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Challenge Conventional Wisdom to Unlock Supply Chain Value

New challenges for consumer products companies require new ways of thinking—and a willingness to challenge conventional wisdom:

  • No consistent observable relationship between cost and service levels. Some companies have managed to balance lower costs with higher levels of service, while others fare poorly at both.
  • No direct relationship between scale and costs for outbound logistics. This counterintuitive effect could be driven by several factors. As organizations grow, the organizational and portfolio complexity typically increases, which can erode the gains from scale. Companies also often grow in ways that do not allow scale to be created in specific functions, such as by expanding into new categories, channels, or locations.
  • Higher inventory levels do not automatically drive higher service levels. In fact, no consistent correlation between inventory and case fill rate is apparent. Just adding inventory to drive service levels is not a silver bullet. Improving service levels requires advanced planning and replenishment systems that allow companies to make sure that the right SKU is in the right location at the right time.
Consumer Products
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