The biggest lie we have ever been told: It’s not that simple.
Why do we in Supply Chain accept the chaos? We complain about it, but we must also have kind of accepted it. Do we believe it can’t be solved? Or are we just stuck inside the boundaries of our paradigm and can’t see the solution?
Firefighting, Expediting, Heroic Efforts to save the day. Some people love those things, I guess. No?
When I suggest to people that the key to resolving the chaos of Supply Chain is having the right amount of inventory, in strategic locations, they always tell me the same thing. It’s not that simple.
Instead, people prefer to use the traditional planning tool (Material Requirements Planning) and the traditional thought processes (make your predictions more precise). If you’ve ever arranged a meeting of friends (say 6 people), do you expect everyone to walk through the door at precisely the same moment? In some awkward version of, “After you. No after you.”
If they don’t show up at exactly the precisely arranged moment you’re not surprised, are you? You don’t try again hoping “maybe this time it will work”.
But that’s what we do in Supply Chain. We work harder to align the unalignable. We fault ourselves for not achieving the impossible. And we search our souls to find the key to making precision happen in an absolutely imprecise world.
Step back for a moment and ask yourself, “If inventory was always available, would that solve the problem?” I can almost hear you saying, “It’s not that simple.”
I’ll point out here that I did not say it was simple. While the question might seem easy, the answer never seems simple. But for a moment, can we agree that having inventory when and where we need it would reduce (if not eliminate) the chaos, and allow us to provide nearly perfect customer service (on time delivery)?
And if we agree on that, the next step is to change our focus for improvement. Away from trying to predict the future requirements (timing and quantity). And towards maintaining and managing a level of inventory that creates the capability of meeting our customer demand.
Conceptually, it’s ridiculously simple. We create an expected range of on hand inventory, by individual part number. Let’s call that “a stable target”. Our job becomes maintaining and adjusting that range.
In traditional planning, we have a target too. It’s the forecast or the customer order. As crazy as it sounds, that is “a moving target”. Our job becomes frantically trying to hit a target that’s no longer where it was. Or frantically trying to move it back so it aligns with our plan.
By implemented Demand Driven Material Requirements Planning, many companies have discovered a significant truth. When they change from trying to hit a constantly moving target, to consistently trying to hit a relatively stable target, their world becomes calmer.
Aiming for a moving target allows us to believe that success is impossible. Aiming for a stable target makes success possible. Is our fear of success greater than our fear of failure?
It really is that simple.
John Melbye
Become Demand Driven
