Supply Chain Fundamental Rethinking

While no Supply Chain professional likes Supply Chain variations, in reality Supply Chain variations is the only certain event of a Supply Chain. Supply Chain variations should be viewed positively to make the most of them. I personally believe that a system which is stable for a long time develops fragility. Over a period of time the basic immune system to handle variations gets completely eliminated hence when the variations occur, the Supply Chain system is not equipped to handle the variations. So some level of variations in Supply Chain is actually good. They keep the system well greased and oiled. Predictability kills and probably does it faster. As a Supply Chain professional if variations have occurred, I think, it gives a great chance for the professional to go back to the drawing board & redesign. e.g. If, in your Supply Chain, you never had shortages of material, it indicates a great Supply Chain for a practitioner. But for me, it represents a Supply Chain where un...

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...