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2017

This is HARD…AvercastScreenshot.png

Having your supply chain management team make decisions about questions like the following is HARD if they are looking at screens like the one you see here.

  • What to order?
  • When to order it?
  • In what quantities?
  • With what priority?

On the other hand, this is EASY…

Having your supply chain management team answer the same questions while looking at something like the accompanying dashboard is EASY:

DDMRP BufferStatusBoard.png

You really don’t even need to know how to read the language. If the dashboard were in French or Polish, you would still be able to figure it out probably.

 

You would think to yourself:

  • RED before YELLOW before GREEN
  • Smaller percent values before larger ones (Why? Because you see that the first YELLOW value—38.06%–is larger than the largest RED value—29.88%.)
  • Replenish the quantity indicated in the quantity column

Buffer Status as the “universal language” of supply chain management

This easy-to-decipher language, when applied in a demand-driven MRP (DDMRP) or demand-driven S&OP environment in accordance with the principles articulated by the Demand Driven Institute is not only intuitive and universal, it also incorporates everything your supply chain managers need to know at any given moment:

              1. Quantities on-hand
              2. Quantities on open replenishment orders
              3. Quantities in demand spikes within each SKU’s spike horizon
              4. Quantities required to cover average daily usage
              5. Quantities required to meet demand today (plus any open backorders)
              6. Quantities estimated to meet any anticipated changes in demand (e.g., seasonality, promotions)
              7. Quantities required to cover typical demand variability
              8. Quantities required to cover typical supply variability

 

Yet, with all that included, still no complex screens! Just a color and a number to indicate priority, and another number to tell you the current actionable quantity.

 

It really is that simple.

 

Why isn’t YOUR supply chain that simple?

 

 

We would be delighted to hear from you. Please leave your feedback below, or feel free to contact us directly.

 

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The following paragraph caught my attention when it appeared in an article on the TechTarget Web site.

 

A more efficient supply chain is almost, by definition, more fragile. An inefficient supply chain is characterized by extra inventory, which can be deployed to cover up errors and unexpected disruptions. As supply chains become more efficient -- that is, they have less extra inventory sitting around -- any disruption in the flow of goods can have an immediate effect on customer service and the availability of goods downstream. [Emphases added.]

 

Most supply chains have a bi-modal stock distribution

DDMRP Bimodal Inventory Distribution.jpg
Most supply chains live in a constant state of their stocks (inventories) being distributed bi-modally. By that we mean that they have many SKU-Locations (SKULs) with too much inventory, many SKULs with too little inventory or out-of-stock entirely, and very few SKULs with just the right quantities to sustain FLOW.

 

Common misconception about supply chain efficiency

The paragraph from the article (above) is indicative of common misconceptions about what constitutes supply chain "efficiency."

 

First, it should be noted (and, if you are a supply chain manager or executive, you are probably very aware) that the supply chain with “extra inventory sitting around” is just as likely to have shortages, out-of-stocks and disruptions in FLOW right alongside the excess inventory. We almost always see—and hear from our clients about—supply chain and inventory managers being faced with "too much of what we don't need, and too little of what we do need."

 

Second, the true efficiency of the supply chain as an operating system cannot be measured by raw quantities of inventory. One man’s treasure is another man’s folly.

 

Your supply chain’s true efficiency is indicated by two factors: Throughput delivered and operating expenses. Here we define Throughput narrowly as: revenues less (only) truly variable costs. (See more on Throughput Accounting here for details.)

 

When these two factors are put into the following formula, you have the supply chain efficiency ratio:

 

Throughput / Operating Expenses

 

Add up your total Throughput for a given period, divide it by your operating expenses over the same period of time, and you have your supply chain efficiency. It is a direct measure of how profitably you are operating your supply chain. When this number is increasing, you are improving. When this number is declining, you are falling backwards.

 

It really is as simple as that.

 

The supply chain that delivers the greatest amount of Throughput, while holding the line on operating expenses, is the most efficient supply chain.

 

This means it is the supply chain where FLOW is effectively sustained in the absence of excess overhead is efficient.

 

Why?

