CASE STUDY $1\mathrm{.}2$

Xerox

Once the problems of introducing 'just$-$in$-$time' production systems $($internal logistics$)$ had been solved at the Xerox plant making photocopiers at Venray in Holland, attention shifted towards the finished product inventory $($outbound logistics$).$ Historically, stocks of finished products had been 'managed' by trying to turn the sales 'tap' on or off as stocks developed. This was characterised by the familiar 'feast or famine' situations. The objective of the next move for Xerox became clear: making only what you need when you need it$,$ then shipping direct to the customer. But the key question had to be answered: just$-$in$-$time for what? The answer is $-$ the end$-$customer. And customer surveys showed that three types of delivery were needed:

Commodity products should be delivered 'off the shelf'.

Middle$-$range products were required in five days.

Larger products that had to be integrated into existing customer processes and systems had to be planned months ahead, but the quoted delivery date had to be met $100$ per cent.

It was envisaged that this would lead to a radically different inventory 'profite' in the supply chain. Figure $1\mathrm{.}6$ shows a traditional inventory profile on the left. Most of the stock was held in local depots waiting for customer orders. If the mix had been incorrectly forecast, too many of the wrong products were in plentiful supply, while needed products were unavailable. Further, a batch of replacement products would take a long time to fight their way through the pipeline. A new 'just$-$in$-$time' strategy was conceived to make the supply chain much more responsive. This strategy had a profound effect on the inventory profile, pushing much of the inventory upstream. The closer that inventory