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Demand Driven MRP results in having the right amount of inventory for strategic parts. Because it creates decoupling points that absorb the variability of the bullwhip effect, I have less surprises regarding inventory. And if I focus on having the right inventory, I can eliminate shortages by only buying the parts I need. At the same time, I can allow the excess inventory to reach its proper level.
Material Requirements Planning (MRP) has been the solution that has allowed manufacturing companies to manage their inventories and their production schedules for around 50 years.
Today, companies of all sizes and industries are solving their inventory firefighting chaos by using Demand Driven Material Requirements Planning, a method to model, plan and manage supply chains while protecting and promoting flow.
It may be common knowledge among Supply Chain Professionals, but I wonder if everyone else in most companies really understands what is going on behind the software called MRP and the complexity related to bringing all of the component parts to be in the right place, right time and right quantity.
Every argument you can give, every tweak that you perform, every data export and re-analysis that you explore that prevents MRP from failing, is exactly my point. The system doesn’t work as it is today.
First, recognize that Inventory is your leverage point. Having the right inventory in the right positions is the first step. Traditional MRP assumes that you wait for a customer order, get the required inventory (no more, no less) and after shipping, you have no inventory left.
It doesn’t matter if you’re in upper management or deep in the trenches, neither side seems to be able to see the perspective of the other. Is the gap between these positions just too great? Is one side or the other incapable? Are we attempting to achieve opposite goals? Or are we speaking different languages?
The way we thought at the time made it seem true, but we sometimes aren’t able to connect the newly acquired information with the old knowledge. One I’m thinking about is related to supply chain, purchasing and inventory management.
I’m hearing about more and more companies that have a Learning and Development Director position (or similar). There is a recognition that adding learning and development initiatives as an afterthought is not working. We need to make it a strategic initiative. But still, why?
The world is abuzz with speculation about the coming effects of Artificial Intelligence. Will robots take over the world? Will my coffee machine figure out the right ratio of coffee to water?
It starts with planning and scheduling, doesn’t it? Deciding the dates to travel is maybe the first thing. That involves several potential allies. You don’t walk to the airport empty-handed and pick the next random destination. Sounds fun, but no, that’s not how it’s usually done.
What is it that makes something a Supply Chain? Is it simply viewpoint? Everywhere I look I see supply chain. The computer I use, the chair I sit in, the painting on my wall, the books on my shelf, all came into being and then to me via some facet of a Supply Chain.
