Definition of Logistics

Definition of Logistics

I was recently asked by a large food manufacturer to help them develop a formal logistics organization. At the kickoff meeting the participants spent the first two hours arguing with one another about who should be represented in the new organization. As utter...
Demand Variability Profiling

Demand Variability Profiling

On the left (in green) is the ratio of the standard deviation of the mean to the average of the mean. The higher that percentage, the more variable is the demand.  The other indicator that you see is the number of days in the year that the item had activity.  If you...
Introduction to Supply

Introduction to Supply

The third set of RightChain™ decisions work in the area of supply. Supply is the process of producing or acquiring inventory sufficient to meet the targets established in inventory planning.  The objective of supply management is to maximize the financial performance...
Supplier Visibility

Supplier Visibility

Just as suppliers need visibility into our inventory levels to execute vendor managed inventory programs, we need visibility into our supply partner’s inventory, production schedule, and production capacity to permit supply chain scheduling and optimization.  Demand...
Collaborative Planning

Collaborative Planning

Just like there is an optimal production schedule for a factory that minimizes the total production and inventory carrying cost given labor and material availability; manufacturing and storage capacity; and demand requirements, there is an optimal supply chain...
Sourcing Optimization

Sourcing Optimization

We also help make the sourcing and inventory connection with sourcing optimizations that take into consideration the full set of parameters and buying terms that impact the financial, service, operations, and inventory performance of the buy. An example RightBuys™...
Supplier Rationalization

Supplier Rationalization

The objective in supply base rationalization and consolidation is to minimize the number of suppliers while satisfying all the quality and cost objectives of the sourcing policy.  Fortunately, those goals – minimizing the number of suppliers, improving supply quality,...
Make-Buy Analysis

Make-Buy Analysis

The first sourcing decision for each item is whether to make it or buy it.  The decision should take into account long-term business strategy, our own core competencies, the capabilities of optional supply sources, total ownership cost, and quality implications...
Non-Conformance Chargebacks

Non-Conformance Chargebacks

An important follow-up to the creation of supplier certification criteria is the design of rewards and penalties for extraordinary performance or non-conformance to established criteria.  Typical rewards are high-profile vendor recognition, long-term contracts, and...
Supplier Valuation and Segmentation

Supplier Valuation and Segmentation

Based on performance to established targets and inbound logistics volumes, suppliers should be classified into three or four segments.  One large retailer classifies suppliers as red light (100% receiving inspection), yellow light (50% receiving inspection), and green...