 

Because both inventory overstocks and inventory shortages lead to increases in overhead expenses (e.g., carrying costs, stock movements, expediting, overtime) with no corresponding increase in Throughput.

 

Your turn

Are you confusing “lean” or lower inventories with efficiency?

 

Let us know how you determine “efficiency,” and why you believe it is a valid measure by which to manage. Is the metric continuously leading you on a path of ongoing improvement (POOGI)?

 

Leave your comments below, or feel free to contact us directly, if you prefer.

 

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REFERENCES:

Article: http://searchmanufacturingerp.techtarget.com/answer/What-are-todays-most-critical-supply-chain-management-issues

Figure adapted from Demand Driven Performance Using Smart Metrics by Smith and Smith

 

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Are your supply chain planners and production decision-makers constantly evaluating, examining, considering, checking and double-checking screen-after-screen, row-after-row, column-after-column of numbers in printed reports, in your ERP system, or in Excel™ workbooks trying to make decisions that are timely, accurate and effective?DDMRP BufferStatus PlanVsProd.png

 

If you answered, "Yes," then chances are they are looking at numbers like…

  • Quantities on-hand
  • Quantities on open replenishment orders
  • Quantities required for open sales orders or work orders
  • And more….

The Genius of Simplicity

The genius of DDMRP (Demand Driven MRP) and its closely-related DDSOP (Demand Drive S&OP) is that it boils metrics down to two easy-to-understand elements: a color and a number.

 

From the SUPPLY CHAIN PLANNER and MANAGER’s point of view all the quantity factors are already included in the visual elements presented. The factors incorporated are:

  1. Current On-Hand Quantity (in any given SKU-location, designated a “Buffer”)
  2. Quantities on any open replenishment orders
  3. Quantities required for any open demand that is scheduled for shipment or consumption today or before today (e.g., backorders)
  4. Quantities on any qualified demand spikes within the determined spike horizon [1]
  5. Planned adjustments for any known or anticipated changes in demand (e.g., special promotions) [2]
  6. Average daily usage (ADU)
  7. Minimum Order Quantities (MOQ), if applicable [3]
  8. Demand Variability
  9. Supply Variability

 

No more looking at rows and columns of numbers. For any given item, the planner might be looking as something like this:

DDMRP Dashboard Planners.png

This SKU-Location (SKUL) has a PLANNING buffer in the YELLOW ZONE at 36 percent of total buffer.

 

From the Execution Viewpoint

The folks whose responsibilities are related to execution—say, production or shipping—would be seeing something entirely different, however.

 

Someone on the shop floor might be seeing something like this (below) with regard to the same SKUL the planner is viewing above:

DDMRP Dashboard Execution.png

Since the execution team is interested only in quantities on hand necessary to serve immediate demand, they would be seeing a different version.

 

From a PLANNING perspective, the actual on-hand quantity will normally reside in the YELLOW ZONE (typically, the lower half of the YELLOW ZONE). Therefore, from the EXECUTION perspective, quantities in that range are GREEN ZONE positions for them. The top portion of the PLANNER’s RED ZONE becomes the YELLOW ZONE for execution, and the lower portion of the PLANNER’s RED ZONE is RED for both PLANNING and EXECUTION. (See first figure above.)

 

Measuring the Performance of the Protection of FLOW

This simple arrangement does not seek to bog down PLANNING and EXECUTION personnel in the review of hundreds or thousands of numbers on a page or screens. Instead, this gives both team clear indication of the PERFORMANCE of the BUFFER that protects FLOW, Throughput and profits.

 

It also allows the PLANNING and EXECUTION teams to easily set priorities for actions—again, without looking at rows and columns of numbers.

 

Because both teams get a COLOR and a VALUE, each team can readily and effectively prioritize actions based on the following two very simple rules:

  1. RED before YELLOW, and YELLOW before GREEN
  2. ACT on BUFFER STATUS PERCENT in ASCENDING ORDER (e.g., 3% before 17% before 27% in the example above)

 

Simple. Yes?

 

Simplify Your Life and Work

So, simplify your life and work. Stop spending hour after hour pouring over rows and columns of numbers until you’re dizzy.

