Optimal Supply Chains

Please enjoy the thoughts and musings of our friend, supporter, and long-time contributor Art van Bodegraven Jr., who passed away on June 18, 2017. Art was a prolific writer and had amassed a collection of unpublished blog posts he had planned to run well into the future. To honor his memory, we will continue to post these remaining blogs as he had intended. If you’ve been a fan of The Art of Art blog, check out our tribute.

 

My friend Terry Harris of  Chicago Consulting has taken a stand promoting the design of supply chains that balances cost and service considerations, as reported in Parcel Industry.com.  The cost elements are fairly simple: transportation, warehousing, and inventory.

Terry's take, where we come apart, is that the balance of cost and service is a trade-off that offsets cost with lead time reduction.  He reduces this balance to a graphic that allows self-placement on a sliding scale that displays the optimized trade-offs, to illudtrste the comprtitive position of a given enterprise.

My own view is that the competitive positioning is way more complex than that.  Terry's model works just fine in a transactional universe.  My position tries to create relationships that build special ties between companies and customers.

There's a reason that Rolex is in high demand, at a price point that would ruin Casio.  And, it's not based on traditional cost/service trade-offs.