Supply Chain Principles

What is a Supply Chain?

It is the end-to-end flow of: Product, Information, and Money from supplier → distributor → retailer → consumer

Beverage Process

• Brewery produces beer

• Distributor stores and delivers cases

• Retailer sells to customer

• Sales data flows back upstream

What is a forecast?

A best estimate, not a promise. → “It will be wrong — but hopefully useful.”

Types of Forecasts

• Sales Forecast

• SKU-level forecast

• Location-level forecast

Demand

What customers want to buy.

What is Inventory?

• Meet service expectations

• Buffer uncertainty

• Support promotions and peaks

Cycle Stock

Normal operating inventory

Safety Stock

Protection against variability

Excess

More than needed inventory

Obsolete

Inventory that is no longe sellable

Inventory Turns

How many times inventory is sold & replaced.

• High Turns = Efficient

• Too High = Risk of stockouts

What is the Supply Chain Triangle?

• Service

• Cost

• Cash (Inventory)

Common Tools

• Excel

• BISM

• EO Star → RAS (Route Accounting Software) & WMS (Warehouse Execution)

• Slimstock → ERP/ordering systems

Good Supply Chain Thinkers

• Ask why before fixing

• Look upstream & downstream

• Learn from misses

Bad Habits

• Reacting without thinking

• Blaming another team

• Thinking too much about responding to a question w/o actually understanding the question