SUPPLY CHAIN SERVICE STRATEGY

14 | R i g h t S e r v e ™ Not that long ago I received a phone call from the head of supply chain for one of the world’s largest automotive companies. His reason for calling was that their head of sales had called him and was distressed about their low fill rates. He wanted my recommendation for increasing their fill rates. I recommended as I always do that they run the numbers to determine their optimal fill rate targets, incorporating their financial and service objectives, and operate their supply chain accordingly. He thanked me for the advice. A few months later I received a phone call from the same individual. His reason for calling was that their CFO was upset with him over their high inventory levels. He wanted my advice on how to lower their inventory investment. I recommended as I always do that they run the numbers to determine their optimal fill rate targets, incorporating their financial and service objectives, and operate their supply chain accordingly. He thanked me for the advice. A few months later the same individual called again. His reason for calling was that their head of sales had called and was very upset with him over their low fill rates. He wanted my advice on how to increase their fill rates. I took a slow deep breath and suggested that my advice was for him to take my advice; count the cost of the inventory and the cost of the lack of inventory and set an inventory strategy accordingly. No corporation or individual has infinite resources. Allocating finite resources to the supply chain, counting the cost