Directory UMM :Data Elmu:jurnal:T:Transportation Research_Logistics & Transportation Review:Vol36.Issue3.Sept2000:
Transportation Research Part E 36 (2000) 205±217
www.elsevier.com/locate/tre
Postponed manufacturing supplementary to transportation
services?
Remko I. van Hoek a,b,c,*, Roland van Dierdonck d
a
Cran®eld School of Management, UK
Erasmus University of Rotterdam, Netherlands
c
University of Ghent, Belgium
Vlerick Leuven Ghent School of Management, University of Ghent, Belgium
b
d
Received 23 April 1998; received in revised form 26 August 1999; accepted 24 September 1999
Abstract
This paper empirically assesses the economic size (in terms of full time equivalent employees (FTEs)) of
postponed manufacturing applications and related activities. Based on a survey among 782 companies, the
dierences in size and scope of applications between manufacturers, wholesalers and logistics service
providers are assessed. Currently, relatively simple postponement applications are practiced in wholesale
and logistics services as supplementary services. More complex, high value adding manufacturing activities
are still the primary domain of manufacturers and these are not often outsourced to logistics service
providers. Based on future expectations of respondents this need not stay this way. Ó 2000 Elsevier
Science Ltd. All rights reserved.
1. Introduction
``Postponement is one of the only true logistics concepts'' (Prof. A.C. McKinnon, comment
to the author).
``A critical paradigm shift is that from a Push products out - forecast driven supply chain
towards a Market product in - postponement driven supply chain. [...] For which the
development of inter-organizational supply chain postponement is a challenge.'' (Prof.
*
Corresponding author.
E-mail address: remko.van.hoek@wxs.nl (R.I. van Hoek).
1366-5545/00/$ - see front matter Ó 2000 Elsevier Science Ltd. All rights reserved.
PII: S 1 3 6 6 - 5 5 4 5 ( 9 9 ) 0 0 0 2 8 - 9
206
R.I. van Hoek, R. van Dierdonck / Transportation Research Part E 36 (2000) 205±217
D.J. Bowersox during the Annual Conference of the Council of Logistics Management, Chicago, October 1997).
Postponement can be traced back to the 1950s and 1960s literature (Bucklin, 1965) and the
1920s in practice (CLM, 1995). Initially postponement was applied in the distribution sphere
(logistics postponement), involving the delay of the forward movement of inventories in the
channel. Bucklin (1965) covered the questions: where in the channel should inventory be positioned (upstream ± downstream) and by which player (supplier, customer). The advantages of
postponing the forward movement of goods until actual customer orders are received are avoiding
obsolete inventories and low customer responsiveness by avoiding wrong time and place utility of
products. The disadvantages may be that, as lead times may increase due to the longer transportation routes from central inventories to customers, some safety-inventories may need to be
maintained by customers.
In addition to time and place utility, a third utility has been added to the postponement
concept: that of form/function utility. In postponed manufacturing applications, ®nal processing
and manufacturing activities are postponed until customer orders have been received and are
performed from operations centrally located in the international supply chain to include customer
and country speci®c characteristics in ®nished products. In the operating system generic products
may be customized through adding product features or assembling speci®c products from generic
modules. This would allow not only for customization but also maintain cost-eectiveness based
on lowered inventory-levels and maintained economies of scale in upstream, forecast-driven,
primary manufacturing. The emergence of this new form of postponement may be contributing to
the turbulence of markets and demanding customers:
``Virtually all managers are keenly aware that the key to winning in market after market today
is excelling in tailoring one's oerings to the speci®c needs of each customer while still maintaining low costs and prices''. (Anderson and Narus, 1995, p. 75).
Placing ®nal manufacturing activities in the distribution channel contributes to the role of the
channel as a service channel. First, the logistics function is conceptualized as a service function
because its output is not a product but a performance, like just-in-time delivery of the right
amount of goods at the right place (Heskett et al., 1990). Second, postponed manufacturing
activities are often included in the service oerings of logistics service providers as services supplementary to core-services of transportation and warehousing.
