The Need for Organisational Resilience Chapter-6
Safety Stocks instead of none-at-all
The approach of JIT may well reduce waste and excessive inventory costs. Nevertheless, in
recent years, a reverse trend towards JIC can be seen, although not to the extent to which the
Germans practiced it in 1940. A little extra inventory is starting to be seen as a good thing
because reserve (safety) stocks can protect against unexpected changes in demand,
compensating for natural inaccuracies in forecasting. It also provides a buffer for disruptions in
the supply chain. In sum, safety stocks can be maintained in order to provide continuous
logistics, of crucial importance in warfare just as they are in organisations for which continuous
production makes or breaks a competitive advantage. If there is one aspect of behaviour that
ruins an organisation’s reputation, it is not to deliver a product or service on-time.
The question is thus what safety stock should be maintained? One may argue that
commodities such as nuts and bolts for a plane do not need to form part of reserve stock.
However, such supposedly insignificant parts had a significant effect on Boeing’s production of
the 787 Dreamliner. For each service and product, one can define what parts and components
are essential for the whole of the service and product to be produced. It is all a matter of planning
(see following textbox).
[Text Box starts]: NATO: Logistic Planning Considerations
Introduction. Planners will need to determine generally the overall logistic support requirements for an
operation in order to prepare a coherent plan. Further, planners will need to determine specifically the
JOA level support requirements in order to place accurate requests for logistic support force
contributions from participating nations at the beginning of the force generation process. The following
considerations, which apply to all logistic functional areas and particularly so to supply and
maintenance, will assist planners in determining the JOA level support and sustainability
requirements.
a. Mission Analysis. Mission analysis defines the operational tasks to be performed and the
resultant logistic requirements. Some tasks are specified, while others are implied. If the mission
analysis only notes the specified task, then the resources necessary to perform the implied tasks will
be understated. Once the specified and implied tasks are identified, the logistic planner must consider
the tasks in relation to the environment in which they are to be executed.
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