I think we can all agree, COVID has made us scrutinise our Supply Chain systems ability to be able to respond quickly to changes impacting the supply chain. What we don’t see is basic logic applied, and the creation of a new generation of acronyms (e.g. JIC – Just in Case).
The issue is lead time. Lead time comprises of three elements. The initial phase where an order is placed and the supplier either has in stock, manufactures, or sources from third party provider, and it arrives at the departure point (either sea, air, rail/road).
The second element is the journey from supplier departure point to destination country arrival point. The third element is from the arrival point the processing through customs, bond store, quarantine and the logistics timed element, to your warehouse.
The key alignment is in thinking of these three elements of lead time and understanding the impact to inventory values. How many businesses go through the rigors of understanding whether it would be cheaper to airfreight product as it reduces their footprint?
Another key learning is that ‘systems’ in general, will apply a ‘broad brush’. Each supplier requires a bespoke tailored solution for accurate demand forecasting. There are simple solutions to this problem.
By using the supply equation to calculate the min max inventory values and recalculate monthly, inventory levels can be accurately maintained.
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For additional content –
“Constructing Inventory Supply Chain Equations: Elements for Accuracy”(Opens in a new browser tab)
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