The purpose of this paper is to assess whether or not ®nal manufacturing activities are actually
being postponed and placed in the distribution channel. In line with the original Bucklin (1965)
approach, the question then becomes which player of the channel will apply the principle: the
manufacturer in-house, wholesalers or transport and logistics service providers. For the latter,
postponed manufacturing applications may seem a logical extension of warehousing and transport services they are traditionally oering in the distribution channel. A number of studies have
been published projecting the future size of the postponement concept, these projections had been
promoted to transport and logistics service providers to urge investment in postponement services
(Kearney and Knight Wendling, 1993). It is unknown however (A) to what extend the concept is
R.I. van Hoek, R. van Dierdonck / Transportation Research Part E 36 (2000) 205±217
207
applied today and (B) to what extend the applications are still mainly kept in-house by manufacturers and wholesalers or outsourced to logistics service providers.
Apart from the question whether or not postponed manufacturing is a viable area of supplementary services for transport and logistics service providers, it is also relevant to assess the size of
employment created in postponed manufacturing applications. This oers not only insight in the
size of the market for these supplementary services but also of the economic impact the principle
of postponement holds for the area studied. The same publications predicted that a large economic impact could be created with postponed manufacturing coming to the forefront of international business in countries that have a strength in transport and logistics. It is interesting to
assess whether or not that is actually happening, thereby raising the economic impact of transport
and logistics related business phenomena.
2. Literature review and development of hypotheses
This section reviews the relevant literature and develops research hypotheses.
Lampel and Mintzberg (1996) state that the history of most (US) businesses over the past 100
years has been one of fortunes built on the transformation of fragmented and heterogeneous
markets into uni®ed industries: standardization of taste, allowing for the standardization of design and mechanized mass production of standard products, distributed through mass channels.
Increasingly however, they argue that companies are looking for ways to increase the share of
customization oered. In a categorization of supply chains based on the amount of standardization versus customization of activities in the supply chain they develop, customization is expected to start downstream in the chain with distribution activities, involving shipment to order
(logistics postponement). Increasingly, it is expected that customization is working its way up into
the assembly and ®nal manufacturing of products. This approach should allow companies to
achieve mass customization through a combination of cost eective mass production in the upstream stages of the supply chain and customization in the ®nal stages of the chain. Morehouse
and Bowersox (1995) predicted that in the near future about 50% of all inventories (in agri-food)
supply chains will be maintained in a semi-®nished state waiting for the ®nal processing and
packaging based on customer orders.
In the literature various forms of postponed manufacturing can be found, involving a wide
variety of activities that may be postponed. These range from postponed packaging and labelling,
through adding product features or adapting products to ®nal assembly (see for example Cooper,
1993; Zinn and Bowersox, 1988; Feitzinger and Lee, 1997). Despite these theoretical foundations
of the postponement concept, companies have only recently and relatively slowly began to implement postponed manufacturing systems. In many supply chains the application of postponed
manufacturing is the outcome of a logical sequence in which manufacturers initially implement
logistics postponement resulting in European distribution centres and then add form postponement to those operations. Often these distribution centres are partly or fully operated by transport
or logistics service providers on behalf of their customers. In many cases, adding postponed
manufacturing activities to these existing warehouse and transport operations seems a logical
extension of the relation with existing customers and the service oerings. Followed by (popular)
publications such as Kearney and Knight Wendling (1993) and van Donselaar and Sharman
208
R.I. van Hoek, R. van Dierdonck / Transportation Research Part E 36 (2000) 205±217
(1997), some transport and logistics service providers even started marketing themselves as ``industrial added value'' providers instead of transport and warehousing companies, indicating the
attention paid to postponed manufacturing in this sector. Finally, there is a traditional role for
wholesalers in customizing products (Daugherty et al., 1992; Stern et al., 1997). A fundamental
distinction underlying the applications between sectors, however, is that manufacturers and
wholesalers on the one hand perform the activities on their own account, while maintaining
ownership of goods. Logistics service providers, on the other hand, perform these activities as a
service (supplementary to traditional transport and warehousing services) while their customer
maintains ownership of goods. Measuring the application of postponement activities, in terms of
jobs involved, between sectors not only measures the application (and its economic impact
through employment creation) itself, it also measures the degree to which the applications are kept
in-house by manufacturers and wholesalers and the degree to which they are outsourced to service
providers.
