Appelqvist, P.

Gubi, Ebbe

Consumer electronics retailers need to balance the demand for high product variety and short delivery times with the need to keep shop inventories on an acceptable level. Postponing the creation of product variants to the shop is an attractive solution to the problem. However, careful evaluation is required to balance the savings in shops with additional efforts in product development and the complexity of maintaining additional supply chain concepts. The case company is a manufacturer of consumer electronics with over 1200 dedicated retail outlets worldwide. We first interviewed case company management and retailers in different countries. Next, we simulated the complete supply chain, including component sourcing, assembly, warehousing, distribution and retailing. In the simulations, we evaluated different points of product differentiation along with the corresponding supply chain concept. Results indicate that shop inventory is necessary for high-volume, low-variety products. Manufacturing postponement seems most beneficial when: 1) Customers require a delivery time that is too short to enable ship to order from a central location 2) Product value is high enough to justify additional effort in retail outlets. 3) Product variety is mediocre – not too low and not too high. 4) The retail outlet has low sales volumes. The simulations evealed a potential for inventory savings of 40-80% (average 60%) in retail outlets. Based on simulation results, the case company is now implementing a new delivery concept for highvolume, low-variety products. The intended delivery concept should be considered in product development when deciding the product architecture

The benefit of manufacturing postponement in consumer electronics distribution and retailing

http://vbn.aau.dk/files/3113432/Appelqvist_Gubi_2004.pdf

The benefit of manufacturing postponement in consumer electronics distribution and retailing

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