Which statement best describes the postponement strategy in supply chain management?

Which statement best describes the postponement strategy in supply chain management?

• A. To accelerate all production to meet demand.
• B. To delay final customization until order is received to reduce risk and inventory.
• C. To increase safety stock to prevent shortages.
• D. To ship products before orders arrive to reduce lead times.

Answer: (B)

Postponement strategy focuses on delaying final customization until a customer order is received. By keeping generic components in stock and only completing the final, customized features after demand is known, a company reduces the risk of building unpopular variations and lowers inventory costs. This approach also enhances responsiveness, since the product is finished to exact customer specifications once an order is placed. For example, a computer manufacturer might stock standardized cases and motherboards and delay installing the final software, memory, or peripherals until the specific configuration is ordered. That way, the firm can offer many possible variants without carrying hefty finished-goods inventories. Other options describe speeding up production, increasing safety stock, or shipping pre-orders, which don't capture the essence of delaying finalization until demand signals arrive.

Postponement strategy focuses on delaying final customization until a customer order is received. By keeping generic components in stock and only completing the final, customized features after demand is known, a company reduces the risk of building unpopular variations and lowers inventory costs. This approach also enhances responsiveness, since the product is finished to exact customer specifications once an order is placed.

For example, a computer manufacturer might stock standardized cases and motherboards and delay installing the final software, memory, or peripherals until the specific configuration is ordered. That way, the firm can offer many possible variants without carrying hefty finished-goods inventories.

Other options describe speeding up production, increasing safety stock, or shipping pre-orders, which don't capture the essence of delaying finalization until demand signals arrive.