Question

1. Define the terms and explain the role of postponement and speculation in the supply chain

2- Explain and give 2 example of cost tradeoffs in logistics

3- Define or describe the order cycle. What are some causes of order cycle variability and what are the consequences?

Answer 1

Postponement is a deliberate action used in the supply chain department to delay the manufacturing or distribution of products until they receive orders from the customers. Postponement strategy reduces the incidence of wrong manufacturing or inventory development of products. It also reduces anticipatory risks in the supply chain. The strategy of postponement can be fine-tuned so that only generic parts of the products are warehoused and reduce inventory pressure of the firm. The strategy can be divided into two forms: pull postponement and form postponement. Both strategies are used by supply chain management to obtain the competitive benefits of the firm.
On the other hand, speculation strategy is used in the supply chain to reduce the cost of logistics by maximizing the use of resources. This strategy is based on savings created by economies of scale. It also reduces the cost of manufacturing by running large production batches. Speculation strategy encourages large production to produce the scale in the economy and manufactures, and thus supply chain can create less volatile plans. However, this strategy includes high inventory costs due to higher obsolescence and inventory level.