The ®rst hypothesis is:
H1: To date, most postponement activities will be applied to a larger extent in the transport sector
and wholesales than in the manufacturing sector.
Further assessing the current application of postponement, a distinction in activities performed
and the degree of outsourcing can be expected. Previous studies of the factors manufacturers use
in outsourcing activities to transport and logistics service providers indicate the importance of
factors such as the service supplierÕs manufacturing and product expertise, and the contact with
the market (see for example: Daugherty et al., 1996; McGinnis and Kockunny, 1995). Performing
®nal manufacturing activities such as assembly requires manufacturing expertise critically different from the traditional areas of expertise of service providers (warehousing and transportation). Outsourcing postponed manufacturing can also result in a loss of contact with the ®nal
customer, cutting o a channel of market signals of use in the manufacturerÕs future product
development and marketing. Finally, these postponed manufacturing operations require transaction speci®c investments of service providers which may only be justi®ed for long lasting and
well established customer relations. Case studies indicate that third party ®nal assembly and
con®guration applications can emerge in alliances that have developed over a large number of
years (van Laarhoven and Sharman, 1994). This is in contrast to lower value-adding activities like
for example packaging which are closer to the traditional warehouse functions and are more easily
and often outsourced to service providers. Lieb and Randall (1996) for example show, based on
bi-annual surveys, that product assembly is a less used third party logistics service than warehouse
management and shipment consolidation. Finally, the role of wholesalers in customizing products
may also be limited to lower value-adding activities because wholesalers, like transport companies, do not have the industrial expertise of manufacturers. This leads to two variations of a
second hypothesis:
H2a: The postponement applications in the manufacturing sector will be greater in the area of
higher value-adding manufacturing activities, compared to those in transport and wholesale.
H2b: The postponement applications in the transport and the wholesale sector will be greater in
the area of lower value-adding activities, compared to those in the manufacturing sector.
R.I. van Hoek, R. van Dierdonck / Transportation Research Part E 36 (2000) 205±217
209
Fig. 1. Conceptual model for empirical testing.
Following the increasing attention paid to the need for mass customization, it can be expected
that the use of postponed manufacturing applications will increase over the next years. A number
of authors (Anderson and Narus, 1995; Pine, 1993) indicate that postponing assembly and other
manufacturing activities are the best options for achieving ecient customization. However, this
type of customization is judged to be very complex, more complex for example than providing
customization based on distribution service (see: Daugherty et al. 1992). In that respect, and given
hypothesis 2, the future growth of postponement applications can be expected to become more
important in the industry than in the transport sector. Therefore a third hypothesis is:
H3: The growth of postponement applications is expected to be greater in the manufacturing
sector than in the transport sector.
Fig. 1 illustrates the conceptual model based on the above hypotheses.
3. Research methodology
A survey was developed together with the Dutch national bureau of statistics (CBS). The
primary objective was to uncover the current economic value of postponement in the Netherlands,
measured in full time equivalent employees (FTEs). The study was limited to the Netherlands
because this provided manageable population size for this ®rst survey of postponement applications. Also the Netherlands is a country very active in international trade and distribution, with
a large logistics service sector, providing a proper basis for the application of postponement
(Kearney and Knight Wendling, 1993).
The preparation included a de®nition study and a question development phase based on 75 test
interviews in dierent sectors, to assure that the right terminology was used and that the right
questions and postponed manufacturing activities were included in the survey. The survey included a list of activities that could be performed in postponed manufacturing operations, ranging
from high value-adding activities such as assembly and the sizing of products, to lower valueadding activities like packaging and labelling. Also some related activities such as the billing of
customers and installation of products were included as possible supplementary services of
postponement operations.
