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The editorial board of the Logistic Capability Council is always on the lookout for resources, articles, case studies, academic research etc. That will assist in your task of education and education of those in your fulfillment chain. We also welcome your ideas and submittal Of articles and links you have discovered that you feel may assist others in their solutions..

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S&OP in Top 25 supply chains & Apple   
[273] Last Modified: Nov 7, 2012 9:02 AM
Note big mention of S&OP and Samsung's investment in S&OP in article
Rating: Not Rated
How Constraints Management Enhances Lean and Six Sig - From SC Managment Review   
[212] Last Modified: Jan 16, 2009 9:14 AM
A Refresher on Constraints Management
Constraints management (CM) is based on the Theory of Constraints developed by Eli Goldratt, an Israeli physicist.3 CM looks at companies as systems. A system can be defined generally as a collection of interrelated, interdependent components or processes that act in concert to turn inputs into defined outputs in pursuit of a particular goal. Likening systems to chains, CM defines the weakest link as the constraint—the system's limiting factor. (See Exhibit 3.)

A common theme in the success stories of CM implementations is how quickly results are attained. That's because the focus on constraints is, de facto, a focus on the areas where there's the most potential for improvement.

There are essentially two different types of constraints: physical and policy. A physical constraint is usually a capacity-constrained resource, such as a machine or person. It can also be the market itself: excess capacity can result if demand dries up. A policy constraint, which is the dominant type of constraint, can be any business rule that conflicts with the goal of making more money. An example: the prescribed use of large batch sizes in order to be "efficient" but at the expense of longer lead times.

Thinking of a business as a money-making machine—with money entering the machine and money captured inside—helps explain the value of the CM approach. The money produced by the machine is called "throughput," defined as "the rate the machine generates money through sales." Note the word "sales"; if something is produced but is not sold, it's not throughput. Nor is throughput the same as gross revenue. Some revenue generated by the machine is produced by vendors, and this revenue element simply flows through the machine. So throughput equals gross revenue minus all variable expenses (raw material costs, sales commissions, and so forth).

The money captured in the machine is called "inventory." (In this case it includes not only the materials and parts made but also all assets, including buildings and equipment.) And, the money the machine uses to turn inventory into throughput is called "operating expense." This definition includes all direct and indirect labor and all overhead. Consider these as the unavoidable costs of doing business. They are short-term, nonvariable costs; over the next financial period, it doesn't matter how many units are sold—the employees must still be paid.

Throughput, inventory, and operating expense can be easily tied to the bottom-line financial measures of net profit and return on investment (ROI).

Constraints management argues that the greatest improvements come from addressing issues at the weakest links in the chain. Improvements at nonconstraints have very little positive impact on the overall system and can even be detrimental. The CM approach consists of the following:

Key focusing steps: This refers to Goldratt's five original "processes of ongoing improvement": 1) identifying the constraint, 2) exploiting the constraint, 3) subordinating everything else to the constraint, 4) elevating the constraint, and 5) repeating the steps. These steps apply whether the system is manufacturing, distribution, sales, or project management.
The thinking processes (TP): These are the methods to enable the focused improvement of any system. The purpose of the TP is to help answer the three questions essential to achieving focused improvement: What to change? What to change to? How to cause the change?
Throughput accounting (TA): This is the CM alternative to cost-based management accounting. TA is not costing, and it does not allocate costs to products and services. Rather than focusing on costs, it focuses on profit maximization by managing constraints.
Application-specific solutions: This includes supply chain and operations activities and project management operations.
Combining CM with Lean/Six Sigma
Companies that have effectively implemented lean and Six Sigma have driven much of the waste and variation out of their processes. The easy gains have been achieved. So how do their managers decide which lean/Six Sigma improvement initiatives to launch next?

First, they have to keep in mind the ultimate goal of any improvement initiative: to increase shareholder value by improving net profit and ROI. Constraints management provides a framework for measuring the impact of a local initiative on those bottom-line measures. For example, when throughput is increased—without adversely affecting the CM definitions of inventory or operating expense—then net profits and ROI are simultaneously increased. When deciding whether to undertake a local lean/Six Sigma improvement, managers should take into account its impact on all three measures—throughput (making money through sales), inventory (all assets), and operating expense.

The CM position is that the emphasis should first be on increasing throughput, then on reducing inventory, and finally on reducing operating expense. By applying a CM framework to lean/Six Sigma efforts, companies can more easily avoid the problems incurred by placing too much priority on reducing operating expense.

Consider the many examples of businesses that have focused excessively on eliminating waste with the objective of cutting costs, while not applying at least as much effort to selling more. Excess capacity—usually in the form of people—is viewed as waste. This viewpoint can lead to several long-lasting problems. First, cutting capacity to match existing demand leaves little room for increases in demand. Once capacity has been reduced, it's not easy to increase it again. It takes time and money to find and hire skilled workers. A second problem is the effect of such moves on morale—and on future improvement efforts. Just how are workers expected to cooperate with any future lean/Six Sigma efforts if they know they are improving themselves out of a job? By that point, any hope of continuous improvement initiatives has been dashed.

