Delayed differentiation
Encyclopedia
Delayed differentiation or Postponement is a concept in supply chain management
where the manufacturing process starts by making a generic or family product that is later differentiated into a specific end-product. This is a widely used method, especially in industries with high demand uncertainty, and can be effectively used to address the final demand even if forecasts cannot be improved.
An example would be Benetton
and their knitted sweaters that are initially all white, and then dyed into different colors only when the season/customer color preference/demand is known. It is usually necessary to redesign the product specifically for delayed differentiation, and resequence to modify the order of production manufacturing steps.
Typically all paint companies were burdened with the problem of having more than 200 shades, each available in more than 5 container sizes, making more than 1000 Stock keeping Units (SKUs). The cost of keeping so many final products was almost killing the business.
Paint companies changed their process to make white paint and the dyes of three basic colours. The final mixing was done by a machine at the retail end. This minimised the inventory kept by the retailer whilst improving customer service by giving the customer a choice of millions of shades in the exact quantity required.
Supply chain management
Supply chain management is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers...
where the manufacturing process starts by making a generic or family product that is later differentiated into a specific end-product. This is a widely used method, especially in industries with high demand uncertainty, and can be effectively used to address the final demand even if forecasts cannot be improved.
An example would be Benetton
Benetton Group
Benetton Group S.p.A. is a global luxury fashion brand, based in Treviso, Italy. The name comes from the Benetton family who founded the company in 1965. Benetton Group is listed in Milan....
and their knitted sweaters that are initially all white, and then dyed into different colors only when the season/customer color preference/demand is known. It is usually necessary to redesign the product specifically for delayed differentiation, and resequence to modify the order of production manufacturing steps.
See also
- Postponement
- Mass customizationMass customizationMass customization, in marketing, manufacturing, call centres and management, is the use of flexible computer-aided manufacturing systems to produce custom output...
Typically all paint companies were burdened with the problem of having more than 200 shades, each available in more than 5 container sizes, making more than 1000 Stock keeping Units (SKUs). The cost of keeping so many final products was almost killing the business.
Paint companies changed their process to make white paint and the dyes of three basic colours. The final mixing was done by a machine at the retail end. This minimised the inventory kept by the retailer whilst improving customer service by giving the customer a choice of millions of shades in the exact quantity required.