Unpacking Packaging Costs
Body of Knowledge

Unpacking Packaging Costs

Packaging is everywhere.  Almost everything that we buy comes packaged in some form.  New cars are packaged in protective films for transport.  The jeans on the store shelf came in a corrugated paperboard box.  Even the fresh fruit at the farmer’s market arrived in a box, and you took it home in a bag. The…

Should Safety Stock Include Demand Forecast Error?
Body of Knowledge

Should Safety Stock Include Demand Forecast Error?

Yes, I’m broaching a hot topic. This article is deliberately not exhaustive, leaving plenty of room for further discussion. My intent: to encourage constructive, informative conversation among my many LinkedIn supply-chain experts. I have done my best to ensure that I have supported all my assertions with facts, analysis and calculations. Here is my theme: Forecast-to-actual demand variation has no…

Safety-Stock Calculations Are Risky – Demand, Lead Time and Service Level
Body of Knowledge

Safety-Stock Calculations Are Risky – Demand, Lead Time and Service Level

This is a big and touchy topic, I know. I intend only to begin a dialog, not present an exhaustive treatise. First, let me define what I mean by “safety stock,” or SS: Not the restrictive, MRP-specific adder to gross requirements, but the general concept of buffer inventory. SS, determined correctly and optimally, protects against random variations…

5 Keys to Establishing and Maintaining Optimal Target Inventory Levels
Body of Knowledge

5 Keys to Establishing and Maintaining Optimal Target Inventory Levels

At a high level, a supply chain’s structure defines critical factors affecting optimal target inventory levels – factors such as replenishment lead time and variation, customer demand and variation, and replenishment frequency. Supply-chain structure is fundamental to optimal overall financial performance. Still, to achieve target service levels reliably with minimal inventory and expediting, we must…

The Cost of Complexity
Body of Knowledge

The Cost of Complexity

Recently, whilst working with the Global Planning Team of a major oil company, we were asked, “What is the cost of complexity and what is the effective range on this cost?”  At one level, the answer is easy; “It is the cost associated with having more than one customer and product.  The more complex the supply chain,…