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2017

Nate Silver, author of The Signal and the Noise: Why So Many Predictions Fail – But Some Don’t, sets forth a very cogent warning. “[H]uman judgment,” Silver says, “is intrinsically fallible. It’s hard for any of us… to recognize how much our relatively narrow range of experience can color our perception of the evidence.”

 

TMIBook cover: The Signal and the Noise

I learned recently that there is texting shorthand for “too much information” and it’s “TMI.” There are lots of ways to end up getting TMI. We have all probably been in such circumstances—both socially and in our jobs.

 

There are many, many companies and supply chains undertaking very large scale projects—and some at huge expense—in attempt to gather more and more data. These “big data” projects may end up backfiring if there is no clear understanding of the dangers associated with TMI.

 

Nate Silver explains how this goes beyond merely have our experience coloring our perceptions of the data we gather:

 

The instinctual shortcut that we take when we have ‘too much information’ is to engage with it selectively, picking out the parts we like and ignoring the remainder, making allies with those who have made the same choices and enemies of the rest.

 

Therefore, Silver has concluded: “We face danger whenever information growth outpaces our understanding of how to process it.

 

Here is the problem

“The numbers have no way of speaking for themselves,” Silver explains. So, instead, “[w]e speak for them. We imbue them with meaning.”

 

Unfortunately, “we may construe them in self-serving ways that are detached from their objective reality.”

 

Because sales and marketing folks may have a self-serving desire more sales, they may interpret certain factors in the data as “signals” when, in fact, these factors are not signals, but noise.

 

And, further, because there is no hard evidence found in the data to refute the interpretation made by sales and marketing, the entire supply chain may be affected by this interpretation of the data.

 

“Unless we work actively to become aware of the biases we introduce, the returns to additional information may be minimal—or diminishing.”

 

Silver wisely reminds us, “Unless we work actively to become aware of the biases we introduce, the returns [read: benefits, returns on investment] to additional information may be minimal—or diminishing.”

 

If we are not careful, we will invest heavily in attempts improve and increase our data collection effort; or spend significant amounts of time, energy and money attempting to slice-and-dice large volumes of data in (what may prove to be) vain attempts to make sense of it all.

 

But, “[w]hile the quantity of information is increasing [vastly, every day], the amount of useful [or relevant] information almost certainly isn’t. Most of it is just noise, and the noise is increasing faster than the signal. There are so many hypotheses to test, so many data sets to mine—but a relatively constant amount of objective truth.” This is Nate Silver’s assessment, and we find this is never more true than in supply chains.

 

Only relevant information matters

What supply chains really need to know can be boiled down to a few simple things:

  1. Are the supply chain’s buffers (i.e., stock buffers, time buffers, capacity buffers) strategically positioned?
  2. Are the supply chain’s buffers strategically sized?
  3. Are the supply chain’s buffers dynamically managed?
  4. How likely is each buffer to protect FLOW in the supply chain at this present time?
  5. What are the supply chain’s priorities for actions at this moment?

 

If you are not able to find the answers to these questions without digging through screen-after-screen, or the review of one or more (potentially large) reports, then your access to relevant information needs to be dramatically improved.

 

We can help.

 

Your turn

How are you and your supply chain? Too little information? Too much information? Can you answer the five questions in five minutes or less?

 

If not, we can help. Leave your comments below, or feel free to contact us directly, if you prefer.

 

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Read more: Silver, Nate. The Signal and the Noise: Why So Many Predictions Fail - But Some Don't. New York, NY: Penguin Books, 2015.

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What do you stand to gain from making your supply chain truly demand-driven?

5 Steps to Building Demand Driven Supply Chains

 

By “you,” I mean both you (individually) and you (your company). We will talk about the benefits to your company in a few minutes. But, if you (the individual) become the champion that leads the transformation in your company from wherever your company is today, into a future that looks like what we are going to describe below, just how valuable will you become to them?

