Logistics and Supply Chain Management, 4th Edition

LOGISTIC S & SUPPLY CHAIN MANAGEMENT

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and hence less inventory in total. Secondly, because the inventory is generic, its

flexibility is greater, meaning that the same components, modules or platforms

can be embodied in a variety of end products. Thirdly, forecasting is easier at the

generic level than at the level of the finished item. This last point is particularly rel-

evant in global markets where local forecasts will be less accurate than a forecast

for worldwide volume. Furthermore the ability to customise products locally means

that a higher level of variety may be offered at lower total cost – this is the principle

of ‘mass customisation’. ...