HP DeskJet Printer Supply Chain

Q. How can the advantages of delayed

differentiation be quantified?
‘Companies must be flexible to respond
rapidly to competitive and market changes.’
- Michael Porter (1996)
 Delayed Differentiation
Contemporary businesses face uncertainty due
to a variety of factors –
• Increasing Globalization
• Proliferation in product varieties
• Disruptive changes in technology
• Uncertain demands from customers
 Delayed Differentiation
• One of the approach to incorporate operational
flexibility in a firm’s supply chain to better match
supply and demand.
• Using delayed differentiation, a firm delays or
postpones the final customization of a related
bundle of products (and/or shipment of product
to different geographical markets) to the extent
possible, pending more accurate product and
market-specific demand information
 Advantages
1. Make to Order- Can be quantified through the
accurate forecast i.e. reduced demand
uncertainties & reduced lead times.

With demand known, localization can be

implemented (product variability can be ensured)
and lead times can be reduced as the final
product is assembled post receipt of the
customer orders. This ensures customer
satisfaction and hence improving opportunities
for venturing into new market segments.
 Advantages
• Lower Operation (manufacturing) costs- Can be
quantified with Safety Stock of Finished Goods
(Reduced Carrying Cost). The raw materials are
processed into semi-finished goods (based on the
demand levels from accurate forecasts) and on
receipt of the customer orders, semi-finished goods
are processed into final products and then shipped for
delivery to the customer. Hence reduced inventory
and inventory carrying costs.

• Quantification metrics- Demand levels, Lead time,

Safety Stock Levels, Inventory Carrying Cost
 Advantages
• Forecasting Errors can be minimized with the
help of delayed differentiation.
At some locations, availability was an issue,
where as at other places inventories kept
piling up.
• Hence, they target inventory was defined to
be –
Target Inventory Level = Forecasted Sales +
Safety Stock
• Hence safety stock levels should be adequate
at the three distribution centers.
• However, Inventory Carrying Cost was vital in
calculating the safety stock
• Estimates ranged from 12% to 60%
• Hence Delayed Differentiation helped in
reducing the carrying costs too