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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