Postponing Differentiation

The most exciting innovation in the movement toward design for supply is a technique variously called postponement, delayed differentiation, or, less commonly, freeze-point delay. The basic idea is to build products in generic form at the plant, ship them to distribution centers close to their destinations, then perform the final operations that result in a specific product (Figure 15.7). This technique pushes the efficient frontier because it offers greater economies of scale in both production and transportation, yet also increases a company's flexibility to respond to changing demand.

Figure 15.7. The Postponement Technique

The classic success story for postponement is Hewlett-Packard's DeskJet line of printers. ...

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