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KNOWLEDGE LIBRARY

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27Jun

Warehouse Occupancy Percentage

Optimal storage utilization helps enforce healthy inventory management. In our early work with Honda their...

02Jun

Efficient Procurement Inventory

Efficient procurement inventory (EPI) is often required to realize steep discounts when a special opportunity...

02Jun

Inventory Carrying Rate

The inventory carrying rate (ICR) is the percent of the unit inventory value used to...

26Jun

Inventory Activity Profiling & Data Mining

Suppose you were sick and went to the doctor for a diagnosis and prescription.  When...

27Jun

Inventory Performance Measures

Inventory performance measures include financial, productivity , quality, and response time indicators for evaluating the efficiency and...

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, and reducing total acquisition cost – go hand-in-hand.  Raising quality standards automatically disqualifies many suppliers.  Increasing the volumes contracted with the smaller supplier base should also yield unit purchase price reductions.  In addition, long and short-term logistics initiatives aimed at enhancing customer service and reducing total logistics cost are much easier to implement with a few, highly integrated, and highly capable suppliers than with a large mix of loosely integrated, inconsistently capable suppliers.

Supply base rationalization and consolidation should be an on-going, cross-functional practice supported by updated supplier performance metrics provide by the logistics information system.

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