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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