Can Your Company Benefit from a Postponement Strategy?
Make-to-stock or make-to-order demand-fulfillment strategies can lead to either costly overproduction or underproduction risks. To avoid these pitfalls and gain a significant competitive advantage, many manufacturing and wholesale distribution companies are taking a fresh look at postponement strategy as a promising alternative to their current fulfillment strategy.
By holding products in a less-finished or pre-customized form and pushing the point of product differentiation closer to the point of the customer order, a well-executed postponement strategy can help a company improve its forecasting ability and enhance its capacity to offer customers a greater range of variety and customization. As a result, companies reduce the risk of losing sales because their product is not available when a customer wants it. In addition, companies realize lower inventory holding costs and decreased obsolescence and scrap costs—all of which ultimately lead to greater cash flow and improved top-line revenues.
It sounds promising, but is postponement truly the answer for your company? It depends. For many companies, the answer may very well be a resounding “yes.” But postponement is not for everyone.
This is the second article in a five-part series, "How Manufacturing and Wholesale Distribution Companies Can Maximize Performance and Profitability," prepared by CohnReznick Advisory Group and the Firm's Manufacturing and Wholesale Distribution Industry Practice.
For more information on postponement, please contact David Rubin, Principal with CohnReznick Advisory Group, and National Director, Risk and Business Advisory, at 973-871-4021, or Alan Wolfson, Partner and Manufacturing and Wholesale Distribution Industry Practice Leader, at 646-254-7416.
For more information on CohnReznick's Manufacturing and Wholesale Distribution Industry Practice, visit our website.
This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.