Supply Chain In 3 Minutes

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Oct 25, 2023

Forecast Value Added - Supply Chain in 3 minutes

Conor Doherty, Lokad's technical writer, discusses Forecast Value Added (FVA), a diagnostic tool for evaluating the value of each step in the forecasting process. FVA integrates insights from various departments to enhance forecasting precision. Doherty notes that FVA presumes that greater forecasting accuracy is always beneficial, which is not always the case. He suggests that the focus should be on reducing monetary error rather than pursuing greater accuracy. He concludes that FVA could be used as a competence test, but does not validate the routine use of non-specialists for forecasting input.

Aug 30, 2023

Backorders - Supply Chain in 3 minutes

Backorders are purchase orders made to the supplier for products that are already out of stock from a given location being served. Backordering is the process of selling inventory that the company doesn’t currently have on hand, and can therefore only take place when the demand is captured in a formal manner.

Aug 23, 2023

Inventory Control - Supply Chain in 3 minutes

Inventory control encompasses all the processes that support the supply, the storage, and the accessibility of items in order to ensure their availability while minimizing inventory costs. It can be split into two major areas. The management of inventory and the optimization of inventory. When managing the inventory, the goal is to sustain a high productivity for all inventory operations.

Jul 19, 2023

Demand Driven Material Requirements Planning (DDMRP) - Supply Chain in 3 minutes

Demand Driven Material Requirements Planning (DDMRP) is a quantitative method intended to optimize the supply chain performance of multi-echelon manufacturing businesses. This method delivers the quantities to be either bought or manufactured for any SKU of a BOM. A BOM (Bill of Materials) represents the assemblies, components and parts needed to manufacture an end-product. DDMRP seeks to determine, at any point of time, how much more raw materials should be sourced and whether more units of any SKU should be produced.

Apr 12, 2023

ABC XYZ - Supply Chain in 3 minutes

ABC XYZ Analysis is a categorization tool aimed at identifying the best-performing products in one’s catalog. This information is often used to set service level and safety stock targets. Unlike ABC Analysis, which focuses exclusively on a single variable (typically revenue), ABC XYZ attempts to quantify a second dimension (variance). In this tutorial, Conor explores ABC XYZ and delivers his verdict.

Feb 22, 2023

Debunking Supply Chain Terminology - Supply Chain in 3 minutes

In supply chains a sizable portion of supply chain terminology is inadequate. Good terminology should be as neutral and factual as possible, however this is far from the case in supply chain. We suggest changes to ABC analysis, service level, safety stock, seasonality, EOQ, BI and ERP, along with an explanation behind our proposed improvements.

Feb 1, 2023

Kanban - Supply Chain in 3 minutes

The Kanban method was initially implemented to improve manufacturing efficiency and reduce waste by providing a simple and visual material replenishment process so that every step of the production process would get just enough to operate smoothly without stockpiling raw materials or components.

Jan 4, 2023

Problem- vs Solution-oriented Software Design in 3 minutes

Every single SKU calls for mundane daily decisions, such as moving in more stock or changing the underlying price tag. Naturally, sticking to a fully manual process for those decisions is labor intensive and companies have been adopting varied software-based automation solutions.

Dec 28, 2022

Bureaucracies in Supply Chains in 3 minutes

At the core, there are two fundamental problems that, almost without exception, lead to the undoing of supply chain optimization initiatives. First, a misguided thirst for control; second, bureaucracy taking precedence over reality.

Dec 21, 2022

Choosing the right service level in 3 minutes

The service level represents the desired probability of not getting a stock-out. The more product you stock, the lower the chances of running out of stock, but also the higher the inventory cost. Deciding on the right service level for a certain product is essentially balancing inventory costs with the cost of a stock out.

Nov 23, 2022

Supply Chain Triangle in 3 minutes

The supply chain triangle refers to the correlation between cost, cast and service in a supply chain. A business provides its customers with a certain type of service that requires both cash to produce and deliver and has a cost associated with it.

Nov 9, 2022

Prioritized ordering in 3 minutes

Supply chain literature most often focuses on ordering policies where each separate item is treated in complete isolation to all the other items. the decision to order more units of item A is strictly independent from the decision to order more units of item B. In contrast, the prioritized ordering policy emphasizes multi-item decisions, where each item competes for capital allocation with all the other items.