2:26 AM
What is Supply Chain Design ?
Supply Chain Design is the next step in the evolution of Supply
Chain Management (SCM). Companies have invested in systems from MRP to ERP and
APS to SCM and SCEM to make their supply chains more responsive and their plans
more accurate. As the name suggests, Supply Chain Design focuses on how the
supply chain should work. Perhaps the biggest challenge to understanding this
new discipline is that it revolves around the same concepts and terms as all of
those previous inventory management systems. The common goals include improving customer service levels, reducing safety stock
and holding costs, increasing inventory turns, and improving supply chain
effectiveness – all of which can improve profitability. Inventory theory does
not change – the concept is to hold inventory at the cheapest point possible,
except when you can’t.
Supply Chain Design helps pinpoint:
• What the lowest cost inventory holding points are,
• Situations when you can’t hold stock at the lowest cost points,
and
• What to do when you can’t hold inventory at the lowest cost
points.
Part
of why companies are stuck at certain levels of supply chain performance is
because their supply chain tools – ERP, APS, and SCEM, collaborative planning
and execution – are all working within the constraints of an existing supply
chain. And according to AMR Research, 80% of the costs are already committed
during the design of the supply chain.
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