 

Get a COLOR and a NUMBER and know immediately where your precious TIME and ATTENTION should be spent.

 

What are you doing to simplify your life and work?

 

Let us know by leaving your comments below, or by contacting us directly, if you prefer. Thanks.

 

 

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NOTES:

[1] For more information on how qualified demand spikes and the spike horizon are determined, contact us.

[2] For more information on how planned adjustment factors are determined and employed, contact us.

[3] Want to know more about how MOQ gets involved? Contact us and we will fill you in on the details.

For years I have joked with folks saying, “I wish my doctor would stop practicing medicine. I want to go to him when he’s done practicing!”TedEd_HowToPracticeEffectively.png

 

However, I have to confess, now, that I’ve been wrong about that. It’s a clever joke, but built upon a wrong assumption about what it means to “practice” something.

 

Watch this TedEd video on practicing and you’ll learn why.

 

Define “Practicing”

In the video, we learn that practice “is the repetition of an action with the goal of improvement. And it helps us perform with greater ease, speed and confidence.”

 

There are some crucial considerations here.

 

Practice is not (or, at the very least, should not be) just the repetition of actions to satisfy the instructor or someone else in authority. Although, I must confess that, in my youth, some of my practicing of various things was precisely that and nothing more.

 

Real practicing, however, is repetition with the goal of improvement!

 

This means, of course, that firefighting in our companies and supply chains is not practice.

 

Firefighting, by definition, is an action intended to rescue us from a negative condition and restore whatever can be salvaged to some state of normality. Firefighting has nothing whatsoever to do with improvement.

 

Nevertheless, I meet lots of executives and managers who have invested (I use the term loosely) far more in firefighting within their organizations and supply chains than they have invested in practicing in their supply chains and companies.

 

Perform with greater ease, speed and confidence

Likely, you recognize—now that I’ve brought it up—that nothing about firefighting is helping your company or your supply chain perform with greater ease, speed or confidence.

 

However, if you are like most of the executives and managers with whom we work day-in and day-out, their fondest wish is that their companies and supply chains could and would perform with greater ease, speed, and confidence.

 

Unfortunately, the typical state of their supply chains are more likely…

  • Dis-eased (disease is, also by definition, an abnormal state with regard to the intended function of a system)
  • Sluggish (especially with regard to the flow of relevant information and relevant materials, despite much frantic activity)
  • Lacking in confidence (almost never certain that the actions planned and executed will actually achieve the desired outcomes)

What to do

The video actually points us in the right direction. It says,

 

We…know that mastery isn't just about the amount of hours of practice. It's also the quality and effectiveness of that practice. Effective practice is consistent, intensely focused, and targets content or weaknesses that lie at the edge of one's current abilities. [Emphasis added.]

 

Look at these points:

  • Effective practice is consistent
  • Effective practice is intensely focused
  • Effective practice targets… weaknesses that lie at the edge of one’s current abilities

Consistent

We seldom see this in many of the supply chains we are invited to help. Instead, we frequently see lots of management oscillation.

 

Today the emphasis is on cost-cutting. Tomorrow, the emphasis will be on customer service. Today the emphasis is on larger batches for improved efficiencies; but tomorrow batch setups will be broken intentionally to allow crucial orders to be completed on-time. Today the emphasis is on volume buying to get the best deals; but tomorrow we will be told that we have too much inventory. This kind of inconsistency goes on ad nauseum.

 

“A house divided against itself….”

 

Inconsistency will never achieve effective practice in your supply chain.

 

Intensely focused

Focus is also a big problem—or, rather, the lack of focus is the problem.

 

A great many of the executives and manager we meet and work with have so much data available to them that they are unable to separate the relevant data from the irrelevant data. As a result, their attentions are diffused, not focused.

 

If you do not know what you need to focus on to achieve improvement, you cannot practice management effectively.

 

Targets weaknesses that lie at the edge of your current abilities

DDMRP Bimodal Inventory Distribution.jpgAs Carol Ptak and Chad Smith so cogently point out in DDMRP – Demand Drive Material Requirements Planning, what we need to learn and focus on in order to improve FLOW in our supply chains is at the edges of our inventory profiles. We need to have tools that focus our practice at the edges where we have too much inventory and too little inventory. We need relevant information that helps us understand why these conditions occur and, as we begin to improve, provides advanced warning when items are beginning to drift into one of these two edge states.

