Christoph Lenhartz - General Manager Europe, Middle East and Africa for Pinnacle Strategies will discuss decision making for high performance - demand-pull supply chain management. Lehhartz noted, “Often, companies find their Supply Chain Management (SCM) investments are not yielding the expected benefits and that the performance of their supply chain is low. Decisions often focus on efficiency only instead of ensuring reliability.”
Technology is transaction-
Lenhartz will discuss a systems approach to supply chain management, suggesting, “The key to better decision making in SCM and to improve supply chain performance is to treat the supply chain as a system, where efficiency is a by-product of system performance.”
Priorities for supply chain improvement must be:
1. Improve reliability
2. Improve return on investment
3. Reduce operating costs
Decisions to improve supply chain performance must address the root causes; not the symptoms. Smart process design that integrates our understanding of human behavior and process variation can create a pull system for the entire supply chain. In such a system inventories and costs are minimized and reliability maximized.
With a push-based supply chain, products are pushed through the channel, from the supplier to production through to the distribution organization to the end user. In such a system, decisions making relies on forecasts. Forecasts are always wrong as nobody can exactly predict the future and backwards-looking, assumptions, and “best guesses” are used to develop the forecast. When the market doesn’t react as it has in the past, it takes some time for the push-based supply chain to respond to changes in demand, which results in overstocking or bottlenecks and delays (the bullwhip effect), unacceptable service levels and product obsolescence.
In a pull-based supply chain, procurement, production and distribution are demand-driven so that all decision making is based on actual customer or end-user orders, rather than forecast demand. The pull demand system controls inventory investment, thus stabilizing supply chain performance, allowing supply chain managers to make rational tradeoffs and decisions regarding supply chain variables and performance.
Mr. Lenhartz joined Pinnacle Strategies in 2012 and serves on the boards of TOCICO, the Theory of Constraints International Certification Organization (Chairman 2012/2013) and the Eliyahu M. Goldratt Foundation. Mr. Lenhartz is a sought-after speaker on business and operations strategies and has written numerous articles on subjects such as profitable growth strategies, project management, continuous improvement, business and performance management.
Pinnacle Strategies (www.pinnacle-
Annette Hamilton, Director of Marketing