Supply Chain Fundamental Rethinking

Supply Chain Practitioners appreciate the need to improve Supply Chain performance and in all probability the improvements focus on "hard" aspects of Supply Chain like Network Redesign, Technology Applications, Infrastructure development so on and so forth. Supply Chain best practices are introduced to leverage on those for enhanced Supply Chain performance. The trap here is the structure for improvements is in place, the enablers are identified and the "facilitators" of that improvement are "assumed" to deliver on those. The failure of Supply Chain improvements is not so much to do with "hard" aspects as much as it has to do with "Soft" aspects. From my experience i am penning down a few thoughts on this area. A Supply Chain practitioner landed in Supply Chain, mostly, by accident. It is not by design that a large cross-section of Indian Supply Chain professionals are in Supply Chain. By academics very few are Supply Chain qualif...

Supply Chain inherently have variations. Nothing that is of surprise or unknown to a Supply Chain practitioner. Huge amount of Supply Chain resources are committed to identify root causes of the variations with a primary objective to "dampen" the variations. I see a lot of Supply Chains professionals who dislike variations. They would like the make a detailed analysis to discover the root cause of the variation(s) leading to efforts of reducing the frequency as well as the amplitude of the variation(s). A Purchase person dislikes variations in Sales forecasts which lead to change in Procurement plans. Similarly a Production person dislikes variations in Supply Schedules. Above all the Sales person dislikes variations in Production or Logistics leading to consequences of customer relationship. Each of these links of the Supply Chain invest heavily to find ways of dampening the variations. Question really is - In an attempt to dampen variations, what has the Supply Ch...

When I work with the industry in the domain of Inventory rationalization, many a times Supply Chain practitioners feel that the easiest part of inventory which can be reduced is "Safety Stocks". By and large practitioners believe that Safety stock is the redundant inventory in the system which also is a cost without benefit. There is a prevalent practice to have Zero safety stocks or (in some companies as they are called) Buffer stocks. The target inventory norm for any SKU has to have consideration for Consumption during the Lead Time, Standard Deviation of Supply side, Standard deviation of the Demand side and expected Service Level. Statistically speaking, if one maintains enough inventory to cover average consumption during the lead time then the probable service level (% times the SKU is available on the first instance of being demanded) is only 50%. This point is missed in many instances of inventory exercises leading to on paper reduction of inventory but a drama...