 

If we are not targeting our weaknesses at the edges, we are just trying to do what everyone else is doing. Everyone else is using traditional tools and methods and they are failing to achieve any real improvement.

 

They are still firefighting, and not practicing.

 

Isn’t time you moved from firefighting to practicing?

 

We can help.

 

Your turn

Now it’s your turn. Please leave your comments below. Let us know how you are improving your practice of supply chain management. If you would prefer, please feel free to contact us directly.

 

 

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I sometimes quip to people that I get most of my exercise by jumping to conclusions.

 

The fact of the matter is, we all do! (Of course, some people actually work out in a gym, jog, or take walks daily, too.)

 

Here’s a great YouTube video that explains the physiological reality behind our natural human proclivity for jumping to conclusions. Click here to watch the 12-minute “The Science of Thinking” video. It’s well worth your time.

 

If you watched the video, you can see that it is very natural for us to respond without really thinking, if we think we already know the answer.

 

Tools to Help Us Think

Because of this natural human proclivity toward not thinking if we think we know, Eliyahu Goldratt developed the Thinking Processes—a set of tools to help us really think about what we think we already know.

 

Let me give you an example.

 

Is this statement true or false?

If it is raining outside, I will get wet.

 

Many of you probably went through a thought process something like this:

  1. It’s true.
  2. Wait a minute… it’s not always true
  3. Other factors might come into play….

 

On the other hand, some of you may have concluded it was true, and left it at that.

 

This is where the Thinking Processes can help us.

 

We can put what we think we know down in a graphical format that serves to augment our discussions of what is based on sound logic and what is based on assumptions. Look at the accompanying simple diagram.

CRT_001.png

The round-cornered boxes are statements that include subject and a predicate. We call them entities in a generic sense. The arrow represents a logical cause-and-effect relationship.

 

The diagram is read from the bottom up as:

 

IF it is raining, THEN I get wet.

 

Since the arrow represents a logical IF-THEN relationship, we can begin a discussion about any assumptions that may underlie the arrow. We can begin making those assumptions explicit in our diagram. It may progress to this…

CRT_002.png

Note that we could have connected an arrow directly from “I go outside” to “I get wet,” but that would not have been true. We cannot say, “IF I go outside, THEN I get wet,” if it isn’t also raining. So, we use the AND conditional join for the two statements. It can now be read as:

 

IF it is raining AND I go outside, THEN I get wet.

 

Still, someone might object and the diagram might become something like this:

CRT_003.png

 

Helping us engage in real thinking about what we think we know

As you can see, having the Thinking Process tools to use, we can begin to have discussions about the assumptions that lie beneath the things we already think we know and understand. We can bring an end to jumping to conclusions about how things work—or fail to work—in our enterprises and supply chains.

 

This has meaningful business applications.

 

Below are two excerpts from what we call Current Reality Trees (CRTs). Developing and discussing CRTs help our clients begin to really think about the underlying assumptions their management teams hold about the causes-and-effects across their enterprises or their supply chains.

CRT_Actual_Excerpt_A.png

CRT_SupplyChain_A01.png

By beginning to make the cause-and-effect connections explicit in the diagram, the door is opened to discuss the underlying assumptions that various team members have about why this leads to that in their system.

 

Once the real cause-and-effect relationships have been agreed upon, and necessary assumptions stated explicitly, the process of really thinking about solutions—instead of firefighting and finger-pointing—can begin. This is real power of the Thinking Process tools.

 

We use them to help us help you think through to breakthrough solutions and real, long-lasting improvements for your enterprise and your supply chain.

 

If you would like to see an example of a full Current Reality Tree (CRT) and talk about developing one for your organization or supply chain, leave your comments below, or feel free to contact us directly, if you prefer.

 

 

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Thinking really is hard work. If you don’t believe me, try the “brain damage” of this YouTube video.ThinkingIsHardestWork_HFord.png

 

It leaves you scratching your head even though the narrator tells you precisely how to think it through!

