Postponement strategies through business process redesign in automotive manufacturing

Purpose – To demonstrate how postponement strategy can be applied in an automotive company by using business process redesign in the knowledge innovation context. Design/methodology/approach – A demonstrative case was developed using simulation of alternative scenarios of cycle service levels (CSL) and product flexibility, etc. to determine the value of postponement (VOP) in a manufacturing process integrated with a supply process. Findings – It was shown that by managing the knowledge on existing processes and developing an innovative mindset for managers, it is possible to derive significant benefits by redesigning the processes. The financial benefits in terms of the VOP showed significant savings even at high service levels desired in automotive supply chains. The need to identify judicious level of flexibility to benefit from postponement strategy was observed to be important. Research limitation/implications – A pragmatic data set reflecting the operating conditions was used to show the potential benefits. There is a need to generalize the results with alternative data sets. Additional research will be expedient to enrich some of the useful possibilities identified in this industry research effort. Practical implications – Postponement strategies can offer significant benefits if the knowledge of existing supply chain and manufacturing processes is used to innovate new integrated process redesigns. These benefits may be usefully measured by the industrial managers as the VOP. The VOP is dependent on CSLs as well as the flexibility requirements due to the multiple automotive models. Originality/value – In the knowledge and innovation context this is a useful industrial research effort in the organization to redesign the external (supply chain) processes with proper collaboration and redesign of the internal (manufacturing) processes leading to significant potential benefits as shown by the VOP under various scenarios.