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24 The PCB Magazine • July 2015 Supply Chain Tools Kanban Re-Order Point The Kanban re-order point represents the number of units of inventory that, when reached, needs to trigger a replenishment order for the ROQ (reorder quantity). ROP is calcu- lated in Figure 5. World-Class Supply Chain Your goal should be to have a high-perfor- mance supply chain that is on par with the best companies in the world in your industry. But if you take an unbiased look at yours, you will probably find that it comes up short in a num- ber of areas. Ask your management team "How confident are we in our organization's supply chain and its ability to actually perform in a way that supports our business needs?" If the answer is 'not very,' you may be surprised to learn you aren't alone. According to the results of Deloitte's 3 rd an- nual Supply Chain Survey, only 38% of execu- tives claim to be "extremely" or "very" confi- dent their current supply chain has the com- petencies required to meet their needs. This number should scare the hell out of us because it means that almost two-thirds of executives aren't confident about their supply chain's ca- pabilities! What's more, just 43% consider their supply chain organization to be "excellent" or "very good" when it comes to strategic thinking and problem solving. Again, this translates into more than half of executives who feel their sup- plier chain is merely adequate. The good news is that there is always room for improvement, and by using the tools, methodologies and phi- losophies discussed in this article, which are appropriate for your particular business model, a world-class supply chain is certainly within striking range for the typical organization. The other take-away is that building long- term strategic relationships with your suppliers will get you on this path quickly and efficient- ly with a payback that keeps on giving. Don't be penny wise and dollar foolish with supply chain management. A single problem from an unqualified or uninformed supplier will cer- tainly cost you much more than an audit plane ticket would have! PCB SUPPLy CHAIN IN THE 21 ST CENTURy continues Feature Figure 5: roP calculation. Figure 7: sawtooth replenishment process. Figure 6: economic order quantity (eoQ): The quantity at which the total cost of ownership is optimized. Steve Williams is the president of The right approach consult- ing llc and the former strategic sourcing manager for Plexus corp. he is the author of four books, in- cluding Quality 101 Handbook and Survival Is Not Mandatory: 10 Things Every CEO Should Know About Lean. To read past columns, or to contact williams, click here.