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Supply Chain Analysis Moneyball Style

There are many reasons to trust your inventory to a 3PL like Patterson Warehouses. Many of those are fairly straightforward, for example: a 3PL can smooth out seasonal ups and downs by “flexing” space and labor in a way that you can’t do when you lease or own your own distribution facility and employ your own workforce.  And when you look at Memphis in particular as a location to outsource your warehousing and distribution, you’ll find we’re one of the most cost-effective labor and warehousing markets in the country.  The list goes on. But here’s an interesting article on LogisticsViewpoints.com that likens the formula for supply chain analysis to the one used by the Oakland A’s Billy Beane to compete effectively with teams having a much heftier payroll.  (And isn’t it timely that the A’s just made the playoffs in a surprising upset of the Rangers?)

You should read the entire article, but it can be boiled down pretty succinctly with a single question:

Have you quantified the cost of customer dissatisfaction that results from order errors?

To quote Steve Banker, the author of the article,

“Knowing the cost of poor quality associated with perfect order metric failures tells a company how much money it can realistically spend improving its order fulfillment capabilities. The handful of companies I know that have conducted various types of “cost of quality” studies  have found that errors generally cost them far more than they thought it would.”

One of the best reasons to trust your inventory to Patterson is that we make warehousing and distribution our only business and that’s why you won’t hear us talking about order errors.  They happen so infrequently that we don’t have to.

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