Goldratt's Blog

Theory of Constraints Golden Nugget
#9 – Color Psychology

(Supply Chain)

A company that had started Viable Vision implementation about a year ago had made satisfactory progress. Nevertheless, there was a point that troubled them as well as us: the level of inventory in their regional warehouses did not significantly decrease. It was months after the establishment of a central warehouse, coupled with the activation of daily replenishment according to actual consumption throughout the supply chain. Thanks to having a good level of availability at the central warehouse (99%), the replenishment time to the regional warehouses was cut to a mere fraction of what it originally was. Setting the inventory targets in the regional warehouse in accordance with the shortened replenishment time should have reduced the original high inventory levels there to less than half, even when taking into consideration the additional inventory that was needed for raising the DDP of the regional warehouses from the original performance – below 50% – to the current delightful level of 99%. More than enough time had passed to enable the mountains of excess inventory to be flushed out. So, how come the inventories in the regional warehouses were lowered by just 10%?… Click here to continue reading.

Distribution and Supply Chain – Pull System and Replenishment Dr. Eliyahu M. Goldratt Share this video With the exception of companies whose stated business is retail, most companies tend to ignore distribution. This is a huge mistake. Since every company is a link in a supply chain, most already realize that as long as the end consumer has not bought, nobody has sold. The biggest clot in the supply chain – the majority of the inventories – are usually found in the distribution stage. If a company wants to prosper its managers must understand how to help the distribution link to drastically improve its performance. 35 min, English, Spanish, Русский, 繁體中文, 简体中文