Orders cause material to flow from sellers to buyers, and invoices cause cash to flow from buyers to sellers. The principles and techniques of Chapters 2, 3, and 4 and the parallel loop discussion in Chapter 5 are combined to optimize the network design by maximizing velocity and minimizing variability. The optimization steps, summarized below, apply to both the design of a forward supply chain network and separately to a reverse supply chain network:

1. Each trading partner is rationalized against a focused business strategy.

2. The product BOM is flattened to minimize the number of midstream echelons.

3. The Country Of Origin is chosen as a tradeoff between landed cost and network length.

4. The total number of network echelons is minimized upstream, midstream, and downstream.

5. Nominal trading partners of like kind, i.e., LSPs, ISPs, and FSPs, are consolidated where possible.

6. Where possible, subcycle information flows and cash flows are run in parallel rather than in series.

For each subcycle the optimization continues as follows:

1. The number of process steps in each subcycle is minimized.

2. The velocity for each subcycle is maximized by reducing the mean cycle time for each process step.

3. The variability for each subcycle is minimized by reducing the standard deviation of the cycle time for significant process steps.

4. A measure of the successive network design improvement is plotted on the value circle.

This Chapter has raised two fundamental questions:

• How can you accelerate the order-to-delivery-to-cash cycle and avoid velocity traps?

• How can you take variability out of...