Postponement is a business strategy employed in manufacturing and supply chain management which maximizes possible benefit and minimizes risk by delaying further investment into a product or service until the last possible moment, or where a manufacturer produces a generic product, which can be modified at a later stage before the final distribution to the customer. An example of such a strategy is Dell Computers' build-to-order online store. One of the earliest references to the concept was in a paper by Walter Zinn and Donald J. Bowersox in the Journal of Business Logistics in 1988, which highlighted five types: labelling, packaging, assembly, manufacturing and time postponements.[1]
One of the most modern definitions today is the following, suggested by Christopher (2005):
Postponement refers to the process by which the commitment of a product to its final form or location is delayed for as long as possible.[2]
A successful example of postponement – delayed differentiation – is the use of "vanilla boxes".[3] Semi-finished computers are stored in advance of seeing the actual demand for the finished products. Upon seeing the demand, thus with no residual uncertainty – these “vanilla boxes” are finished by adding (or removing) components. The three key interrelated decisions are: (a) how many different types of vanilla boxes to stock, (b) in what quantities, and (c) how to finish to meet the order most effectively. Another example is an umbrella manufacturer who does not know what the demand will be for different colored umbrellas. The manufacturer will manufacture all white umbrellas and dye them later when umbrellas are in season and it is easier to predict demand of each color of umbrella. This way the manufacturer can stock up on white umbrellas early with minimal labor costs, and be sure of the demand before they dedicate time and money into predicting the demand so far in the future.