To determine where the focus should be for improvement initiatives, it's important to remember that a system of dependent events is governed by a very small number of constraints. The 80/20 rule states that 20 percent of the initiatives will yield 80 percent of the results. Once you realize that constraints govern the system's performance, it becomes clear that only a few things can be done that will have a significant impact. In fact, the 80/20 rule becomes the 99/1 rule.
Rating: Not Rated
AMR 2008 Supply Chain Prediction   
[206] Last Modified: Jan 31, 2008 5:47 PM
Prediction by AMR Research on Supply Chain Solutions for 2008
Rating: Not Rated
Postponment is answer - Long Tail PRTM   
[202] Last Modified: Sep 16, 2007 9:47 PM
Excelent review of recent book on economic power of postponment


Supply Chain Graphic of the Week: Postponement Strategies and "The Long Tail"

Is There Market Opportunity or Just Cost in the 80% of SKUs that have Low Velocity? Postponement can Make All the Difference
By SCDigest Editorial Staff

It's well understood that the Pareto Principle applies to most companies when it comes to inventory management and SKU counts; that is, approximately 80% of the demand and sales revenues come from just 20% of the total SKU base.

Most companies in theory would like to address this scenario by reducing SKU counts to focus the supply chain only on the faster moving products - not eliminating all of the bottom 80%, in most cases, but certainly a strong number of them, in the name of cost reduction and supply chain simplification. Analysis generally shows many of these slow moving SKUs lose money for a company.

In a recent book, "The Long Tail," author Chris Anderson argued, instead, that these slow demand products can in fact lead to big profits by serving high profit niches.

Consultant group PRTM, which produced the Long Tail graphic below, argues that for many companies, the key to making profits with Long Tail products is frequently "modular design" and the use of Postponement strategies to minimize manufacturing and inventory costs.
Rating: Not Rated
S&OP Resolutions by Plan4Demand - very good   
[196] Last Modified: Jul 11, 2007 7:22 PM
In general a short list of resolutions on keeping S&OP "real" and credible. We could not agree more on uniting to minimize distortion for marketing of products and unique consulting approaches. The draw of S&OP is its simplicity, time tested success and now the ability of good internet enabled information to scientificly net demand and supply and minimize overiding and guessing !

Ths article by Plan4Demand
Rating: Not Rated
Business Week June 2007 Article on Mfgr Stats May Have Distorted US Competitiveness   
[195] Last Modified: Jun 14, 2007 7:16 AM
As Business Week notes: “It was easy to downplay the huge trade deficit as long as it seemed as though domestic growth was strong. But if the import boom is actually creating only a facade of growth, that's a different story. This lends more credence to corporate leaders such as CEO John Chambers of Cisco Systems who have publicly worried about U.S. competitiveness--and who, perhaps coincidentally, have been the ones leading the charge offshore.”

Now we are finally getting the proper statistics that show the NEED to use techniques such as postponment to control the supply chain, intellectual property and customer service
Rating: Not Rated
Does RFID past the ROA test from Nov 2005   
[193] Last Modified: May 10, 2007 9:33 AM

A good predictive article predicting the overhyped RFID that has come to pass. Constructive article helping look to areas RFID can be supportive of real ROA financial returns in the supply chain
Rating: Not Rated
Keep S&OP Simple   
[192] Last Modified: May 10, 2007 7:29 AM
Good article by Colin Snow at Ventana on keeping S&OP simple
Rating: Not Rated
History of Visibility applications   
[126] Last Modified: Nov 8, 2005 6:43 PM
This link provides an excellent basic summary of how many different fields of supply chain technology are attempting to evolve to provide "visiblity" and cross enterprise value. The article probably falls short in allowing the reader to understand most if not all these products are obsolete as SOA, web services and loosely coupled linking of these data sources to targeted solutions will likely work faster at a fraction of the cost. The challenge is few commercial applications are available from this perspective although the reader should review
Freightgate global transportaton
DCRA Inc. S&OP, and real time order commitment and real time S&OP
various web service registries for single site tracking of shipments

Rating: Not Rated
2005 AMR Research Releases Second Annual Supply Chain Top 25   
[125] Last Modified: Nov 8, 2005 6:39 PM
AMR reviews of top wealth producing companies as measured by their supply chain performance. Historically the ratio of total yearly sales / ending inventory balance is an outstanding quick ratio.
Rating: Not Rated
Demand Mgmt S&OP Software Needed   
[118] Last Modified: Aug 31, 2005 7:12 AM
This article from Frontline provides insight to the lack of demand managment software, in particular S&OP, available in the marketplace
Rating: Not Rated
The Financial Advantages of the Lean Supply Chain   
[107] Last Modified: May 13, 2005 8:03 AM
The Financial Advantages of the Lean Supply Chain
Rating: Not Rated
The Transportation and Warehousing Challenge in China   
[88] Last Modified: Feb 9, 2005 1:18 PM
The Transportation and Warehousing Challenge for Multinational Corporations in China
Journal of Transportation Management - Fall 2004
By Garland Chow, University of North Texas and
Charles Guowen Wang, China Development Institute
Rating: Not Rated
Siemens Total Order Fulfillment Case Study   
[4] Last Modified: Jan 19, 2005 4:54 PM
Brash High-Tech Start-up Matures Into a Profitable Unit of Siemens
Global Logistics & Supply Chain Strategies September 2003

Siemens acquires Efficient Networks just before the high-tech bust. Then it has to figure out a way to keep the new subsidiary alive and stay the course. A revamped supply chain is the answer.
Global Logistics Synchronization:
The Advantage in Global Manufacturing
[12] Last Modified: Feb 22, 2005 7:49 AM
Global Logistics & Supply Chain Strategies — March, 2004
By Jon Kirkegaard

Have you heard the President’s challenge to our nation to put a man on Mars? Can you imagine the engineers designing a Mars space mission precisely calculating the physics of the perfect terminal velocity for the rocket to exit the earth’s atmosphere, but the mission fails because the rocket is inaccurately aimed at the wrong planet? That’s not unlike what many manufacturers are doing with their manufacturing strategy and execution.
Rating: Not Rated