210
R.I. van Hoek, R. van Dierdonck / Transportation Research Part E 36 (2000) 205±217
The study itself consisted of two stages. First, companies active in international trade (industry
and wholesale) and transport and logistics services providers were phoned to identify the proper
respondent within the company and to ask for his or her cooperation. For companies in international trade a size criterion was used as a selection criterion. Only companies with import and
export of over 5 million Dutch guilders (2.6 million US dollars) in the same SIC code were included in a random selection. Next the survey was mailed (a ®rst mail wave and a follow-up wave
after 6 weeks). The total number of companies responding was 782, a response rate of 68% of the
population in the mailing and 53% of the total population, including those that did not agree to
receive the survey during the initial by phone contact.
Following data entry, results were checked in two ways. First, in case of inconsistent response,
companies were phoned back. Next, a comparison was made between survey responses and data
about head-counts known to the CBS through other statistics. Based on phone backs 20 responses
had to be corrected.
In the survey, respondents that applied postponement were asked to specify the number of
employees/workload in FTEs for those postponement activities applied. Furthermore, to develop
an empirical basis for projections of the future size of postponement applications, respondents
were asked to give their expectation about the future (in three years) number of employees for
those activities. This question was operationalized on a three point scale with the labels: decreased
()1), stable (0) and increased number of employees (+1).
4. Results
This section presents the results of the survey, starting with the applications found in the
various sectors.
4.1. Current application of postponement
Table 1 lists total number of FTEs reported per activity by sector to assess the applications of
postponement by sector. Figures at a two digit level are possible because companies can employ
less than an FTEs, for example, a half time person 0.5 FTE. To test hypotheses 1 and 2, the
absolute number of FTEs reported by the respondents were divided by the total number of FTEs
in the companyÕs workforce, resulting in an average percentage of total workforce in the activities.
These percentages are also presented in Table 1. This correction was included to avoid a bias
towards larger or smaller sectors. For example, an average 4.9% of the workforce of responding
manufacturers is active in assembly, whereas 2.49% and 0.98% of FTEs in wholesales and
transport are active in assembly.
The absolute ®ndings presented in Table 1 were extrapolated to the entire Dutch economy by
the CBS indicating that over 350 thousand FTEs are created by postponed manufacturing applications (over 6% of total employment in the Netherlands). With respect to the ®rst part of the
main question (the extend to which postponement is applied today) this indicates the overall
relevance of postponement applications, at least for employment in the Netherlands. The analysis
here focuses on which sectors are most relevant in the context of the employment creation or
postponement application.
211
R.I. van Hoek, R. van Dierdonck / Transportation Research Part E 36 (2000) 205±217
Table 1
Postponement applications per sectora
Activities
Manufacturing absolute
FTEs
Assembly
1211
Con®guration
127.05
Adding manuals
103.30
Repair of transport damage
55.59
Installation at customer site 199.86
Labelling
405.24
Sizing
406.61
Blending and mixing
141.00
Adding product features
223.00
Inspection for repair
116.43
Storage
1727.21
Debtor administration
289.45
Billing ®nal customers
188.10
Reconditioning
48.15
Order intake/Registration
494.75
Testing
599.36
Packaging
685.90
a
Oneway
ANOVA
Average
% of
empl.
Wholesale
absolute
FTEs
Average
% of
empl.
Transport
Absolute
FTEs
Average
% of
empl.
Signi®cance of
dierence
4.95
0.62
0.69
0.49
0.71
1.23
2.04
0.80
1.04
0.77
7.06
1.80
1.44
0.37
3.60
2.57
2.36
1068.50
222.64
169.47
162.00
250.34
401.71
383.38
413.60
194.03
179.15
5325.34
405.42
424.44
137.15
771.78
675.84
775.95
2.49
0.83
0.37
0.92
0.81
1.46
1.67
1.34
0.69
0.96
12.41
3.09
2.91
0.65
4.92
2.48
2.91
768.95
150.26
240.60
104.68
150.30
377.49
83.50
242.20
181.90
110.75
12,923.07
223.35
387.46
264.30
1203.45
299.74
781.39
0.98
0.38
0.52
0.43
0.14
1.48
0.18
0.82
0.38
0.25
16.47
2.05
4.64
0.56
5.49
1.49
2.7
www.elsevier.com/locate/tre
Postponed manufacturing supplementary to transportation
services?
