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Agile vs. Lean in the Service Supply Chain

Dan Spellman, VP CAT Logistics. Agile vs. Lean in the Service Supply Chain. The Current Supply Chain Climate…. The same ole story… Reduce Cost, Increase Service. Customer Requirements. Shareholder demands. Increase product availability Improve order accuracy Reduce price.

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Agile vs. Lean in the Service Supply Chain

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  1. Dan Spellman, VP CAT Logistics Agile vs. Lean in the Service Supply Chain Confidential: Yellow

  2. The Current Supply Chain Climate… The same ole story… Reduce Cost, Increase Service Customer Requirements Shareholder demands • Increase product availability • Improve order accuracy • Reduce price • Reduce inventory • Improve productivity • Grow profits Bottom line: Complex supply chains are continuously challenged to achieve the optimal tradeoff between Cost and Service. Confidential: Yellow

  3. The Response has tended toward lean. Typical Strategic Initiatives- a partial list • Reduce order-to-delivery times • Improve order fulfillment performance • Get leaner with inventory • Automation projects (most badly executed) Complexity Time Seemingly, supply chain leaders rely on cost cutting and “lean” initiatives to deliver increased value to their organizations… but what of increased value to customers? Are we going too far with lean? Confidential: Yellow

  4. Agile or lean? a service parts conundrum Hi “Agility” is needed in less predictable environments where the demand variability is high. “Lean” works best in high volume, low - variability, highly predictable environments. AGILE Demand Variability LEAN Lo Lo Hi Volume Confidential: Yellow

  5. Automation Trap… …not agile and often not lean High Efficiency Low cost Agile Highest Efficiency High Cost Potentially Lean High Control Process Lowest Efficiency High Cost A disaster -- neither lean nor agile Low Efficiency Agile but not necessarily lean yet Low Control Low High Degree of Automation Confidential: Yellow

  6. The effects of early automation can be devastating to agility… Process development Productivity Automation Point Degree of Process Control Automated Productivity Accumulated Experience (t) Confidential: Yellow

  7. The True Payoff is.... Optimal Automation Point True Automation Benefit Productivity Degree of Process Control Frequently “Analyzed” Rarely “Realized” Automation Benefit Accumulated Experience (t) …True payoff often does not even cover the cost to automate. Confidential: Yellow

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