Tag Archives: inventory

Does Lean Leveling Reduce Shipment Variability? 

A nice piece of research on another approach to reducing the economic impact of imbalances between supply and demand in retail. The approach is a two-phase ordering policy. The ‘steady’ phase places EOQ-like regular orders to cover some base level of demand. The ‘balancing’ phase (my terms) orders extra in some periods, perhaps in a more expedited fashion, to handle the peaks and valleys of actual demand.  It amounts to decomposing the demand stream into a steady part and a peak-and valley part, and matching the supply technique to the portion of demand in each ‘frequency’.

The expectation is that problems of promotions, outlet overstocks and shortages, and massive inventory-building on the part of consumers will be addressed at lower cost.  The simulations seem to tell the students that the effect on cost will be positive!

It’s a unique approach, executed for a real business, and therefore rates a careful look. I hope it shows up in a published paper with a heuristic for deciding how to partition the demand forecast.

Article from Supply Chain Management Review

Here’s the article in SCMR where the news was posted.

  Supply chain professionals are often confronted with the challenge of managing highly volatile customer shipments resulting from the bullwhip effect. This volatility leads to supply chain-wide inefficiencies, high operational complexity, low service levels and substantial costs.

Source: Does Lean Leveling Reduce Shipment Variability? – Article from Supply Chain Management Review

Steel monsters making billions from oil crash

Thanks to the Shipping Tribune for this article.  It shows how ships are really just portable inventory.  There’s a long history of oil tankers being used as storage depots.

The steel monsters making billions from oil crash

Source: The steel monsters making billions from oil crash | The Shipping Tribune

Traditional Supply Chains’ Radical Transformation

By 2025 this study thinks that supply chains will radically transform themselves.  The survey by Deloitte and MHI is summarized in the graphic below from the article.  Increased use of emerging technologies will be a prime investment area.

I am delighted to see that inventory planning and optimization is again in ascendancy.  That’s my field of course!

MHI & Deloitte Study: Traditional Supply Chains to Undergo Radical Transformation By 2025 – Supply Chain 24/7.

You can download the study free by signing up for it at Supply Chain 24/7.

Or here:  MHI_industry_report_2015

Download the 2015 MHI Annual Industry Report