Remko I. van Hoek a,b,c,*, Roland van Dierdonck d
a
Cran®eld School of Management, UK
Erasmus University of Rotterdam, Netherlands
c
University of Ghent, Belgium
Vlerick Leuven Ghent School of Management, University of Ghent, Belgium
b
d
Received 23 April 1998; received in revised form 26 August 1999; accepted 24 September 1999
Abstract
This paper empirically assesses the economic size (in terms of full time equivalent employees (FTEs)) of
postponed manufacturing applications and related activities. Based on a survey among 782 companies, the
dierences in size and scope of applications between manufacturers, wholesalers and logistics service
providers are assessed. Currently, relatively simple postponement applications are practiced in wholesale
and logistics services as supplementary services. More complex, high value adding manufacturing activities
are still the primary domain of manufacturers and these are not often outsourced to logistics service
providers. Based on future expectations of respondents this need not stay this way. Ó 2000 Elsevier
Science Ltd. All rights reserved.
1. Introduction
``Postponement is one of the only true logistics concepts'' (Prof. A.C. McKinnon, comment
to the author).
``A critical paradigm shift is that from a Push products out - forecast driven supply chain
towards a Market product in - postponement driven supply chain. [...] For which the
development of inter-organizational supply chain postponement is a challenge.'' (Prof.
*
Corresponding author.
E-mail address: remko.van.hoek@wxs.nl (R.I. van Hoek).
1366-5545/00/$ - see front matter Ó 2000 Elsevier Science Ltd. All rights reserved.
PII: S 1 3 6 6 - 5 5 4 5 ( 9 9 ) 0 0 0 2 8 - 9
206
R.I. van Hoek, R. van Dierdonck / Transportation Research Part E 36 (2000) 205±217
D.J. Bowersox during the Annual Conference of the Council of Logistics Management, Chicago, October 1997).
Postponement can be traced back to the 1950s and 1960s literature (Bucklin, 1965) and the
1920s in practice (CLM, 1995). Initially postponement was applied in the distribution sphere
(logistics postponement), involving the delay of the forward movement of inventories in the
channel. Bucklin (1965) covered the questions: where in the channel should inventory be positioned (upstream ± downstream) and by which player (supplier, customer). The advantages of
postponing the forward movement of goods until actual customer orders are received are avoiding
obsolete inventories and low customer responsiveness by avoiding wrong time and place utility of
products. The disadvantages may be that, as lead times may increase due to the longer transportation routes from central inventories to customers, some safety-inventories may need to be
maintained by customers.
In addition to time and place utility, a third utility has been added to the postponement
concept: that of form/function utility. In postponed manufacturing applications, ®nal processing
and manufacturing activities are postponed until customer orders have been received and are
performed from operations centrally located in the international supply chain to include customer
and country speci®c characteristics in ®nished products. In the operating system generic products
may be customized through adding product features or assembling speci®c products from generic
modules. This would allow not only for customization but also maintain cost-eectiveness based
on lowered inventory-levels and maintained economies of scale in upstream, forecast-driven,
primary manufacturing. The emergence of this new form of postponement may be contributing to
the turbulence of markets and demanding customers:
``Virtually all managers are keenly aware that the key to winning in market after market today
is excelling in tailoring one's oerings to the speci®c needs of each customer while still maintaining low costs and prices''. (Anderson and Narus, 1995, p. 75).
Placing ®nal manufacturing activities in the distribution channel contributes to the role of the
channel as a service channel. First, the logistics function is conceptualized as a service function
because its output is not a product but a performance, like just-in-time delivery of the right
amount of goods at the right place (Heskett et al., 1990). Second, postponed manufacturing
activities are often included in the service oerings of logistics service providers as services supplementary to core-services of transportation and warehousing.
