A Historical Review of Postponement Research

• Published date: 01 March 2019
• Date: 01 March 2019
• DOI: http://doi.org/10.1111/jbl.12213
• Author: Walter Zinn

A Historical Review of Postponement Research

Walter Zinn

The Ohio State University

This historical review traces the development of postponement research starting in the fifties. The focus is on seven related themes: connect-

ing form and time postponement, conceptual extensions to postponement, decoupling points, design for postponement, customization and

mass customization, factors favoring postponement implementation, and postponement in global settings. Within these themes, the review

includes concepts such as postponement costs, decoupling points, part commonality, and the impact of demand correlations on the benefits of

postponement. The review suggests that substantial progress has been made in postponement research.

Keywords: postponement; speculation; risk management; mass customization; decoupling points; modularized production

This historical review of postponement research traces contribu-

tions from the fifties to this day. Postponement started as a rela-

tively simple but powerful idea that timing matters in marketing

and distribution. By delaying a product’sfinal configuration or

time of movement down the channel, firms delay commitment to

a specific customer or market, thus coping with uncertainty and

consequently reducing cost.

Postponement research has come a long way since the early

days. To trace its development, this review begins with a brief

account from its modern origins until the eighties. From the

nineties onward, postponement research grew rapidly as logistics

and operations researchers advanced our understanding in multi-

ple directions. Accordingly, in the sections that follow, several

themes related to these advancements are reviewed. While dis-

tinctive, these themes are not independent. There is overlap.

Seven such themes are included: connecting form and time post-

ponement, conceptual extensions to postponement, decoupling

points, design for postponement, customization and mass cus-

tomization, factors favoring postponement implementation, and

postponement in global settings.

This review is not intended to be a formal literature review. It

is not systematic, does not propose new frameworks, and does

not make suggestions for further research. Instead, it is a histori-

cal review of selected themes to celebrate progress in postpone-

ment research. As part of this progress, we are fortunate to have

a number of excellent literature reviews available (Van Hoek

2001; Yang et al. 2004b; Boone et al. 2007 and Olhager et al.

2015).

ORIGINS

Postponement research was brought into the scope of logistics

research by Donald Bowersox’s evangelizing (e.g., 1978, 1982).

It migrated from marketing. While there are earlier mentions of

postponement as a useful concept in the management of market-

ing cost and risk, the first consequential writings in terms of kick-

starting research in the field are attributed to Alderson (1950,

1957), a marketing professor and consultant. Alderson’s contribu-

tions became the reference for much of the research that followed.

He proposed that the principle of postponement, by managing

cost and risk, promotes efficiency in the production and distribu-

tion of products. Alderson enunciated that the principle “requires

that changes in form and identity occur at the latest possible point

in the marketing flow; and changes in inventory location occur at

the latest possible point in time.”These two types of postpone-

ment became known as form and time, respectively.

While Alderson (1950) did acknowledge that there are “limits

to postponability,”Bucklin (1965) proposed a formal treatment

of these limits and enunciated a principle for postponement’s

opposite, the principle of speculation. He described reasons why

cost and risk would shift toward an institution rather than away

from it. Some of these include economy of scale in production,

lower order quantity cost, and lower transportation cost. Applica-

tion of the principle of speculation consequently results in the

accumulation of inventory. Bucklin then also proposed a princi-

ple to combine both postponement and speculation. The principle

of postponement–speculation predicts that an inventory will

appear in the distribution channel whenever the cost of carrying

inventory is less than the joint savings from postponement

enjoyed by the buyer and the seller.

The implication of Bucklin’s principle is that a speculative

inventory will appear in a distribution channel whenever it

reduces the total cost of distribution. In a theoretical extension to

this notion, Zinn and Levy (1988) connected postponement–spec-

ulation with the concept of a functional spin-off. This concept,

based on Stigler’s (1951) seminal work and developed by Mallen

(1973), predicts that firms will shift inventory to other members

of the distribution channel whenever it reduces its own average

cost. Zinn and Levy concluded that the shifting of inventory to

minimize either the channel total cost or the cost of an individual

firm depends on the channel’s governance structure. Under more

Corresponding author:

Walter Zinn, Fisher College of Business, The Ohio State University,

200 Fisher Hall, 2100 Neil Avenue, Columbus, OH 43210, USA;

E-mail: zinn.13@osu.edu

Note: As we celebrate the fortieth anniversary of the Journal of

Business Logistics, we also celebrate its contributions to research in

our field and its role in advancing the careers of so many researchers

in our community. In these past four decades, JBL grew from a

fledgling new journal to the preeminent outlet for logistics and sup-

ply chain research, continuously improving the relevance and

methodological quality of its contents. A major debt of gratitude is

owed to authors, reviewers, associate editors, and past editors for

their contributions to JBL's success.

Journal of Business Logistics, 2019, 40(1): 66–72 doi: 10.1111/jbl.12213

© 2019 Council of Supply Chain Management Professionals