Expert explains how to improve supply chain efficiency — Thomas Roemer

MIT Sloan Senior Lecturer Thomas Roemer

MIT Sloan Senior Lecturer Thomas Roemer

From Supply Chain Opz

Companies seeking to further improve their supply chain efficiency will have to continue fighting their old foe – variability – albeit in a set of new clothes.

One emerging way to combat demand variability is to locate (some) manufacturing closer to the customer. By reducing lead times due to shorter delivery routes, inventory and waste in the system can be reduced without sacrificing service levels. Much of the recently observed reshoring efforts fall into this category.

Highly flexible manufacturing goes a step further by moving from a Built-to-Stock to a Built-to-Order system for the most erratic demand pattern. Amazon’s printing and binding some of its demand at centers close to their customers while serving base demands from stock is one example of this approach.

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