ABSTRACT
Just as you might think twice before building a five-story house on sandy ground, so you would not want to try to improve your company’s strategic, tactical, or operational planning processes if its physical supply chain setup was costly and inefficient. So in order to optimally mitigate the effects of variability, complexity, and uncertainty in today’s VUCA world, it is worth “cleaning up” your company’s supply chain before implementing LEAN SCM. The following rule of thumb underlines the corresponding impact on your company’s costs: a 1% reduction in variability reduces the cost of inventory by about 1.5% and that of capacity requirements by about 1.7%, on average.
