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Logistics Challenge of Customisation

Logistics Challenge of Customisation. Janny Leung Systems Engineering & Engineering Management Department The Chinese University of Hong Kong. The Evolution of Marketing. The new 4 P's'. Product - the essence of what we offer the customer

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Logistics Challenge of Customisation

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  1. Logistics Challenge of Customisation Janny Leung Systems Engineering & Engineering Management Department The Chinese University of Hong Kong

  2. The Evolution of Marketing The new 4 P's' Product - the essence of what we offer the customer Processes - system and activities that support provision of the core product or services Performance -do we get it right? Have we live up with our promises? People - interaction with employees: make or break!

  3. Changing Customer Expectations • Shortening product life cycles • Higher service requirements • Global market -- segmentation • Product proliferation • multi-stage, multi-vendor production • global transportation logistics • demand • cost • leadtime Uncertainty!!

  4. Supply Chain Management -- Christopher Tang Product variety is increasing • Crest toothpastehave 35 options (flavors and package sizes) • HP workstationshave 500,000 options (RAM cards, video cards, graphic cards, monitors, disk drives, etc..) • GM cars have 20,000,000 versions (color, interior combinations, drive train configurations, and option choices)

  5. Supply Chain Management -- Christopher Tang Pitfalls of increasing product variety • Demand may not increase -- (Quelch & Kenny, HBR 1994) • total demand spread over more SKUs • reduced product life cycle • Forecasting nightmare • High manufacturing cost • High inventory cost • Poor availability of product to customers • High product support and service costs • “Mark-down” sales at the end of product life

  6. Supply Chain Management -- Christopher Tang Postponement:A Strategy for managing product variety in Global Market • Postponement:Delaying the “point of product differentiation” • Two types of postponement • Logistic postponement: moving customization point to closer to customers • Form postponement: delaying differentiation point by standardizing parts, products and processes

  7. HP公司各種打印機 香港中大-清华第三届供应链管理高层经理研修班 香港 2002年11月

  8. HP – Universal Power Supply • A new network printer for world-wide distribution • 110V and 220V power supply for North American and European markets • Long lead time from engine manufacturing (by Japanese partner) to printer customers • High regional split forecast error ! Hau Lee

  9. 負相關减低波動 負相關 香港中大-清华第三届供应链管理高层经理研修班 香港 2002年11月

  10. FA&T Customization PCA No Delayed Product Differentiation Mono Printer Color Printer FA&T PCA Customization With Delayed Product Differentiation Supply Chain Management -- Christopher Tang Form Postponementat HP DeskJet Printers • Standardization -- Mono/Color Printer Mono Printer Color Printer • Cost -- Additional materials • Benefit -- Lower Inv.. and Higher Service Level

  11. + + 10 10 10 30 = DC A A B B C C 100 100 100 100 100 100 Logistics Postponement:Impact on Distribution System 17

  12. Advantages of Postponement • Lower inventory cost • Improved product availability (better customer service) • Lower burden on forecasting • especially during ramp-up and end-of-life • Lower reconfiguration costs for trans-shipment • Lower obsolescence and write-offs • Higher design, manufacturing/material costs

  13. Logistics Challenges to Automotive Industry? Thank you

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