The Infosys global supply chain management blog enables leaner supply chains through process and IT related interventions. Discuss the latest trends and solutions across the supply chain management landscape.

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Pareto Theory in Supply Chain Implementation

The Pareto theory resonates among all of us, specifically the Supply Chain consultants. Based on general experience, it is usually a few deviants that take all of one's attention. Not only do these deviants get all the attention, they make the process and the solution to deal with general elements very complex.

Consider for example, the most upstream activity in Supply Chain planning - i.e Forecasting. It is usually easier to forecast 80% of the products, however challenging to forecast the 20% that seemingly show no pattern. Likewise with Supply Planning, the regular safety stock planning or constrainted planning is challenging for a finite segment of the products. Even on the execution side, i.e Order Promising, it is usually challenging to be able to accurately confirm and fulfil certain demand segments.

One suggested approach in such situations is to disect the problem into these two dimensions - the regulars and the deviants. Analyze them on another two dimensions - are they critical to business or nice-to-haves. Try to address the low-hanging fruits in the first wave of implementation and slowly graduate to the next levels. Some of the biggest mistakes one could do with supply chain implementations is to aim for the sun and fall on the face - never bodes well long term.

Some ways of finding what is critical to business is to be able to make them articulate the relative value of solution feature provides with respect to the overall solution - does business stop or get crippled due to a certain feature not being implemented ?

On a philosophical side - what gets taken for granted is usually the most important - hence focus on the basics first in a Supply Chain implementation.


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