Managerial levers

Discuss managerial levers that help achieve coordination in a supply chain. 

In this chapter, we extend the ideas from Chapter 9 and focus on improving coordination across the supply chain. We discuss how lack of coordination leads to a degradation of responsiveness and an increase in cost within a supply chain. We describe various obstacles that lead to this lack of coordination and exacerbate variability through the supply chain. We then identify appropriate managerial levers that can help overcome the obstacles and achieve coordination. In particular, we discuss how collaboration can improve supply chain performance. 

Identify managerial levers that reduce lot size and cycle inventory in a supply chain without increasing cost. 

Identify managerial levers that reduce lot size and cycle inventory in a supply chain without increasing cost. The key managerial levers for reducing lot size, and thus cycle inventory, in the supply chain without increasing cost are the following ... 

Use available managerial levers to lower safety inventory without hurting product availability. 

A goal of any supply chain manager is to reduce the level of safety inventory required in a way that does not adversely affect product availabihty. The previous discussion highlights two key managerial levers that may be used to achieve this goal ... 

Use managerial levers that improve supply chain profitability. 

In this chapter, we explore the process of determining the optimal level of product availability to be offered to customers. The chapter examines factors that influence the optimal cycle service level. We discuss and demonstrate how different managerial levers can be used to improve supply chain profitability by increasing the level of product availability while reducing inventories. 

In the examples described earlier, firms provide different levels of product availability. Every supply chain manager must use factors that influence the optimal level of product availability to target that optimal level and identify managerial levers that increase supply chain surplus. Next, we identify factors that affect the optimal level of product availability. 

MANAGERIAL LEVERS TO IMPROVE SUPPLY CHAIN PROFITABILITY... 

As discussed in Chapter 12, postponement refers to the delay of product differentiation until closer to the sale of the product. With postponement, all activities prior to product differentiation require aggregate forecasts that are more accurate than individual product forecasts. Individual product forecasts are required close to the time of sale when demand is known with greater accuracy. As a result, postponement allows a supply chain to better match supply with demand. Postponement can be a powerful managerial lever to increase profitability. It can be particularly valuable if customers are willing to wait for delivery. If the supply chain can postpone product differentiation until after receiving the customer order, a significant increase in profits and reduction in inventories can be achieved. 

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