Supply Chain Illustrated

girl looking in microscope

Supply Chain – Under the Microscope.

I asked my supply chain friends a few questions. See the questions and the responses below.

Q: How do you prioritize your work? How do you decide what to do each day?

First, I look at my Material Requirements Planning (MRP) reports. I must review every morning, since MRP recalculates overnight.  Due to the precision of MRP and the multitude of inputs and changes that happen each day, yesterday’s report and today’s report have many, many differences. So, every day I must start again. 

What’s changed?  We’ve shipped product, we’ve received product. We’ve produced goods, we’ve scrapped components, we’ve updated our inventory, customers have changed dates or quantities, new orders have been entered, forecasts updated.  We’ve made errors, we’ve corrected errors. The list goes on and on.

Next, I listen to the people around me.  My boss has a priority for me.  The shop floor supervisors have a priority for me.  I notice something as I walk through the plant, and I adapt.  Customer Service calls with a new priority for me. All unexpected, all urgent. Code Red.

Q: How would you summarize your main responsibility?

Well, I basically must predict the point in time when each part number in our inventory will hit a zero balance. Then, I must decide at what prior point in time I will ask for that part number to be replenished. I consider the variability of demand and supply as well as other variabilities.  And, I make this prediction with regard to the part’s lead time. For parts that have a short lead time, I have less variability to contend with. 

But for parts with long lead times? It’s like predicting when your checking account will run out of money.  If you had to schedule your deposit six months in advance, how likely is it that you would guess correctly?  This is why precision (in an increasingly imprecise world) is problematic.

Q: What do you see as the primary stumbling blocks? 

Traditional MRP (the tool most of us use) uses a binary warning system.  This means, the status changes from “okay”, to “not okay” without any warning.

And the MRP planned orders are precise calculations based on the information in the system. So, I must search through all the recommendations to find the urgent ones.

There is a connection between many parts.  When a shortage occurs, plans must change. Thereby using product that wasn’t planned to be used such that the next orders are impacted. And the change snowball rolls downhill, impacting more parts, gathering more snow.

The irony is two-fold.

First, for all our talk about processes and process improvement, we really spend an obscene amount of time manually adjusting and firefighting to achieve the desired outcome.

Second, soon after we have completed our tasks to the best of our ability, they require changing because precision cannot hold for very long in an imprecise world.

If this sounds crazy to you, you’re right.  If this sounds like your daily world, come learn about Demand Driven MRP and how a few changes to our processes results in a world of difference.

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