The purpose of this paper is to assess whether or not ®nal manufacturing activities are actually
being postponed and placed in the distribution channel. In line with the original Bucklin (1965)
approach, the question then becomes which player of the channel will apply the principle: the
manufacturer in-house, wholesalers or transport and logistics service providers. For the latter,
postponed manufacturing applications may seem a logical extension of warehousing and transport services they are traditionally oering in the distribution channel. A number of studies have
been published projecting the future size of the postponement concept, these projections had been
promoted to transport and logistics service providers to urge investment in postponement services
(Kearney and Knight Wendling, 1993). It is unknown however (A) to what extend the concept is
R.I. van Hoek, R. van Dierdonck / Transportation Research Part E 36 (2000) 205±217
207
applied today and (B) to what extend the applications are still mainly kept in-house by manufacturers and wholesalers or outsourced to logistics service providers.
Apart from the question whether or not postponed manufacturing is a viable area of supplementary services for transport and logistics service providers, it is also relevant to assess the size of
employment created in postponed manufacturing applications. This oers not only insight in the
size of the market for these supplementary services but also of the economic impact the principle
of postponement holds for the area studied. The same publications predicted that a large economic impact could be created with postponed manufacturing coming to the forefront of international business in countries that have a strength in transport and logistics. It is interesting to
assess whether or not that is actually happening, thereby raising the economic impact of transport
and logistics related business phenomena.
2. Literature review and development of hypotheses
This section reviews the relevant literature and develops research hypotheses.
Lampel and Mintzberg (1996) state that the history of most (US) businesses over the past 100
years has been one of fortunes built on the transformation of fragmented and heterogeneous
markets into uni®ed industries: standardization of taste, allowing for the standardization of design and mechanized mass production of standard products, distributed through mass channels.
Increasingly however, they argue that companies are looking for ways to increase the share of
customization oered. In a categorization of supply chains based on the amount of standardization versus customization of activities in the supply chain they develop, customization is expected to start downstream in the chain with distribution activities, involving shipment to order
(logistics postponement). Increasingly, it is expected that customization is working its way up into
the assembly and ®nal manufacturing of products. This approach should allow companies to
achieve mass customization through a combination of cost eective mass production in the upstream stages of the supply chain and customization in the ®nal stages of the chain. Morehouse
and Bowersox (1995) predicted that in the near future about 50% of all inventories (in agri-food)
supply chains will be maintained in a semi-®nished state waiting for the ®nal processing and
packaging based on customer orders.
In the literature various forms of postponed manufacturing can be found, involving a wide
variety of activities that may be postponed. These range from postponed packaging and labelling,
through adding product features or adapting products to ®nal assembly (see for example Cooper,
1993; Zinn and Bowersox, 1988; Feitzinger and Lee, 1997). Despite these theoretical foundations
of the postponement concept, companies have only recently and relatively slowly began to implement postponed manufacturing systems. In many supply chains the application of postponed
manufacturing is the outcome of a logical sequence in which manufacturers initially implement
logistics postponement resulting in European distribution centres and then add form postponement to those operations. Often these distribution centres are partly or fully operated by transport
or logistics service providers on behalf of their customers. In many cases, adding postponed
manufacturing activities to these existing warehouse and transport operations seems a logical
extension of the relation with existing customers and the service oerings. Followed by (popular)
publications such as Kearney and Knight Wendling (1993) and van Donselaar and Sharman
208
R.I. van Hoek, R. van Dierdonck / Transportation Research Part E 36 (2000) 205±217
(1997), some transport and logistics service providers even started marketing themselves as ``industrial added value'' providers instead of transport and warehousing companies, indicating the
attention paid to postponed manufacturing in this sector. Finally, there is a traditional role for
wholesalers in customizing products (Daugherty et al., 1992; Stern et al., 1997). A fundamental
distinction underlying the applications between sectors, however, is that manufacturers and
wholesalers on the one hand perform the activities on their own account, while maintaining
ownership of goods. Logistics service providers, on the other hand, perform these activities as a
service (supplementary to traditional transport and warehousing services) while their customer
maintains ownership of goods. Measuring the application of postponement activities, in terms of
jobs involved, between sectors not only measures the application (and its economic impact
through employment creation) itself, it also measures the degree to which the applications are kept
in-house by manufacturers and wholesalers and the degree to which they are outsourced to service
providers.