 

What we think we know

Another great YouTube video found here explains why thinking is so hard. In short, it says we’re lazy.

 

(Uh. Go back and watch the video. You'll get a lot more out of the rest of this if you do. Thanks.)

 

No. I'm not saying lazy in the sense of being consciously unwilling to labor at problem-solving.

 

Rather, our physiology is such that (literally) if we think we know the answer to a challenge we are facing, we will fall back on what we think we know, rather than putting forth the energy to really think through the problem.

 

You don’t believe me? Did I hear you say that? If so, then you need to go take a look at this video one more time.

 

How we (typically) spend our energies

I believe Henry Ford got it right when he opined:

 

Most people spend more time and energy going around problems than trying to solve them.

 

Think about what firefighting is in your enterprise and your supply chain.

 

Firefighting is a euphemism we use to describe “going around a problem” rather than solving it. We know that, when we take extraordinary means to put out a fire, it is very likely we will be fighting that same fire again (perhaps in a slightly different form, or with a different SKU or different supplier) quite soon.

 

Problem solving (read: thinking) stops with what we think we know

Eli Schragenheim offers sage advice when he reminds us:

 

Never say, “I know.” Never say, “I don’t know.” You know something, but not everything.

 

Most frequently, we know many things about our situation. We understand much about the challenges we face in our supply chains, or in making our enterprises more profitable.

 

What we don’t know—most commonly—is how all of the things we know are connected and related.

 

The best consultants

This is why we constantly remind our clients that the best consultants don’t come to bring you the right answers.

 

We don’t know the right answers.

 

We come to help you ask the right questions!

 

Because, the right questions will help you set aside what you think you know long enough to get you really, actively thinking.

 

You can engage Drew, instead of Gun, and begin making real progress.

 

By the way, if you don’t understand the “Drew” and “Gun” references in the preceding paragraph, try this link.

 

 

Please leave your comments below. We'd like to hear what you have to say.

 

 

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I went back again to watch the film “Joy,” which was originally released at Christmas 2015.Joy_TheMovie.png

 

JOY is the wild story of a family across four generations centered on the girl who becomes the woman who founds a business dynasty and becomes a matriarch in her own right. Betrayal, treachery, the loss of innocence and the scars of love, pave the road in this intense emotional and human comedy about becoming a true boss of family and enterprise facing a world of unforgiving commerce. Allies become adversaries and adversaries become allies, both inside and outside the family, as Joy’s inner life and fierce imagination carry her through the storm she faces. Jennifer Lawrence stars, with Robert De Niro, Bradley Cooper, Edgar Ramirez, Isabella Rossellini, Diane Ladd, Virginia Madsen, Elisabeth Röhm and Dascha Polanco. Like David O. Russell’s previous films, Joy defies genre to tell a story of family, loyalty, and love.

 

All the drama of real life—because it is real life

This film encapsulates all of the supply chain drama that, I am certain, you and your company have gone through in various stages. Maybe, these dramas are being repeated over and over in your real life:

  • Betrayal
  • Treachery
  • Loss of innocence
  • Intense emotional and human comedy
  • Facing a world of unforgiving commerce
  • Allies becoming adversaries and adversaries becoming allies

Without too much exaggeration, I can say this sounds like some of the companies I’ve visited and worked with over the last couple of decades.

 

Okay. Maybe “betrayal” and “treachery” are too strong. But, there certainly were company politics at work with people saying one thing behind closed doors and quite another thing in the more open meetings.

 

To paraphrase Abraham Lincoln and the Bible, “a company divided against itself” will find surviving and thriving to be all the more difficult.

 

All real success begins with a dream

At the outset, the dream is just to start a business and become successful.

 

However, year after year, the executives and managers usually go through some kind of planning exercise in which they are invited to dream about what the future will look like for the company in the coming year, two years, or even three to five years.

 

The film, Joy, opens with Joy’s grandmother, speaking as the narrator, saying,

 

“Everybody starts out with some kind of dream….”

 

I can tell you this, I have never, ever sat with a team of managers and executives who said, “Next year, or in the coming five years, let’s make plans to be mediocre, just like we have been for the last five years.”