 

The value to you (the individual) is in the value added to your reputation within your company and your company’s supply chain. It will, of course, add to your personal brand value wherever your career takes you in the future.

 

Becoming truly demand driven

Because “demand driven supply chains” is used to describe almost any combination of ingredients in supply chain planning and execution practices—depending upon who is employing the term, we want to be very clear.

 

In this article, we are using the term “becoming truly demand driven” to mean bringing your supply chain into alignment with the demand driven principles articulated by Demand Driven Institute.

 

In our usage here, “becoming demand driven” does not mean:

  • Improving your forecasting
  • Becoming make-to-order (MTO)
  • Boosting supplies of inventory everywhere across your supply chain
  • Simple “pull”—like Lean’s Kanban or similar

 

Benefits depend upon the starting point

It should be clear to all that the range of benefits derived from becoming truly demand-driven will vary depending upon how your company and supply chain function (or, fail to function) today.

 

If you are like most companies or supply chains we encounter, you are presently using traditional MRP (material requirements planning) or ERP (enterprise resource planning) methods. Of course, you have also found them to be deficient—or, even misleading. So, like the vast majority of companies, you are presently supplementing your ERP/MRP system with multiple spreadsheets, and (perhaps) some other homegrown applications.

 

If that is your company’s case, then you can expect the following benefits from becoming truly demand-driven:

  • Improved competitive performance from reduced lead-times, increased on-time delivery, and improved order fill-rates.
  • Increased system productivity when measured by Throughput / Operating Expenses ratios (Throughput will go up, while Operating Expenses will stay steady, or even decline)
  • Inventories reduced while disruptive shortages also are reduced
  • Stability improved in your plants and all along your supply chain (firefighting, and the need for firefighting will rapidly decline)
  • Enhanced system-wide visibility
  • More accurate decision-making
  • Easier, more sustainable supply chain collaboration

 

Typical results

The typical results from becoming truly demand driven look something like this:

  1. Customer order fill rates (customer service levels) increase from (often) lower than 70 percent to (not uncommonly) 98 or 99 percent
  2. Dramatically improved material and component availability for Lean manufacturing and TOC (Theory of Constraints) initiatives
  3. Markedly improved lead times, with days or weeks stripped out of current lead times
  4. Inventories are often greatlyreduced—virtually always, the reduction is significant
  5. System-wide productivity is improved and significant new capacities are often uncovered
  6. Expediting expenses for both inbound and outbound shipments are reduced
  7. System “nervousness” is cut as right-sized and strategically-positioned buffers absorb variability
  8. Supply chain agility rises without increases in operating expenses or major capital investments
  9. Reliance on forecasts declines, and the costly and relentless pursuit of ever more accuracy is ended
  10. Forecasting takes its proper role for use in setting long-term capacity requirement estimates and adjusting buffers in the near-term

 

Learn more

Learn more by going to Beyond MRP and the Demand Driven Institute’s Website.

 

Become a supply chain champion at your company—starting right now—by educating yourself and others.

 

We can help you get a running start. Leave your comments below, or contact us directly, if you prefer. We would be delighted to hear from you.

 

 

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In this article we compare crucial components of DDMRP (demand-driven material requirements planning) to a couple of product offerings: specifically, Sage 500 and Sage Inventory Advisor. Sage 500 is an ERP (enterprise resource planning) solution focused on mid-sized business enterprises, and Sage Inventory Advisor (SIA) is a cloud-based SaaS (software-as-a-service) supply chain management solution also from Sage Software.

 

DDMRP Component

Sage 500 ERP

Sage Inventory Advisor (SIA)

Dynamically-adjusted inventory buffers – flex buffer positions based on changes in actual demand

The implementation of Demand, Safety Stock and Lead Time formulas in Sage 500 will permit inventory buffers to be dynamically adjusted. However, they are adjusted only after processing period end (manually) and the execution of (1) Calculate Projected Demand, and (2) Calculate Replenishment Parameters. There is no native automation, and the number of days in the Inventory Periods determines the maximum frequency for dynamic buffer adjustments.

