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ARTICLE TITLE

Zinn, Walter, Bowersox, Donald J., "Planning physical distribution with the principle of postponement", Journal of Business Logistics, Vol. 19, No. 2, 1988, pp. 117-136.

 

ABSTRACT

The principle of postponement holds that the time of shipment and the location of final product processing in the distribution of a product be delayed until a customer order is received. A methodology is developed and illustrated to help managers evaluate when postponement is justified. Five types of postponement are developed: labeling, packaging, assembly, manufacturing, and time. Normative cost models are developed for each type of postponement. Each model is simulated across a range of 8 product physical and demand characteristics. The results show that there is a cost advantage in postponing the distribution of a substantial number of products. The most promising types of postponement, with respect to generating distribution cost savings, are found in packaging and time. Product value is the most important variable that justifies form postponement. Uncertainty of demand is the most important determinant of time postponement.