Finished Goods Forecasting: Postponement Strategy

Posted by: Mark Krantz Posted Date: 04/10/2014

Finished Goods Forecasting is a multi-faceted  adventure in business. There are theories and practices that some will say are the best and some will say are the worst. The key for a small business is to know the theories and decide what works best for them. One such theory is the Postponement Strategy.

The postponement strategy, is discussed by Gilliland in his book The Business Forecasting Deal: Exposing Myths, Eliminating Bad PracticesThe strategy aims to have goods almost finished, but not quite until needed. The aim is to delay the final assembly as long as possible to avoid having items on shelves waiting to be purchased. He states that rather than having shelves stocked with items waiting for customers, the postponement strategy has products in a state where they can be quickly assembled once an order is received.

This is useful for something that can be configured in the last step into several different things. For example: toothpaste. Toothpaste can be assembled into several different sized tubes. So, if the toothpaste is made, and then held until you know the sizes customers want, then you are using the postponement strategy. That way you don't have a lot of toothpaste waiting on shelves. 

Gilliland states this finished goods forecasting does not eliminate forecasting, it just eliminates some of the variables, such as how many of what size are needed.

This strategy is limited to certain products, but it is a form of finished good forecasting that a small business can consider. It is a strategy that you have to decide if it is best for you, or not.

This is just one of the finished goods forecasting strategies that might work for you. We'd like to help you find what works best for you, so please contact us.

Supply Chain & Risk Management Go Together Like Peas & Carrots

Posted by: Robert Cowan Posted Date: 02/04/2014
Peas and carrots, strawberries and cream, risk management and supply chain management. OK, that last pair doesn't have the same ring to it, but I'm sure supply chain professionals are more than aware of the intrinsic relationship between the two.
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