Buffer sizes are dynamically recalculated with each overnight upload and execution by SIA.

Planned Adjustments to inventory buffers – aids in managing seasonality, product introductions / end-of-life transitions, and more

Users may enter Demand Adjustments, but these must be in quantities, rather than the more convenient percent change. Therefore, these adjustments do not flex with dynamic changes to the buffers.

Forecasts may be adjusted by amount or percent.

5-Zone inventory buffers
1) Excess
2) Green Zone
3) Yellow Zone
4) Red Zone
5) Out-of-stock
-
provide easy status and relative-priority visibility for planning and execution at all levels

Does not report stock positions by zones.

Does not specifically report stock positions by zones, but does report SKU-locations in the following categories: excess stock, excess supply, potential out-of-stocks, and out-of-stock

Globally-managed inventory buffer profiles – SKU-locations are grouped by similar attributes for ease of management

Purchase Product Lines may offer some similarities, but are intended for an entirely different purpose.

Automatically assigns items to nine (9) categories based on activity level and value (in a matrix). Also assigns best-fitting statistical algorithm for management, which is reassessed monthly.

Decoupled BOM explosion – creates a unique blend of dependence and independence for planning

Uses traditional MRP or DRP.

Employs a statistically-augmented traditional MRP approach for SKU-locations with BOM dependencies.

Actively Synchronized Replenishment Lead Times (ASRLT) – lead time determined by the BOM’s longest unprotected sequence

May do this, but only via manual calculation and SKU-location configuration.

May do this, but only via user-assigned (manual) lead times. Otherwise, lead times are calculated from replenishment history by SKU-location.

Order spike protection – accounts for problematic sales orders based on spike thresholds and spike horizons

Uses standard MRP or DRP methodologies.

Uses standard MRP or DRP methodologies.

Material Synchronization Alerts – identifies specific misalignments between child supply and parent demand

Uses standard MRP or DRP methodologies. May provide pull-in, push-out, or expedite signals.

Uses standard MRP or DRP methodologies. May provide signals to guide pull-in, push-out, or expedite actions.

Multi-location inventory buffer status visibility – relative status visibility across a distribution network for similar SKUs to facilitate proper priorities for effective action

Does not use buffer status reporting.

Does not use buffer status reporting. Does signal excess stock, excess supply orders, potential out-of-stocks, and out-of-stocks by location or across all locations.

Lead-time managed SKU-locations – managing critical non-stocked items through time buffers and alerts

No.

No.

Matrix BOM + ASRLT analytics – revolutionary lead-time and working capital compression method across all BOMs and SKU-locations

No.

No.

 

If you have any questions regarding either of the products mentioned, or on DDMRP itself, please feel free to leave your comments below, or to contact us directly, if you prefer. We look forward to hearing from you.

 

 

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Recently, I read an article on LinkedIn entitled “Why the Dunkin’ Donuts Name Change is Too Little, Too Late.”

 

In the article, Chris Malone points out that the Dunkin’ Donuts name change to “Dunkin” is “long overdue.” He says, “dropping ‘donuts’ from the Dunkin’ brand name has been a strategic ‘no brainer’ for over a decade and ideally should have been fully completed at least five years ago.”

 

Malone also points out that Dunkin’ Donuts’ sales growth has been stalled for several years, and that the future of coffee has changed from hot and made-to-order to cold and ready-to-drink. Dunkin’ has been a late entrant into that market, allowing its competitor to gain a huge market lead.

 

Good things come to those who wait?Page from DDMRP presentation

Patience may be a virtue in our personal lives. In competitive markets, however, it is not a virtue, but a vice.

