Postponement Strategies for Channel Derivatives

The value of postponing product differentiation until final distribution for manufacturers who market a family of product derivatives through multiple channels is examined. A model is developed of a supply chain that distributes many short‐lived products through different channels. Using the model, we find the postponement is particularly valuable for managing short‐life products. Postponement increases distribution service levels while reducing costs and order fulfillment risk. Postponement is particularly valuable when there are many derivative products and forecast error is high. Trade‐off curves are presented, that allow managers to evaluate the benefits of investing in postponement strategies.