If your supply chain is misaligned, as per a recent AT Kearney white paper, it’s probably filled with waste that might include, but not be limited to:
- excess buffer capacity built into the system,
- overtime and suboptimal changeovers,
- too much safety stock,
- excess inventory to keep the lines running, and
- line shut down.
Of course, all of this costs you money and, if things are really bad, a lot of money. More specifically, if your supply chain is misaligned, once you fix it, you can realistically expect a 20% reduction in costs. Furthermore, you’ll require less capital up front, produce higher quality products (as suboptimal changeovers decrease quality and increase errors), improve service levels (as your service will be more predictable), understand true demand, and improve the overall visibility of total supply chain cost.
More specifically, better alignment will:
- improve asset utilization (and reduce costs 6%),
- reduce overtime (and reduce costs 5%),
- increase utilization of transportation cubes (and reduce costs 5%),
- decrease expedited shipments (and reduce costs 3%), and
- reduce inventory levels (and reduce costs 3%).
And, like it has done for Toyota many times, it might even keep you in business. Why? How? Check out the white paper and find out.