 

Former president of the United States, Abraham Lincoln, said it well: “Things may come to those who wait, but only the things left by those who hustle.” (Presidential Humor. Morton Grove, IL: Publications International, 2015.)

 

Today—for the last decade or longer—a huge change is underway in supply chain management. That huge change—no less than a revolution—is called demand driven material requirements planning (DDMRP).

 

Who’s using DDMRP? What kinds of success are they creating through its application? You can discover that by reading case studies supplied by the Demand Driven Institute here. The range of industries is huge, including:

  • Aerospace
  • Bio-tech and pharmaceuticals
  • Consumer goods
  • Electronics and technology
  • Forging, metals and machining
  • Make-to-order manufacturing
  • Mixed-mode manufacturing
  • Petro-chemical
  • More…

 

If you don’t want to be one of those firms waiting for the left-overs of those who hustle, you can learn a lot about DDMRP in less than an hour by watching a Demand Driven Institute’s video. Click this link to watch it.

 

Once you’ve decided to learn more and start your demand-driven journey, we can help. Feel free to contact us directly, or to leave your comments or questions below.

 

Don’t get caught waiting for good things that will be captured by your competitors, leaving you with only left-overs.

 

                                                                                                                                                                                                                                         

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RDCushing

Safety Stock - A Primer

Posted by RDCushing Aug 15, 2017

In our work to help small to mid-sized business enterprises get better at managing the own inventories and improve their supply chains, we are often greeted with what seem to be fundamental questions. One of those fundamental questions is:

 

“What is safety stock, and how do we go about figuring out how much we should carry?”Maintain Items screen from ERP system

 

Interestingly, safety stock (s) really is not set independently. Effective safety stock quantities—if they going to be used at all—need to be set in coordination with the reorder point (r).

 

Reorder Point (ROP)

In a well-managed inventory system, a replenishment order is placed every time the replenishment position reaches the reorder point (r) or ROP. Therefore, in theory, the replenishment position can never go negative. In essence, r becomes the BASE STOCK LEVEL.

 

A SKU-location (SKUL) replenishment position is calculated as:

 

Replenishment Position = On-hand Quantity – Backorders + (supply) Orders

 

If we state the expected demand over lead time as Q, we can expect to have r - Q stock on-hand when the replenishment supply order arrives.

 

Therefore, our minimum stock quantity becomes Q or (expected) lead time in days times (expected) daily demand in units. Any quantity of stock greater than r - Q, therefore, becomes SAFETY STOCK, and is intended to protect against stock-outs due to variability in supply or demand.

 

Safety Stock Calculation

SAFETY STOCK quantities, hence, may be calculated indirectly by seeking the value of r (reorder point) that will allow your system to satisfactorily cover variations in supply and demand. (That is to say, if the ROP is set properly, no portion of stock necessarily need be identified as “safety stock,” per se.)

 

For example, in the accompanying illustration, Min/Max Reorder Methods tell the system that r (the reorder point) is 2,744 units; and that the system should order up to the Maximum Stock quantity (7,016 units). If the present replenishment position is 26 units, they MRP will tell the system to order 9,277 units (for this purchased item).

 

How does it calculate the 9,277-unit order? Like this:

  • Maximum Stock Level – Replenishment Position = 7,016 – 26 = 6,990 units
  • Safety Stock deficit = 2,287 units
  • 6,990 units + 2,287 units = 9,277 units (planned order quantity)

 

The same effect could be achieved by simply boosting the reorder point (Minimum Stock quantity) to 5,031 units (the sum of Safety Stock and Minimum Stock), and then setting Safety Stock to zero.

 

Accounting for Uncertainty

Whether you do it with traditional quantities identified as “safety stock,” or merely by boosting your reorder point, the intent is to provide a buffer that accounts for uncertainty, or variability, in supply and demand.