 

Nevertheless, I can tell you that is precisely how the vast majority of companies end up.

 

Why is that?

 

Joy asks that same question in the film. In a heart-to-heart conversation with her best friend, Joy asks, “What happened to us, Jackie; all the things we used to dream about? I think they keep getting further and further away.”

 

In a flashback, Joy recalls a conversation with her then soon-to-be first (and ex-) husband. In the conversation, Joy enumerates many of the things that had gone wrong—certainly differently from her dreams—that seemed to be keeping her from moving ahead.

 

He consoles her by saying, “Maybe your dreams are on hold, right now. Huh?”

 

Smiling halfheartedly, Joy replies, “That’s a nice way of putting it.”

 

Are your supply chain (or corporate) dreams on hold right now?

We are sure you didn’t dream, or make your plans, to achieve mediocrity. We are almost positive that you’d like to reach higher than that.

 

So, what’s holding you back? Why are your dreams “on hold, right now?” Huh?

 

In the book Scaling Time, the authors write:

 

“Discovery consists of seeing what everybody has seen and thinking what nobody has thought.” [1]

 

In a crucial scene from the film, Joy has a discovery moment. While cleaning up spilled wine and broken glass, she cuts her hands again and again as she wrings out the mop. But, despite the apparent hardships she is facing, she thinks what no one else is thinking!

 

Her discovery in that moment became the basis of all the future success for herself, for her family, and even for her friends.

 

No spoilers here

I’m not going to give away the story-line here. You really ought to watch this film yourself.

 

Nevertheless, I will tell you this: that moment of discovery did not bring instant success.

 

She faced opposition from within her own family—much like those trying to bring new ideas often face opposition from within their own enterprises. There was no shortage of nay-sayers and “Doubting Thomas’s” surrounding her—even openly telling her that she could never succeed.

 

When success came, however, all those who opposed her were more than willing to jump on board and join in celebrating rewarding outcomes.

 

Real success comes from dreaming that the future can be different from today

Real success comes from dreaming that the future can, indeed, be different—better, even dramatically better—if we stop doing the same things we have always done and the way we have always done them!

 

If any of the methods we have been using could dramatically improve the performance of our supply chains, and dramatically increase our return on assets (ROA), then they would have done so long ago (since it is likely we’ve been trying small variations on the same methods for many, many years already)!

 

Everybody is seeing the same things.

 

But only those who learn to think what others are not thinking will break out of mediocrity.

 

It is time to get out of the day-to-day angst in your supply chain management and operations and find some real joy.

 

We are firmly convinced that becoming truly demand-driven (as advocated by the Demand Driven Institute) is the new thinking that can bring you, your company and your supply chain the joy you have been seeking.

 

What is “joy,” by the way?

 

Joy is "the emotion of great delight or happiness caused by something exceptionally good or satisfying." [2]

 

Isn’t it time you got some of that in your enterprise and in your supply chain?

 

We can help you dream and bring into reality some joy—and help you bring an end to that nagging angst.

 

Your turn

Tell us about your dreams, successes or angst. We would like to hear from you. Leave your comments below, or contact us directly, if you prefer.

 

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[1] Weilert, Matthew; Watau, BonnieRobin. Scaling Time: How I Learned to Love Logistics: A Straussian Adventure of Cross-Disciplinary Insight (Blue Two™ Series Book 7). Skerja Press, an imprint of STI Press. Kindle Edition.

[2] http://www.dictionary.com/browse/joy

 

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An article by Lora Cecere appearing on the Supply Chain Shaman website offers this warning:

 

Disruption in supply chain planning is happening. My angst is that it is not happening faster. We are on a path to reinvent decision-support technologies like supply chain planning. The third act is starting. This will make traditional approaches obsolete. The rate of adoption will be fast for early adopters (next five years), but much slower for conservative followers. The barrier for all is traditional thinking.

 

ChangeIsInevitable.jpg

What we think we know

Think back over the course of history.

 

It doesn’t really matter what history. It could be your personal history. It could be the history of your company. Perhaps, it could your history in managing supply chains. You could even look back at the history of any nation, or culture.

