SUPPLY CHAIN STRATEGY

E d w a r d H . F r a z e l l e , P h . D . forecast that will not run out of product. The result... more safety stock inventory than you know what to do with. Second stop... manufacturing. How are most plant managers measured? The large majority of plant managers are evaluated based on the unit cost, plant yield, and/or machine utilization within the four walls of the plant. How do you go about achieving those objectives? Long production runs creating lots of inventory are the norm. Third stop... sourcing. How are most buyers measured? The large majority of buyers are measured based on how low a price they can pay a vendor for the product. How do you get a low price? Large purchase quantities creating lots of inventory are the norm. (Is it any wonder it's called a lot size?) Next stop... transportation. How are most transportation managers measured? Most transportation managers are evaluated based on transportation cost as a percent of sales, cost per mile, and/or vehicle utilization. How do you minimize transportation cost and maximize vehicle utilization? By making sure the outbound containers and vehicles are as full as possible, in other words by maximizing | 23

RightChain™

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