 

In this case (our example above), the configuration indicates that the replenishment lead time is about 21 days, and expected demand over lead time is 205.8194 (projected daily demand) * 21 = 4,322 units. The S&OP team is, therefore, allowing for about a 50 percent variability in supply and/or demand in days’ coverage in safety stock (2,287 units safety stock / 4,322 units in expected demand over lead time).

 

Dangers with Safety Stock

Regardless of how you go about calculating it, safety stock does not come without its problems when addressed using traditional material requirements planning (MRP) methods. As Hopp and Spearman point out in their excellent work, Factory Physics:

 

Operations management researchers have long debated the role of safety stock and safety lead times in MRP systems. [Joe] Orlicky felt these had no place in the system except, possibly, for end items. Lower-level items, he believed, were more than adequately covered by the workings of the system. Since Orlicky's time, many researchers have disagreed. Because MRP is deterministic, the logic goes, something should be done to account for uncertainty and randomness. [p. 133]

 

[A]lthough safety stock and safety lead times can be useful in an MRP system, we must be cognizant of the fact that both procedures lie to the system. Safety stock requires the intentional production of quantities for which there is no customer need, while safety lead times set due dates earlier than are really required. Both situations will make available-to-promise calculations (used to quote deliveries to customers…) less accurate. Excess safety stocks and long safety lead times will result in customers being turned away because of perceived schedule infeasibility even though the schedule is actually feasible. In addition, there is always the risk that once safety stock and/or lead times are discovered by the users, an informal system of "real" quantities and due dates will appear. Such behavior can lead to a subversion of the formal system and can degrade its performance. [pp. 134f – emphases added]

 

Hopp and Spearman also point out the dangers to cash-flow and return-on-investment of failing to strategically analyze how your stock is positioned in your supply chain:

 

[C]onsider a computer manufacturer that sells systems with three different choices of processor, hard drive, CD-ROM, removable media storage device, RAM configurations, and keyboard. This makes a total of 36 = 729 different computer configurations. To make the example simple, we suppose that all components cost $150, so that the cost of the finished good for any computer configuration is 6 x $150 = $900. Furthermore, we assume the demand for each configuration is Poisson with an average of 100 units per year and that replenishment lead times for any configuration is 3 months.

 

First, suppose that the manufacturer stocks finished goods inventory of all configurations and sets the stock levels according to a base stock model. Using [standard techniques], we can show that to maintain a customer service level (fill rate) of 99 percent requires a base stock level of 38 units and results in an average inventory level of $11,712.425 for each configuration. Therefore, the total investment in inventory is 729 x $11,712.425 = $8,538,358. [p. 300]

 

It is easy to clog your supply chain with too much stock, believing that more inventory will protect FLOW better. More inventory is just more inventory if your stock is not strategically situated in your supply chain and providing real and effective return-on-investment.

 

Becoming demand driven is the best solution, and we can help you get there. Contact us directly, if you wish, or leave your comments below. We would be delighted to hear from you soon.

 

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Thanks to: Hopp, Wallace J., and Mark L. Spearman. Factory Physics. Long Grove, IL: Waveland Press, 2011.

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There are really only two KPIs (Key Performance Indicators) that measure the performance of your entire “system.” Here we mean by “system,” your entire company or your entire supply chain. Those two KPIs are:

  1. Return on Investment (ROI)
  2. On-time Performance

 

The bottom-line (literally, the bottom-line) for the financial stakeholders in your enterprise—or the cumulative financial stakeholders in your supply chain—is how well your enterprise or supply chain is performing in producing profits relative to the total investment required to produce those profits. This is the very definition of ROI or return on investment.

 

So, from an internal standpoint, ROI measures the performance of your system as a whole.

 

From an external point of view, all your customers are concerned about is on-time performance.

 

You might argue that they are concerned with many other things, like price and quality.

 

While this is true, by the time they are your customer for a specific purchase, the matters of price and quality have already been settled. Now, to keep them as your customer—assuming quality remains constant and satisfactory—the one remaining factor in their mind is on-time performance.

