oey & Evelyn Carolina Nitihardjo, 2016. "Selecting Regional Postponement Centre Using PESTLE-AHP-TOPSIS Methodology: A Case Study in a Pharmaceutical Company," Global Business Review, International Management Institute, vol. 17(5), pages 1250-1265, October.

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