SUPPLY CHAIN STRATEGY

E d w a r d H . F r a z e l l e , P h . D . RightChain™ terms , optimizing supply chain logistics means satisfying the terms of the customer service policy at the lowest possible total logistics cost . Supply chain logistics optimization is not possible if the total logistics costs are not defined and computed (and they rarely are) or if the customer service policy (CSP) is not defined and computed (and it rarely is). A more detailed discussion of the SCL objective function and constraints follows O . ptimization is a facet of our RightChain™ program that most clearly differentiates it from other quality, operational, and/or philosophical approaches to supply chain logistics including Lean, Six-Sigma, Pull, Just-in-Time, Kanban, and the Toyota Production System (TPS). Those approaches all have their roots in the Toyota Production System – and implicitly assume that all inventory is bad (or illegal), that 100%perfect quality is always the goal, and that moving things between places more often is always better than carrying inventory. Through optimization, RightChain™ takes into consideration each business’s unique financial goals and customer service requirements to help determine the right supply chain strategy. Though it may sound heretical, the optimal solution may involve carrying more inventory. That | 43