3.4
Do not Optimize Transport:Optimize VALUE
You are not a transport company!
Find your optimal Value Stream
It happens so often that I give it an extra chapter: Many process seem to be designed around optimized cost of transportation…
In many cases this proofs to be sub-optimal. The reasoning is: We need to make sure to drive with fully loaded trucks. This usually result in a series of measures, breaking the continuous flow of the process. In order to solve that, buffers are created: Stock. This results in whiplash effects, that are being tried to cope with by… higher stock. The contact to the market, the real demand of the customer, becomes more and more diluted, so we need to have ‘better planning’…. And so on.
Can you see the vicious circle?
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Try this simulation: What if ALL your incoming AND outgoing stock would turn in 4 or 8 hrs? Find all the advantages. Define what would need to be done. |
Please check the following issues when discussing the effect of transport-volume:
- What is the Cost of storage extra stock (incl. heating/cooling etc)
- What is the Cost of physical handling
- What is the Cost of planning
- What is the Cost of liquidity attachment of the stock
- What is the Cost of longer lead-times
- What is the Cost/risk of reduced shelf-life
- What is the Risk of outdated, obsolete stock
