ABSTRACT
As your supply chain construction project is completed and you begin operations, it is fairly common to encounter the following situation: demand is down, cost of goods sold (COGS) is higher than expected, and the inventory investment is greater than expected. All three work to strain your cash flow. You may become concerned that your cash reserve is too small to carry you through, until the new or modified supply chain is working to plan. The last chapter, Chapter 11: “Performance Measures,” presented diagnostics to get throughput, landed cost, and inventory turns back on plan. Tuning supply chain “small-signal” performance is not the focus of this last chapter. Rather, this chapter looks at “large-signal” situations and external dynamics outside your control that could sink your boat. You need to understand the degree to which your supply chain can be made flexible and risk tolerant before it is stretched to its breaking point.
