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Article Excerpt
Abstract
Postponement has a long history in both practical applications and academic literature. However, past empirical research has almost always been conducted in the Western countries. The purpose of this study is to investigate the current situations of postponement application in Greater China (which includes Mainland China, Hong Kong, and Taiwan) and to verify the effects of some determinants (i.e., business environment uncertainty, administration factors, IS maturity, and industry characteristics). This study conducted a questionnaire survey that encompassed large manufacturers across three industries. The result indicates that postponement application in Greater China is growing, and the degree is higher than that indicated by previous findings in some Western countries. Business environment uncertainty, administration factors, and IS maturity all have positive effects on postponement application, while industry-specific variations truly influence the presented styles of postponement strategies. In summary, the findings of this study may provide another viewpoint that is different from what we are used to seeing in the Western studies.
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Postponement is a strategy that simultaneously reduces delivery time and increases flexibility by postponing the building, packaging, or assembling of a product until a concrete order comes in from a client (Chopra and Meindl 2001). This strategy is well known in both academic literature and practical applications. There are many studies on the definitions, types and typology, practical applications, and cost-benefit analyses of postponement. Originally, postponement came from the marketing area and was used to reduce risks in distribution channels. Towards the end of the 1990s, the demands of operating in the global market pushed many managers in various industries to seriously consider postponement as a supply chain strategy for mass customization. These days, the scope of postponement considerations has expanded to various fields, from marketing to logistics, manufacturing, product development, purchasing, and promotion processes. This means that the range of postponement applications is growing (van Hoek, Vos, and Commandeur 1999; Yang, Burns, and Backhouse 2005).
However, there are still some research gaps on postponement. First, the literature predicted that postponement application will increase (cf. CLM 1995; Morehouse and Bowersox 1995; van Hoek 1998), while some empirical studies (e.g., Battezzati and Magnani 2000; Brown, Lee, and Petrakian 2000; Yang, Burns, and Backhouse 2005) found that postponement application has not been utilized as much as expected. In addition, most empirical investigations about postponement application have been conducted in the Western regions (especially in the USA and the UK), but postponement is also widely practiced in other regions, such as the Asia Pacific. There are few empirical studies concerning postponement application in Greater China (which includes Mainland China, Taiwan, and Hong Kong). It is necessary to know in what current situations manufacturers in the Chinese market apply postponement and whether the levels of postponement strategies differ among different industries.
Second, applying postponement to a whole organization involves many determinants, but very few empirical studies have been conducted to verify the effects of these determinants. The case study method now is the major method adopted by existing empirical studies on postponement (van Hoek 2001). A survey encompassing different industries might provide a bigger picture of the universal application of postponement in Greater China (Wang, Chen, and Li 2006).
Based on the above research gaps, the purpose of this study is to conduct a questionnaire survey for manufacturers in Greater China to understand the current situations and the related determinants of postponement application. In regard to determinants influencing postponement application, we referred to past research conducted in Greater China (e.g., Chiou, Wu. and Hsu 2002; Graman and Magazine 2006; Huang and Lo 2003; Wang, Chen, and Li 2006) and decided to discuss the effects of business environment uncertainty, industry-specific variations, administration factors, and information system (IS) maturity on postponement application.
The remainder of this article is structured as follows: theoretical bases from reviewing past literature, measurement of constructs and design of data collection, data analysis and discussion, and limitations and future research directions stemming from this article.
LITERATURE REVIEW
Postponement
Although postponement is well known in both practical applications and academic literature, most existing research focuses on establishing theoretical principles and modelling (including mathematical models and simulation) (Battezzati and Magnani 2000) to find out and prove possible affecting conditions or performance indicators for postponement. However, the major limitation of analytical modelling is the fact that these models are dependent upon the researchers' theoretical assumptions and the initializing values of the independent variables. Additional challenges include how to verify the models under different conditions. As a result, there is increasing pressure for researchers to recognize the importance of field-based research, in which data are gathered from the business context or the social setting in which these practices occur. Therefore, case studies that mainly focus on collecting the practical experiences of companies in implementing postponement (e.g., Feitzinger and Lee 1997: van Hoek, Commandeur, and Vos 1998; Wang, Chen, and Li 2006) have become the most commonly adopted method until now (van Hoek 2001). Unfortunately, research using the case study method lacks the generalizability and the possibility to affect the investigated phenomenon.
Questionnaires can be used to complement the limitations of analytical models and case studies, and they have been increasingly used in postponement research. However, postponement research using survey methodology is still limited. In addition, most empirical surveys are done in the Western regions (especially in the USA and the UK), while postponement is also widely practiced in other regions such as the Asia Pacific. Very few empirical surveys concerning this issue have occurred in the Greater China region (see Table 1).
Determinants of Postponement Application
According to recent research using survey methodology (shown in Table 1), both external and internal factors are important to postponement implementation. Wang, Chen, and Li (2006) developed case studies in the Wuhan district in China and found key drivers for postponement application are demand uncertainty and price competition. Moreover, a postponement implementation involves fundamental changes to a company's manufacturing processes or internal operations, and hence, Chinese enterprises focus on their internal operations solely based on their own enterprise environment (Wang, Chen, and Li 2006). Other studies on postponement application in Greater China (cf. Chiou, Wu, and Hsu 2002; Graman and Magazine 2006; Huang and Lo 2003; Wang, Chen, and Li 2006) also provided similar viewpoints. After reviewing past literature, we chose business environment uncertainty, industry-specific variations, administration factors, and information system (IS) maturity as the major determinants in postponement application.
There are additional reasons why these determinants were chosen: (1) Since we hope to compare our results to the findings from the Western regions, we needed to choose factors that are found in both Chinese and Western references; (2) Considering there is no similar research conducted in Greater China, and that we don't know if the existing findings from case studies are general or specific, we could not choose factors that are too particular. Therefore, we consider two categories as factors. One is the so-called external factor, which organizations cannot control (i.e., business environment uncertainty and industry-specific variations), while the other is the so-called internal factor that could be handled by an organization (i.e., administration factors and IS maturity).
Business Environment Uncertainty. Global market demand is becoming increasingly complex and uncertain. Consumer demand now changes very rapidly--consumers want more and more various products in a decreasing timeframe. These challenges caused the wide emergence of postponement. The strength of postponement lies in its capability to cope with uncertainties inherent to dynamic and changing markets. The logic behind this strength is that the delay of product differentiation leads to the availability of more market information, thus improving the quality of decision making (e.g., on product design, purchasing, inventory, production, and distribution) (Lee and Whang 2001). When companies operate in an extremely uncertain business environment, they may derive significant economic benefits from using faster manufacturing/distribution processes and/or locating production factories geographically closer to customers to postpone production in time (Yang, Burns, and Backhouse 2005). In other...
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