THE FAT IS GONE-NOW WHAT?

It's no surprise to anyone that in today's environment, there's little room for error in managing performance. With decreasing customer loyalty and increasing pressure on predictable performance and profitable growth, there's simply no "fat" left. Yet the effort to reduce costs has resulted in highly extended supply networks-creating many additional failure points in the system that can restrict responsivenessto change.

Historically, manufacturers improved customer service and change responsiveness through the use of expensive "just-in-case" practices such as running excess capacity, expediting orders, and carrying inventory buffers or safety stock. Yet these practices are ineffective, as Charlie Barnhart of Technology Forecasters, Inc. recently wrote:

While adding inventory to the supply chain may look like a quick-fix to the challenges created by remote supply solutions, it is not. In practice, it tends to make companies less responsive to market dynamics-not more.