Page 48 - DMGT501_OPERATIONS_MANAGEMENT

Operations Management

Notes process steps and manage their resources and work flows more flexibly. They can keep their
product options open longer, act on market information later, and reduce the delays, bottlenecks,
rework, and wasted effort inherent in today's assembly-line Product-Development Process.
When the product development cycle is shortened, products can be designed to be more responsive
to specific customer requirements. By transforming a sequential process into a more dynamic
and information-based concurrent process, companies can quicken the pace of development and
improve a product's odds of success.

Task Track the product development process of Tata Docomo and Tata Indigo Manza.
Collect as much details as possible.

2.5 Delayed Differentiation

The concept of delayed differentiation, also known as postponement, was first suggested by
Alderson in 1950. He suggested that producers should add options or make differentiating
changes to the product close to the time of purchase by the end use customer. There are many
visible advantages of this concept. Consider the entire supply chain of a product and try to locate
the point at which the product has been manufactured or has assumed the final form. How
remote is it from the consumer in physical terms or in terms of time? If we give the final form
or configure the product close to the consumer, will it really give us any advantage? The answer
to the question is intrinsically related with the product type; and, following Fisher's cue, there
are reasons to believe that some benefit can be achieved by postponement. This can be achieved
by better control of demand information as the final configuration of the product can be
manipulated based on more up to date demand information. The manufacturing postponement
should allow better management of forecasts and demand information by shortening the
manufacturing lead time. This of course seems a very suitable approach for innovative products
with short product life cycle and high risk of obsolescence. The classic example of postponement
is provided by Benetton, the trade mark Italian apparel manufacturer. Benetton used an innovative
manufacturing and supply chain strategy based on postponement to carve out a niche market
for itself.
Postponement will not eliminate inventory or surplus material from the system but will shift it
up stream. The advantage of postponement is based on two fundamental understandings that
aggregate demand of similar products (or same product group) is more predictable compared to
demand for individual types, and that it is the finished product which has the short life cycle and
high risk of obsolescence. Postponement enables a firm to react more efficiently to demand and
is an effective strategy for innovative products. Postponement or delayed differentiation, when
taken to the extreme, has resulted in firms adopting a type of 'customization' or 'mass
customization'. Manufacturing is postponed until definite demand information is obtained in
the way of firm customer orders with specific requirements.

In economic sense, the value of delayed differentiation (also known as postponement) for a
monopolist has been extensively studied in the operations literature. It becomes near necessary
to analyze the case of (imperfectly) competitive markets with demand uncertainty, wherein the
choice of supply chain configuration (i.e., early or delayed differentiation) is endogenous to the
competing firms. It requires characterizing firms' choices in equilibrium and analyzing the
effects of these choices on quantities sold, profits, consumer surplus, and welfare. We demonstrate
that purely strategic considerations not previously identified in the literature play a pivotal role
in determining the value of delayed differentiation. In the face of either entry threats or
competition, these strategic effects can significantly diminish the value of delayed differentiation.

42 LOVELY PROFESSIONAL UNIVERSITY