supply-chain-and-logistics

Supply chain and logistics

Supply chains fail at variability, not at averages. A chain planned on average demand and average

lead time will disappoint at both ends: stockouts when either runs long, dead stock when they do not.

Inventory is a bet on uncertainty

Safety stock exists to absorb variation in demand and in lead time. Sizing it needs both the average

and the spread — a supplier averaging 20 days at ±2 is a different proposition from one averaging 20

days at ±15, and treating them the same guarantees you are wrong about one.

Set reorder points on lead-time demand plus safety stock, and revisit them when either input moves.

A reorder point set once is a reorder point that is now wrong.

Hold inventory where it is most flexible. Stock held as components serves several finished

configurations; the same value held as finished goods serves one and obsoletes faster.

Lead time is a distribution

Quoted lead time is a marketing number. Plan against your own measured receipt dates, including the

bad months. Track the variance explicitly — reliability of lead time usually matters more than its

length, because a long predictable lead time can be planned around and a short erratic one cannot.

Concentration is the risk that actually bites

Map dependencies past the first tier. Two suppliers on paper who share a single sub-supplier, a

single port, or a single region are one supplier with extra paperwork.

For each critical input know: who else could supply it, how long qualifying them takes, and whether

anything in the design makes switching hard. That answer is worth having before you need it —

qualifying an alternate under pressure is where quality problems enter.

Supplier commercial terms and exit rights belong with operations:vendor-management; continuity of

the wider business process belongs with operations:business-continuity-and-resilience.

Fulfillment reliability

Measure on-time-in-full, not on-time and in-full separately — partial shipments that arrive on

schedule are a way of appearing to hit a target while failing the customer.

Diagnose misses by cause: supply, capacity, information, or process. The remedies do not overlap,

and a fulfillment problem attributed to the wrong one gets more expensive rather than better.

Never

• Size safety stock from average demand without accounting for variability.
• Treat a quoted lead time as a planning input when you have measured data.
• Count two suppliers as redundancy without tracing where their chains converge.
• Report on-time and in-full separately to make the number look better.