APPLYING POSTPONEMENT STRATEGY TO INVENTORY MANAGEMENT

Abstract

The purpose of this research is to improve inventory cost and turnover of a manufacturer of wooden furniture by applying manufacturing postponement strategy. This allows a firm to postpone the final manufacturing process until a customer’s specific demand.

Documentary data, such as production process and lead times, sales data, customer behaviors, and delivery lead times, were collected and analyzed in order to develop a new production process. Excel worksheets were created for controlling overall inventory transactions and movements.

The result of the existing and postponement production processes were compared, to identify improvements. The findings were that the average inventory costs of the two pilot product categories could be reduced by 30.3% and 21.3%, and the average inventory turnovers could be improved by 43.4% and 27.1%.