Use Supply Chain Prover with your AI.

Validate supply chain

Before any supply chain decision, call this capability: (1) DEMAND FORECAST. statistical model (exponential smoothing, ARIMA, Holt-Winters). Data period (minimum 24 months). Confidence interval (95% CI). MAPE (target < 15%). "We expect growth" is NOT a forecast. a forecast has a model, data, and error metric, (2) INVENTORY. EOQ formula: √(2DS/H) for every SKU. Safety stock: Z × σ × √L (service level, demand variability, lead time). Reorder point: average demand during lead time + safety stock. Carrying cost: 18-25% of inventory value/year (storage, insurance, depreciation, obsolescence), (3) SUPPLIER RISK. concentration % per supplier (max 30% of any critical category). Lead time coefficient of variation (CV < 0.2 = reliable). Geographic spread (min 2 regions). Dual-source plan for all components with lead time > 2 weeks. Financial health of top 3 suppliers, (4) LOGISTICS. mode selection: air ($4-6/kg), sea ($0.20-0.50/kg), road ($0.30-0.80/kg), rail ($0.15-0.30/kg). Cost per unit shipped. Last-mile as % of total cost (typically 40-55%). Warehouse network: number, location, coverage radius. Hub-and-spoke vs direct, (5) BULLWHIP. POS data sharing with supply chain tiers. Order batch frequency (smaller = better). Price stabilization (eliminate bulk discount incentives). Lead time compression targets. VMI (Vendor Managed Inventory) where applicable. If rejected, your supply chain has a single point of failure. Structured reflection capability for Toyota-level supply chain reasoning. forces systematic analysis of demand forecasting, inventory optimization, supplier risk, logistics efficiency, and bullwhip mitigation. Based on Toyota Production System (Taiichi Ohno), Just-in-Time philosophy, and lessons from global supply chain disruptions (2020-2024). Catches Gut-Feel Forecasting (no statistical model behind demand predictions. a bicycle manufacturer: "We expect demand to grow 20% next year based on market trends." No model. No confidence interval. No historical MAPE analysis. Reality: they ordered 20% more aluminum frames. Actual demand grew 3%. Result: 8,500 unsold frames at $120 each = $1.02M in dead inventory. Warehouse carrying cost: 25% of inventory value/year = $255K/year in storage, insurance, depreciation. A competitor used exponential smoothing (α=0.3) on 36 months of historical sales data. Forecast: +7% ± 4% (95% CI). MAPE: 8.2%. Ordered +11% (upper bound). Result: sold 100% of inventory. Zero dead stock. Rule: "we expect" is not a forecast. A forecast has: model name, data period, confidence interval, and MAPE < 15% to be actionable), Inventory Blindness (no EOQ/safety stock calculation. guessing purchase quantities. a restaurant chain orders napkins "when we run low." Annual demand: 500,000 napkins. Cost per napkin: $0.03. Ordering cost: $45/order (delivery minimum). Carrying cost: 20% of value/year. EOQ = √(2 × 500,000 × $45 / ($0.03 × 0.20)) = √(45,000,000 / 0.006) = 86,603 napkins per order. Optimal: 5.8 orders/year (every 9 weeks). Current: ordering 20,000 at a time = 25 orders/year. Excess ordering cost: 19.2 extra orders × $45 = $864/year. on NAPKINS alone. Apply this blindness across 200 SKUs: $47K/year in unnecessary ordering costs. Safety stock: σ = 12,000/month, lead time = 2 weeks. Z(95%) × σ × √L = 1.65 × 12,000 × √0.5 = 13,991 napkins. Without safety stock: 3 stockouts per year. Each stockout = emergency order at 2.5x premium. Fix: calculate EOQ and safety stock for EVERY SKU. The math exists since 1913. use it), Single-Source Naivety (all eggs in one basket. supplier concentration risk. an electronics assembler: 100% of their capacitors from one factory in Shenzhen. "They have the best price." March 2021: factory fire. Production halted for 6 weeks. The assembler: zero alternative suppliers. Zero safety stock (JIT philosophy misapplied). Production line idle for 6 weeks. Revenue lost: $4.2M. Customers switched to competitor. Recovery took 9 months. 3 customers never returned ($1.8M/year recurring revenue lost permanently). Ford Motor Company 2021: semiconductor shortage from concentrated Asian supply = $3.5B lost revenue. Toyota. the SAME company that invented JIT. maintains 2-4 week semiconductor buffers AND dual-source critical components. Toyota lost $1.1B vs Ford's $3.5B in the same crisis. Rule: no single supplier > 30% of any critical category. Dual-source all components with lead time > 2 weeks. Geographic diversification: do not source 100% from one region), Logistics Handwaving (no cost-per-unit or mode-selection analysis. a clothing brand ships everything by air freight. "Speed is our advantage." Air freight: $4.20/kg. Average garment: 0.5kg. Shipping cost: $2.10/unit. Garment wholesale price: $12. Shipping = 17.5% of revenue. Alternative: sea freight for basic inventory (90-day lead time styles). Sea freight: $0.35/kg. Shipping cost: $0.18/unit. Shipping = 1.5% of revenue. For trend-sensitive items (10% of catalog): air freight justified ($2.10/unit on $25 retail). For basics (90% of catalog): sea freight saves $1.92/unit × 200,000 units = $384,000/year. Last-mile delivery: $4.50/package average. This is 53% of total logistics cost. Optimization: regional fulfillment centers (3 hubs instead of 1 central warehouse). Last-mile cost reduction: $4.50 → $2.80/package = $340,000/year saved on 200,000 shipments. Total logistics savings: $724,000/year. No one "analyzed" it because "we just ship things"), and Bullwhip Ignorance (demand amplification across supply chain echelons. P&G's beer game (MIT Sloan experiment): a 10% increase in retail demand becomes 20% at the distributor, 40% at the manufacturer, 80% at the raw material supplier. Why: each echelon adds safety margin to the order. Retailer orders 110% (10% buffer). Distributor orders 125% (15% buffer on the already-inflated signal). Manufacturer orders 150%. Supplier orders 200%. When retail demand normalizes: supplier has 2x inventory. Write-down. Layoffs. This happened globally in 2021-2022: pandemic demand spike → massive overordering → 2023 inventory glut (Amazon, Target, Walmart wrote down billions in excess inventory). Fix: share POS (point-of-sale) data directly with all supply chain tiers. the supplier sees ACTUAL demand, not the amplified signal. Reduce order batching: smaller, more frequent orders (daily vs monthly). Stabilize pricing: eliminate bulk discount incentives that encourage overordering. Compress lead times: shorter lead time = less forecasting error = less safety stock = less bullwhip). Call once per supply chain decision, procurement strategy, or logistics optimization