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Old 12-18-2012, 07:42 AM
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Hi ljperuffo,

If your Customer Service levels are very high or the product delivery is critical to customer, you could consider higher safety stocks as buffer for high lead time fluctuations. A solution might involve reassigning new suppliers to account for the fluctuating lead times. If the product is highly profitable, developing reserve capacity at the supplier may be advantageous.However, if the product is not profitable for the supplier, you could engage with the supplier and identify cost reduction opportunities for improving overall supply chain profitability.

Another option is to look at a pull based predictive system that evens out the highs and lows of your demand especially for non runner items. Have a “dynamic buffer system”. It works on a traffic light mechanism of red, yellow and green wherein you do not have to over stock at the central distribution point. Your “top of green” is the maximum time it takes for you to replenish. So, for example, if your average consumption of this slow moving item is say 6 a month and it takes 2 weeks for it to be manufactured and shipped then your top of green is 4. As soon as 1 or 2 move, the dynamic buffer triggers you to start the replenishment cycle. This reduces your forecast to consumption mismatch risk and also ensures a better customer experience.

-Sam, CGN & Associates
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