The ®rst hypothesis is:
H1: To date, most postponement activities will be applied to a larger extent in the transport sector
and wholesales than in the manufacturing sector.
Further assessing the current application of postponement, a distinction in activities performed
and the degree of outsourcing can be expected. Previous studies of the factors manufacturers use
in outsourcing activities to transport and logistics service providers indicate the importance of
factors such as the service supplierÕs manufacturing and product expertise, and the contact with
the market (see for example: Daugherty et al., 1996; McGinnis and Kockunny, 1995). Performing
®nal manufacturing activities such as assembly requires manufacturing expertise critically different from the traditional areas of expertise of service providers (warehousing and transportation). Outsourcing postponed manufacturing can also result in a loss of contact with the ®nal
customer, cutting o a channel of market signals of use in the manufacturerÕs future product
development and marketing. Finally, these postponed manufacturing operations require transaction speci®c investments of service providers which may only be justi®ed for long lasting and
well established customer relations. Case studies indicate that third party ®nal assembly and
con®guration applications can emerge in alliances that have developed over a large number of
years (van Laarhoven and Sharman, 1994). This is in contrast to lower value-adding activities like
for example packaging which are closer to the traditional warehouse functions and are more easily
and often outsourced to service providers. Lieb and Randall (1996) for example show, based on
bi-annual surveys, that product assembly is a less used third party logistics service than warehouse
management and shipment consolidation. Finally, the role of wholesalers in customizing products
may also be limited to lower value-adding activities because wholesalers, like transport companies, do not have the industrial expertise of manufacturers. This leads to two variations of a
second hypothesis:
H2a: The postponement applications in the manufacturing sector will be greater in the area of
higher value-adding manufacturing activities, compared to those in transport and wholesale.
H2b: The postponement applications in the transport and the wholesale sector will be greater in
the area of lower value-adding activities, compared to those in the manufacturing sector.
R.I. van Hoek, R. van Dierdonck / Transportation Research Part E 36 (2000) 205±217
209
Fig. 1. Conceptual model for empirical testing.
Following the increasing attention paid to the need for mass customization, it can be expected
that the use of postponed manufacturing applications will increase over the next years. A number
of authors (Anderson and Narus, 1995; Pine, 1993) indicate that postponing assembly and other
manufacturing activities are the best options for achieving ecient customization. However, this
type of customization is judged to be very complex, more complex for example than providing
customization based on distribution service (see: Daugherty et al. 1992). In that respect, and given
hypothesis 2, the future growth of postponement applications can be expected to become more
important in the industry than in the transport sector. Therefore a third hypothesis is:
H3: The growth of postponement applications is expected to be greater in the manufacturing
sector than in the transport sector.
Fig. 1 illustrates the conceptual model based on the above hypotheses.
3. Research methodology
A survey was developed together with the Dutch national bureau of statistics (CBS). The
primary objective was to uncover the current economic value of postponement in the Netherlands,
measured in full time equivalent employees (FTEs). The study was limited to the Netherlands
because this provided manageable population size for this ®rst survey of postponement applications. Also the Netherlands is a country very active in international trade and distribution, with
a large logistics service sector, providing a proper basis for the application of postponement
(Kearney and Knight Wendling, 1993).
The preparation included a de®nition study and a question development phase based on 75 test
interviews in dierent sectors, to assure that the right terminology was used and that the right
questions and postponed manufacturing activities were included in the survey. The survey included a list of activities that could be performed in postponed manufacturing operations, ranging
from high value-adding activities such as assembly and the sizing of products, to lower valueadding activities like packaging and labelling. Also some related activities such as the billing of
customers and installation of products were included as possible supplementary services of
postponement operations.
