supply-chain-and-logistics
Supply chain and logistics
Supply chains fail at variability, not at averages. A chain planned on average demand and average lead time will disappoint at both ends: stockouts when either runs long, dead stock when they do not.
Inventory is a bet on uncertainty
Safety stock exists to absorb variation in demand and in lead time. Sizing it needs both the average and the spread — a supplier averaging 20 days at ±2 is a different proposition from one averaging 20 days at ±15, and treating them the same guarantees you are wrong about one.
Set reorder points on lead-time demand plus safety stock, and revisit them when either input moves. A reorder point set once is a reorder point that is now wrong.
Hold inventory where it is most flexible. Stock held as components serves several finished configurations; the same value held as finished goods serves one and obsoletes faster.