Transportation Uncertainty and Postponement Strategy

A manufacturing company can postpone production and logistics process on its supply chain system. Delaying of manufacturing and logistics can eliminate burden of accurate forecasting of demand and reduce inventory carrying cost. Same postponement process cannot be implemented generally because every product has its own characteristic of demand and every company has its own characteristic of production environment. A company needs to find its best postponement strategy to minimize its cost of a product. This study applies Pagh and Cooper (1998)'s typology of supply chain process to find a best postponement strategy for an example company, one of the global 500 company which have factory both in Europe and U.S. Total cost of the example product may be affected by holding cost rate, customer service level, exchange rate, and transportation uncertainty while the product moves through each supply chain. This study will simulate the supply chain system and apply these factors in each postponement strategy. The simulated data will be used to analyze the effect of parameters and discuss the result.