 

Don’t let other things get in the way

Why do we bring up these two crucial system-wide KPIs?

 

Because too many times we see other KPIs get in the way of achieving these system-level performance metrics.

 

We see metrics applied at lower levels—in functional silos—that actually get in the way of system-wide improvements.

 

Profits and, hence, ROI, stem from FLOW. So, whatever disrupts FLOW tends to reduce profits and ROI.

 

Interruptions to FLOW tend to reduce FLOW and increase EXPENSES in very much the same way that stop signs and traffic-clogged roadways reduce your ability to reach your destination (read: shipping your product) and increase your fuel expenses (by reducing your miles-per-gallon performance).

 

Even before cars had dashboard read-outs for MPG (miles per gallon), almost every driver realized that stop-and-go driving meant lower MPG, and clear sailing on freeways meant lower cost-per-mile for fuel.

 

The same thing is true in your enterprise or supply chain: IMPROVE FLOW, and you virtually AUTOMATICALLY REDUCE OPERATING EXPENSES per UNIT produced and shipped. If you will focus on improving FLOW, your ROI will tend to improve almost without effort.

 

Bonus!

Here’s the bonus!

 

Guess what? If you will focus on improving FLOW, your other system-wide KPI goes up as well! On-time performance automatically improves with a focused POOGI (process of ongoing improvement) and sound methods for improving FLOW.

 

Don’t let the broken and disproven methods about “efficiencies” and “driving down unit-costs” keep you from these goals. Haven’t you witnessed often enough that all the efforts in that direction—that you’ve probably undertaken for the last ten, 15 or 20 years—do not produce long-lasting improvements in ROI? What more proof do you want than your own experience?

 

You could read books like these to help you understand why a focus on unit-costs is failing you:

 

Whatever you do…

Whatever you do, don’t let anything stand in your way any longer. Improve FLOW and you will auto-magically improve your ROI and on-time performance!

 

We can help. Contact us.

 

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Former president of the United States, Rutherford B. Hayes once said:

 

Virtue is defined to be mediocrity, of which either extreme is vice. [1]Cemetery scene

 

“Everybody’s doing it”

Surely we all recall our days as teenagers.

 

You remember: when your parents told you that you should stop doing something, and your response was, “But, everybody’s doing it!

 

You probably also recall your parents’ response: something like, “So, if everybody jumped off a bridge, would you do it, too?”

 

Hooked on Mediocrity

We all feel somehow safer in doing whatever it is we are doing—even if what we are doing is wrong or foolish—if there are lots of other folks doing the same thing.

 

For some reason, we feel like it is virtuous—or, at least, more acceptable—to run with the pack. And, running with the pack—being an “also-ran”—is the very definition of mediocrity.

 

We admire those supply chain leaders who excel. We admire those companies that have achieved something outstanding in their ability to meet their customers’ needs.

 

But, we tend to admire them from afar.

 

If we are going to attempt to emulate them, we often do so timidly—taking half-steps that (all too frequently) cannot and will not yield the kinds of results these market leaders have achieved.

 

Mediocrity defined

Here are some synonyms for mediocrity:

  • Weakness
  • Averageness
  • Ordinariness
  • Commonplace

 

How many of you sat in your last corporate strategy meetings and said anything like the following?

  • “I believe our goal should be to have weak supply chain.”
  • “Let’s do what everybody else is doing so we can have an average supply chain.”
  • “If we continue to do what everyone else is doing, we can have an ordinary supply chain and suffer the same risks as all our competitors.”
  • “Our supply chain should be commonplace, so top management can’t blame us if things don’t go according to plan. After all, if everyone else is doing it this way, it can’t be all bad.”

 

Don’t end up in the graveyard of mediocrity

Mediocrity is not a virtue.

 

The virtue of excellence is what you admire in others. You don’t think: “Wow! That company is really average! We should try to be more like them.”

