The Effects of Postponed Manufacturing and Product Planning on Inventory Performance:

An Empirical Analysis of Japanese Apparel Firms

Abstract

Postponement of decision making in manufacturing and product planning has been adopted in many industries. In particular, apparel firms are trying to absorb demand uncertainty and inventory risk through additional manufacturing and planning throughout the season. Despite such efforts, the inventory volume is increasing in the Japanese apparel industry. This paper examines the impacts of postponed manufacturing and planning on inventory performance based on the analysis of survey data collected from Japanese apparel firms (wholesalers). The findings indicate that postponed manufacturing reduces the amount of inventory, however, postponed planning increases it when apparel firms externalize their retail function. Apparel firms that adopt postponed planning need to consider the controllability of retail function and the ability to maintain the decision-making accuracy of additional production at a high level.