Supply Chain Management Best Practices, 3rd Edition

CHAPTER 2Anatomy of a Supply Chain

Flashpoints

• Best-in-class supply chains share many common characteristics, no matter what industry they're in.
• It takes a coordinated team effort to build, maintain, and sustain a well-run supply chain.
• Best practices don't just happen—somebody has to champion them, devise them, and then apply them.

Supply chains are defined as much by their similarities as by their differences. While there may not appear to be much in common between, say, a multibillion-dollar big-box retailer and a single-site mom-and-pop shop, in fact both companies operate on the same principle: When you're out of stock, you're out of business. With out-of-stock rates averaging 10% (in some product categories, it can be considerably higher), having products on the shelves is the be-all and end-all of retail life. So retailers of all shapes and sizes—whether they're mass discounters the size of a small country like Walmart or a modest chain of three comic book stores—are naturally inclined toward adopting best practices that will maximize their revenues (e.g., rapid replenishment) while minimizing their costs (e.g., demand planning).

The story is much the same for manufacturers, distributors, nonprofits, service industries—in short, any organization that makes or moves products, whether physical or digital, has common supply chain challenges. According to Jim Tompkins, chairman of supply chain consulting firm Tompkins International, top-performing supply chains ...