36 | R i g h t C h a i n ™ I recently wrote an article titled, “Complexity is the Plaque in Supply Chain Arteries.” I have learned the hard way that complexity is the plaque in many arteries of life. When we begin a RightChain™ project we typically find that about one third of the customers, SKUs, and orders are profitable, about one third are breaking even, and about one third are losing money. Perhaps the most fruitful first step to take in developing a supply chain strategy is to remove the unprofitable customers, SKUs, and orders. With those customers, SKUs, and orders removed, the same amount of inventory investment is much more profitably allocated to the value-added customers, SKUs, and orders. Supply chain expenses decline dramatically as the cost of non-value-added complexity decreases. Forecasting becomes more accurate because the same forecasting resources are focused on fewer more forecastable customers, SKUS, and orders. Fill rate and market share increase as a result. Supply Chain Optimization A few years ago, I received a phone call from the head of logistics for one of the world’s largest laptop computer companies. After a few pleasantries, I asked for the nature of

Made with FlippingBook - Online Brochure Maker