Did you know that you’re a supply chain strategist in your everyday life?
If you’ve ever purchased food for your household, you’ve more than likely employed a “delayed customization” strategy that allows you to optimize the costs of your groceries while giving you access to a wide array of food on a daily basis.
Many people will buy single ingredients in “bulk,” whether for a week or a month (typically frozen or shelf-stable goods).
Take chicken, for example. You may buy a large package of chicken in order to take advantage of wholesale prices. You may freeze the chicken and thaw a portion that’s appropriate for your household when you decide to make fettuccine on Monday, curry on Wednesday, and grilled chicken on Saturday. You typically don’t purchase these premade types of chicken in advance because:
This may feel like standard meal planning for the week, but it’s also clever inventory management.
With delayed customization, you keep your pantry stocked with basics – flour, basil, quinoa – while you may make quick stops every few days for more expensive specialty or perishable items like peppers or cheese.
The same is true for companies. Purchasing commodity materials in bulk reduces costs and keeps more in-stock. It also pushes customizing further downstream in the production process (hence ‘delayed customization’), which allows for agility and reduced obsolescence of materials.
A food ingredient manufacturer offered fairly standard products but in many possible packaging configurations.
They realized that it was more efficient to package all of their products the same way at the factory and leverage a 3rd party warehouse facility to customize the pallet configuration and labeling requirements to the customer’s needs.
An auto manufacturer uses a standard platform for the chassis, engine, and basic component parts. As the cars are ordered, they configure how the car is assembled to meet the needs of the customer and represent the more individualized car model.
A sandwich company keeps an assortment of bread, meats, cheeses, and vegetables on-hand, but you order the sandwich to your liking.
Just like managing your weekly grocery costs and space constraints in your fridge and pantry, delayed customization can be a powerful way to manage your company’s costs and space constraints as well.
What other supply chain strategies can help your company save money and reduce inventory issues?
Our supply chain and operations advisors are experienced in many manufacturing and distribution companies. We help find the best way to optimize your supply chain management and get the results you want.