Total Cost Optimization in Service Supply Chain

This document is a solution brief that outlines the concept of Total Cost Optimization (TCO) within the Service Supply Chain (SSC). It describes the challenges organizations face in balancing service level agreements (SLAs) with inventory budgets. The brief explains how traditional optimization methods often rely on arbitrary service level targets, which may not align with the unique demands of the SSC. TCO, as implemented by BaxterProphet, aims to calculate the ideal stock levels that minimize both inventory and stockout costs. The document details how TCO differs from traditional methods by incorporating the financial impacts of service delivery failures. It emphasizes the importance of optimizing fill rates and provides a framework for identifying target stock levels that reduce costs associated with downtime, expedited shipping, and lost productivity. Additionally, it highlights the automated analysis capabilities of the BaxterPredict platform, which helps organizations continuously improve their service parts planning and execution.