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Innovative Technology Fixes Scheduling And Materials Planning Systems And Transforms Manufacturing And Supply Chain Performance.
Every Supply Chain has several links; and if one or more of those links is a manufacturer, then there's a high likelihood of a particular problem developing that has ramifications for every other link in the Supply Chain.
If that manufacturer is using the popular ERP software, there's a very good chance they are also using a module of the software called MRP, or Material Requirements Planning.
And that's where the problem lies; this MRP software, which was conceived in the 1950's and formulated as a computer program in the 1960 decade has barely changed since then - that's 50 years!. Unfortunately, the world has. And the MRP logic that was so promising that it led a revolution in the 1970's and 1980's as more manufacturers could afford computers, isn't a good fit any more for today's business environment.
Product life cycles have been compressed dramatically. After several decades of attempting to reduce purchasing lead times, the strong and continuing trend to outsource from offshore has generated lead times that are longer than ever before. Regardless, customers now routinely order with shorter lead times than ever before. And, customers have no hesitation in changing their minds or their orders. Forecasts are the least accurate they've ever been and and of course forecasts of this kind have never been accurate. And after decades of attempting to reduce variability in processes, the longer lead times, reduced product life cycles and increased volatility in demand has created more variability than at any time in history.
Which poses a real dilemma with regard to MRP.
On one side of the dilemma, the MRP logic - which takes a forecast or real demand and uses the Bill of Material and the inventory and demand order and supply orders to calculate what they need, how many are needed, and when they are needed - has never been more necessary. The ability to re-work the numbers is crucial when so many things are changing.
On the other hand, this volatility combined with MRP's re-running the numbers means our MRP systems are flooding planners with exception messages, and planners can't keep up with the tsunami; and priorities change so frequently that no-one can respond effectively.
One result of this is, manufacturers in many environments (for example, those with any degree of complexity in their Bills of Material) are forced to live with permanent, chronic shortages of materials and purchased and manufactured parts, and finished goods that is leading to entirely unsatisfactory performance in terms of inventory levels, customer service levels and plant productivity.
And since the manufacturing business is in a Supply Chain, and is attempting to manage demand signals and generate their own ..., the impact of this broken engine at the heart of a manufacturing business has consequences for the entire Supply Chain.
Is there a way out? A new approach , a fusion of the best of MRP with concepts from DRP (Distribution Requirements Planning), Lean manufacturing, Theory of Constraints and some pure innovative thinking. It's labeled Demand Driven MRP, shortened to DDMRP, and the scale and nature of results so far in users of all kinds has been stunning.
The DDMRP technology has been extensively documented in the new, 3rd Edition of Orlicky's Material Requirements Planning an updated version of the book, Orlicky's MRP, that first documented the classic MRP approach in the early 1970's.
Typical results include major inventory reductions (as much as 60% for some users), in combination with substantial improvements in Customer Service, often to the 98% order-fill-rate and better. When combined with reductions in the expenses from expediting activities (freight in, freight out, and overtime) the combination is without equal in terms of the potential for performance improvement.
Innovative Technology Fixes Scheduling And Materials Planning Systems And Transforms Manufacturing And Supply Chain Performance.
Thousands of manufacturers have no realization that a major cause of their performance problems is their reliance on 50-year-old computer software. This old logic no longer matches in today's world, and the outcome is Demand Driven MRP, a new technology offering proven solutions.
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