Don’t Be Put Off by Postponement
At the recent Warehousing Education and Research Council's (WERC) annual conference, there was an interesting educational session discussing the theory of postponement. In simple terms, the theory of postponement suggests you put off making certain decisions until the last possible moment. By doing so, you (usually) get more value for the same number of dollars you might have spent, assuming innovation outruns inflation. This is not to be confused with the theory of procrastination, which suggests you just keep putting things off until tomorrow. Just-In-Time manufacturing is probably an example of the postponement concept as applied to manufacturing. The nth degree (some might say absurd degree) of this theory is to build one "whatever" when it is ordered. In fact, this is the direction we (meaning manufacturers) are headed, according to some theoreticians.
You're going to be reading more about the theory of postponement on these pages and in other business magazines. Postponement will be encapsulated with stories featuring mass customization in manufacturing.
What are the benefits of postponement to packaging professionals, and what will this mean? As the speaker at the WERC conference noted, (as have many others) the principal benefit of postponement is inventory reduction. We all know not having a building full of stuff gathering dust is beneficial. Packaging professionals, however, are going to be on the frontlines of defense in the battle over practical application of this cost-saving conjecture.
As the packaging professional member of the team, you will have to make sure the manufacturing side of your company recognizes the need to keep products within the parameters of a minimum number of carton sizes. This offers several benefits. If you have, let's say, three standard carton sizes, you might benefit from volume discounts with your corrugated suppliers. If your company has migrated to returnable containers, benefits accrue as you keep your shipments within the parameters of the pallet size you've selected as your standard.
Keeping the number of carton choices to a minimum helps speed things along the packaging line. Employees do not have to guess which size is best, then over-fill or under-fill the wrong carton choice. Along with standardizing on cartons, you can standardize on dunnage. The same thought process applies to standardized containers going onto standardized pallets.
When packaging is postponed to the last moment, it's best to keep each part of the process as simple as possible. More haste, less speed, as the saying goes.
Another area packaging professionals must be mindful of is shipping partially manufactured products, in bulk, to areas within the plant, or to regional distribution centers, for final assembly. Part of this theory of postponement suggests each step of the manufacturing process add value, but final assembly not be completed until the product is ordered. If that is done, more, rather then fewer shipping containers will be required. It appears if your company chooses to follow this theory of manufacturing, reusable containers would be the most cost-beneficial path to follow.
Precisely when to postpone packaging depends on a number of factors. Researchers Diana Twede and Robb Clarke of Michigan State School of Packaging have done a lot of work on the subject. They suggest the reasons to postpone are to reduce risk, inventory and transportation costs. At what point in the supply chain, however, depends on economies of scale in your packaging operation, transportation cost advantages from smaller cube and weight, and risk from variations from forecast demand.
And what factors favor packaging postponement? Twede and Robb say characteristics of the product, market demand and manufacturing logistics, for starters.
The theory of postponement as applied to transport packaging certainly has potential to save you money. If all of this has a familiar ring, I should point out that I wrote (in May 1992) about how packaging engineer Kevin Howard of Hewlett-Packard applied this theory to a project and saved his company tens of millions of dollars per year. Others have been writing about it much longer. So maybe the real question is: Why have companies been procrastinating when they should have been postponing?
Clyde E. Witt