CAMELOT management Consultants InnovatIon serIes

Authors michail heinmann · visionary officer marco Klein · sCm Consultant ©2011 Camelot management Consultants 3 Preface the challenge of managing a multi-stage supply chain will be familiar to many process industry companies. Implementers of mrP II in the 1980s and early 1990s found that the proposed approaches, whilst possibly sufficient for handling simple supply chains involving a single plant / single market or single plant / few markets were inadequate for the " real world " of process industry. they found that the multi-stages of their supply chains, from raw materials and intermediates to the final stages of manufacture and assembly, were poorly served. the consequences of trying to handle the necessary complexities of such supply chains were queues and instability in production plans that led to excessive inventories. even the introduction of lean manufacturing failed to address the challenge of inventory management in an extended supply chain. local improvements still failed to achieve optimum allocation of inventory. a more strategic approach is required to handle multi-stage supply chains. lean supply chain management provides a means of providing end-to-end synchronization of the supply chain to improve flow and inventory. however, there is still the need to understand how to set safety stock policies within this lean supply chain environment. this paper provides fresh and original insight into how these policies should be set to optimize performance whilst addressing risk, variability and customer service. It demonstrates how a full understanding of the end-to-end chain allows the optimization of the chain rather than point solutions. It shows how in some cases the necessary solution is counter-intuitive, meaning that effective end-to-end coordination and management is required in order to achieve the highest benefit.