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The study itself consisted of two stages. First, companies active in international trade (industry
and wholesale) and transport and logistics services providers were phoned to identify the proper
respondent within the company and to ask for his or her cooperation. For companies in international trade a size criterion was used as a selection criterion. Only companies with import and
export of over 5 million Dutch guilders (2.6 million US dollars) in the same SIC code were included in a random selection. Next the survey was mailed (a ®rst mail wave and a follow-up wave
after 6 weeks). The total number of companies responding was 782, a response rate of 68% of the
population in the mailing and 53% of the total population, including those that did not agree to
receive the survey during the initial by phone contact.
Following data entry, results were checked in two ways. First, in case of inconsistent response,
companies were phoned back. Next, a comparison was made between survey responses and data
about head-counts known to the CBS through other statistics. Based on phone backs 20 responses
had to be corrected.
In the survey, respondents that applied postponement were asked to specify the number of
employees/workload in FTEs for those postponement activities applied. Furthermore, to develop
an empirical basis for projections of the future size of postponement applications, respondents
were asked to give their expectation about the future (in three years) number of employees for
those activities. This question was operationalized on a three point scale with the labels: decreased
()1), stable (0) and increased number of employees (+1).
4. Results
This section presents the results of the survey, starting with the applications found in the
various sectors.
4.1. Current application of postponement
Table 1 lists total number of FTEs reported per activity by sector to assess the applications of
postponement by sector. Figures at a two digit level are possible because companies can employ
less than an FTEs, for example, a half time person 0.5 FTE. To test hypotheses 1 and 2, the
absolute number of FTEs reported by the respondents were divided by the total number of FTEs
in the companyÕs workforce, resulting in an average percentage of total workforce in the activities.
These percentages are also presented in Table 1. This correction was included to avoid a bias
towards larger or smaller sectors. For example, an average 4.9% of the workforce of responding
manufacturers is active in assembly, whereas 2.49% and 0.98% of FTEs in wholesales and
transport are active in assembly.
The absolute ®ndings presented in Table 1 were extrapolated to the entire Dutch economy by
the CBS indicating that over 350 thousand FTEs are created by postponed manufacturing applications (over 6% of total employment in the Netherlands). With respect to the ®rst part of the
main question (the extend to which postponement is applied today) this indicates the overall
relevance of postponement applications, at least for employment in the Netherlands. The analysis
here focuses on which sectors are most relevant in the context of the employment creation or
postponement application.
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Table 1
Postponement applications per sectora
Activities
Manufacturing absolute
FTEs
Assembly
1211
Con®guration
127.05
Adding manuals
103.30
Repair of transport damage
55.59
Installation at customer site 199.86
Labelling
405.24
Sizing
406.61
Blending and mixing
141.00
Adding product features
223.00
Inspection for repair
116.43
Storage
1727.21
Debtor administration
289.45
Billing ®nal customers
188.10
Reconditioning
48.15
Order intake/Registration
494.75
Testing
599.36
Packaging
685.90
a
Oneway
ANOVA
Average
% of
empl.
Wholesale
absolute
FTEs
Average
% of
empl.
Transport
Absolute
FTEs
Average
% of
empl.
Signi®cance of
dierence
4.95
0.62
0.69
0.49
0.71
1.23
2.04
0.80
1.04
0.77
7.06
1.80
1.44
0.37
3.60
2.57
2.36
1068.50
222.64
169.47
162.00
250.34
401.71
383.38
413.60
194.03
179.15
5325.34
405.42
424.44
137.15
771.78
675.84
775.95
2.49
0.83
0.37
0.92
0.81
1.46
1.67
1.34
0.69
0.96
12.41
3.09
2.91
0.65
4.92
2.48
2.91
768.95
150.26
240.60
104.68
150.30
377.49
83.50
242.20
181.90
110.75
12,923.07
223.35
387.46
264.30
1203.45
299.74
781.39
0.98
0.38
0.52
0.43
0.14
1.48
0.18
0.82
0.38
0.25
16.47
2.05
4.64
0.56
5.49
1.49
2.7