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| Supply Chain Design |
| | To find out how simple, robust procedures can improve your stock and service levels - contact Sequoia.
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| A superbly performing replenishment process aiming for the wrong target, will perform poorly.
If the target is wrong for individual SKUs the pressure to react and keep breaking schedules and sequences becomes overwhelming. This generates variability which is reflected onto other products and onto your suppliers - causing a vicious spiral of increasing supply variability, rates of schedule change and deteriorating conformance to plan.
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| Blanket targets result in a lethal combination of useless overstocking of some SKUs and damaging service losses on others.
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| Stock levels that are computed on a SKU by SKU basis and are focused on service targets are better, but still have pitfalls.
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| A full Stock vs Service trade-off is the only way to identify the optimum service level at which to operate for each SKU.
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| Stock/Service targets need to be set by stock location as the variability of demand will vary by location.
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| Stock/Service targets should be refreshed every 3-6 months as demand patterns change.
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| Where shelf lives are short (usually less than 13 weeks) stock/service optimisations also need to include the Cost of Obsolescence.
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It is essential to get the inputs to stock/service calculations correct or you will clearly get the wrong answer. Even when we come across businesses that are using the right stock/service algorithms, we find that they are not correctly accounting for:
- the combination of demand , manufacturing and supply side variability;
- the period of time over which they are trying to buffer the variability.
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OnTarget:We've been optimising safety stock levels for the last 15 years - our new scaleable solution means this service is now affordable to both large and small companies, and within a shorter lead-time than ever before.
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