 

We all want to avoid the vice of failure; but few are willing to take the risk of moving away from the crowd—even when we see the huge rewards experienced by companies and supply chains that do.

 

Someday, all the smart supply chains will have learned the secret of becoming truly demand-driven. [2] Until then, you have the chance to become a real leader by becoming excellent.

 

What keeps you from excellence is setting your sights too low—and then achieving your goal of mediocrity year after year. That is the real vice!

 

Your turn

It’s your turn.

 

Tell us about your successes or failures and how you are addressing the issue of management control in your supply chain operations. Leave your comments below, or feel free to contact us directly, if you prefer.

 

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[1] Presidential Humor. Morton Grove, IL: Publications International, 2015.

[2] Demand-driven, as articulated by the Demand Driven Institute and the book Demand Driven Performance Using Smart Metrics by Smith and Smith.

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Former president of the United States, Dwight Eisenhower said:Lackawana Railroad Engine

 

Neither a wise man or [sic] a brave man lies down on the tracks of history to wait for the train of the future to run over him. [1]

 

A brief timetable for the train headed to the future

  • 1950s – Material requirements planning concepts were conceived
  • By 1965 – The acronym “MRP” was inexistence
  • 1972 – Capacity reconciliation was added to create “closed-loop MRP”
  • 1980 – Cost accounting was added to create MRP II
  • By 1990 – MRP II had evolved to become ERP (enterprise resource planning)

 

However, throughout all that time—about 40 years—the definition and logic behind MRP remained essentially unchanged. It remains essentially unchanged today. Almost all of what Joe Orlicky wrote in his 1975 tome Material Requirements Planning: The New Way of Life in Production and Inventory is still applicable to the logic employed by MRP systems purchased at any price today.

 

While almost nothing has changed in traditional MRP / ERP solutions as far as the essential underlying logic for calculating a material requirements plan over the last 65 years of so, the world in which supply chains operate has changed dramatically.

 

The New Normal

In their outstanding book DDMRP: Demand Drive Requirements Planning, Carol Ptak and Chad Smith [2] point out what is today’s new normal:

 

Experienced planning and purchasing personnel know that if they simply follow what MRP recommends, they will be in big trouble. Shortages will increase. Excess inventory will increase. Expedites will increase. Intuitively, planners understand that materials and inventory management, under conventional practices, places them in a no-win situation. What happened to the promise of MRP...? The answer is exceedingly simple: the world changed and MRP did not.

 

... Customer tolerance times have shrunk dramatically, driven by low information and transactional friction largely due to the Internet....

 

.... Product variety has risen dramatically. Supply chains have extended around the world driven by low-cost sourcing. Product complexity has risen. Outsourcing is prevalent. Product life and development cycles have been reduced.

 

Add on top of this an increased amount of regulatory requirements for consumer safety and environmental protection, and there are simply more complex planning and supply scenarios than ever before.

 

The train of the future has arrived

Here’s the basic problem: far too many supply chain executives and managers have decided to lie down on the tracks of history while the train of the future is running over them.

 

Because it appears to them that all their trading partners and competitors are doing the same thing—including go through all the struggles articulated above—the feel like they are in good company. So, together with their buddies, they are content to lie there on the tracks waiting for the train of the future to run over them.

 

It may be true that “good things come to those who wait,” but—it seems—that better things come to those who innovate. Otherwise, no one would ever innovate.

 

Are you comfortable there on the tracks?

 

Your turn

Now, It’s your turn.

 

Tell us about your successes or failures and how you are addressing the issue of management control in your supply chain operations. Leave your comments below, or feel free to contact us directly, if you prefer.

 

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[1] Presidental Humor. Morton Grove, IL: Publications International, 2015.

[2] Ptak, Carol A., and Chad Smith. Demand Driven Material Requirements Planning (DDMRP). South Norwalk: Industrial Press, 2016.

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