The company has 8 guiding principles that are mentioned in the figure which company is utilising for the

following purposes-

1. ELIMINATE ALL WASTE IN FULFILMENT STREAM-

CUSTOMER COLLABORATION- Earlier the company had few suppliers but for the purpose of
having good outputs and profits ,the company is presently trying to collaborate with a greater
number of suppliers. By the collaboration the company can easily avoid overproduction, waiting
times, saved human efforts and less inventory .Costs must be managed collaboratively over
time, with a clear understanding of how decisions at various points affect the entire fulfilment
stream, in order to reduce the total cost of fulfillment.

2. MAKE CUSTOMER CONSUMPTION VISIBLE-

The end user determines value, and their consumption rate must set the pace for the entire
stream. This necessitates managing the entire process as a lean process. Thus, the company is
focusing on the Production management and sales distribution and proper forecasting of the
sales for consumers need to be properly managed as the end goal of the company is that at the
constant sales, ABE must cut overall costs by $20 million in two years.

3. REDUCE LEAD TIME-

Total lead time in a fulfilment stream is the sum of all processing time, transit time, and time
spent as inventory.
 Manufacturing lead time + RM inventory ADOH* + Inbound lead time + FG inventory
ADOH +outbound logistics=Total lead time.

Currently, the company is following and taking 30 days before ordering after doing a forecast
for 4 months and then shipping , receiving and material planning is done by mastering the production
schedule and then the regional distribution center is used for outbound logistics.

4. USES PULL SYSTEMS- In case when level flow is not possible the company uses pull systems.
 5. CREATE LEVEL FLOW- To minimise the total cost of fulfillment, costs must be managed
collaboratively over the long term, with a clear understanding of how decisions at different
points affect the entire fulfilment stream.

6. INCREASE VELOCITY WHILE DECREASING VARIATION- The company increases the velocity while
reducing the changes that the company does in the smaller and more frequent batches.

7.COLLABORATION AND APPLY DISCIPLINE- The company is Collaborating and applying process
discipline after it identifies and uses root causes and then apply tools for improvement.

8. FOCUS ON TOTAL COST OF FULFILMENT- Currently the company Concentrates on the total cost of
fulfilment eliminating decisions that benefit only one party a portion of the flow at the expense of
others