 

No matter where you look, I believe that—if you’re honest—you’ll be able to recognize a problem. One might even safely label it a “danger.”

It is almost always what we think we know that becomes…

  1. The anchor that holds us back from making great progress; and
  2. The causes of most of our great failings.

 

It was what Napoleon thought he knew about defeating the Russians that caused him to lose more than 400,000 men on his tragic march to and retreat from Moscow.

 

It was what people thought they knew about the earth that kept them—for centuries—from traversing the globe and discovering new lands and the wealth that could be gained from creating “supply chains” between the Old World and these newly discovered lands.

 

It's what we think we know—what Lora Cecere refers to as “traditional thinking”—that is our biggest barrier to achieving great things.

 

Some have broken through—and broken away from the pack

Cecere offers cogent warnings that ought to be considered. The coming changes “will make traditional approaches obsolete.” Further, she accurately declares, “The rate of adoption will be fast for early adopters…, but much slower for conservative followers.”

 

So, let’s take a look at what some “early adopters” are saying about demand-driven material requirements planning (DDMRP) and demand-driven sales and operations planning (DDSOP):

Unite the entire organization [2]

"DDMRP not only offers a comprehensive methodology for improving the flow of operations (both finance and product), but has a powerful conceptual force to unite the entire organization around customer satisfaction." -- Felipe Gonzalez, President, Acerias de Colombia - ACESCO

Short lead time and 100% service

Demand driven planning “was a cornerstone of our lotion pumps business transformation. We now offer much shorter lead times (down by 75 percent) with 100 percent service." -- Vincent Thibault, Global Lean Director, ALBEA Group

Big wins for a distribution network

After implementing demand-driven planning “methods, …backorders as a percent of sales dropped from 16.3 percent to 1.1 percent with a 54 percent inventory reduction. It works." -- Steven Montgomery, General Manager: Supply Chain & Projects, a.b.e.s Construction Chemicals (PTY) LTD

We won a supply chain award!

"The Demand Driven planner program led us to completely overhaul our planning processes. The results were great and we won the 2015 King of Supply Chain Competition!' -- Laurent Vigouroux, VP Quality, Bernard Controls Group

On-time deliveries and low stocks: we did it!

“The Demand Driven Planner Program eradicated our stock-outs transforming us from constant expediting into on-time shipment. Everyday life is now much easier." -- Leila Bouhali, Supply Chain Manager, SAMES KREMLIN

High visibility

"With DDMRP we have nearly eliminated expedites, inventory down is 25 percent in four months, and we have no stock-outs." -- Fernando plaza, Manager, IFAM

We transformed a supply chain

"l was able to take the [demand driven planning] concepts… and leverage them with our suppliers and customers for better flow through the entire chain." -- Lindsey Fountain, Supply Chain Manager, Rex Materials Group

Strongly recommended!!!

"Demand driven [planning] provides a very disruptive approach to deal with the uncertainty, reducing financial risks and increasing service level. Strongly recommended!!!." -- Jaime Hernandez, Supply Chain Manager, Industrias Haceb

 

Where is the brilliance of demand driven planning?

The brilliance and effectiveness found in demand driven planning comes, not from attempting to make forecasts more accurate, but from applying forecasting where it makes the most sense—for longer-term capacity management decisions and for scaling short-term adjustments to dynamically-managed and strategically-placed buffers. The buffers themselves are strategically placed and sized in order to decouple variability on both the upstream and downstream sides of the supply chain.

 

Sound. Proven. Effective.

 

What’s hold you back? We would be delighted for you to join the conversation by leaving your comments below. However, if you prefer, you may contact us directly.

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NOTES:

[1] Cecere, Lora. "Different Strokes for Different Folks (to Yield Better Results?)?" Supply Chain Shaman. February 10, 2017. Accessed February 13, 2017. http://www.supplychainshaman.com/uncategorized/different-strokes-for-different-folks-to-yield-better-results/.

[2] All quotes from "The Demand Driven Institute - World Leader in Demand Driven Education." The Demand Driven Institute. Accessed February 09, 2017. http://www.demanddriveninstitute.com/.

 

 

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