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Einstein quote

Every evil in our supply chains…

Someone said many years ago: “Every evil in a manufacturing environment eventually manifests itself in the form of additional inventory.”


Of course, precisely the same thing is true of supply chains. Every fault, every failing, every strongly-held yet misguided belief about how supply chains should function will eventually manifest itself in our supply chains as excess inventory.


And, interestingly enough, excess inventory manifests itself—as clearly articulated in Little’s law—in longer lead times. And, the consequences of longer lead times are what? The consequences are almost inevitably inventory shortages and out-of-stocks. I have seldom met a supply chain manager or executive that was not simultaneously struggling with out-of-stocks and excess inventories. Our supply chains seem constantly plagued with “too much of the wrong stuff and too little of the right stuff.”


Computers to save the day!

Throughout the 1980s, 1990s, and on into the 21st century, I was helping enterprises and supply chains select, implement and build upon the latest computer technologies. Computer systems were being used to computer statistical reorder points (ROP), economic order quantities (EOQ), and much more.


Even today—within the last year—I have had numerous requests from clients and prospects for help with acquiring and implementing traditional material requirements planning (MRP) systems and the like.


The failure of MRP

Every time I get one of those requests, I cringe a little.




Because, MRP has never, ever lived up to all of the promises made by MRP crusaders of the 1970 to 1990 MRP expansion period. And, contrary to the general thought that we should learn from our experience, experience apparently has not taught us well enough regarding the inherent weaknesses in MRP, MRP II and its ERP evolutions.


Why aren’t we listening?


As far back as 1984, George Plossl and Raymond Lankford were already warning us that MRP systems had been oversold to U.S. industry. They said it was “a classic case of fad psychology” with companies avidly embracing MRP as the solution to their problems. Plossl and Lankford, after studying many, many implementations of MRP and MRP II systems, said—even then—that “MRP II is among the most overemphasized and underachieved goals of U.S. Industry.”*


Even firms where I have successfully assisted them with implementation and training in the use of MRP almost inevitably come to recognize that it doesn’t really solve the problems they were hoping to solve. They readily see that something is still missing.


Despite attempts to follow the recommendations of their MRP / ERP system, they continue to experience

  • Late orders
  • High expediting costs and expenses
  • Wandering bottlenecks
  • Excess work-in-process inventories
  • Unworkable schedules


Why this failure?

In part, this failure stems from management oscillation.


Before moving to traditional MRP, they likely had been managing a just-in-case inventory. They had hoped that having lots of inventory everywhere would help prevent stock-outs, delays, expediting and more. It hadn’t worked. Despite huge inventory investments, they still found themselves struggling with shortages, stock-outs, delays and high expediting costs.


So, they thought, MRP will help us.


MRP is designed to provide time-phased purchasing and production guidance so that our stocks of inventory will be more synchronized with our production and shipping demands. Traditional MRP’s algorithms are based on computer-guided “just-in-time” inventories.


As a result, for some period of time following the MRP implementation, things actually got worse in terms of excess stocks accompanied by simultaneous stock-outs and shortages.


So, work-arounds were implemented. MRP data was further manipulated on whiteboards, in Microsoft® Excel™, or in homegrown applications built in Microsoft® Access™ or with other tools. This helped some. At least the enterprise was surviving, but only at the high cost of increased salaries and expenses related to maintaining all the new islands of information now scattered across offices and desktops. And, of course, scheduling of purchases and production now works the same way it did two decades ago—run most by “gut feel” and the latest or loudest demands from sales and customer service managers.


There is a solution that works

I’m not really sure why we are such slow learners.


There is a solution that really works. It’s called DDMRP (Demand-Driven Material Requirements Planning). You can read about here at the Demand Driven Institute website. Or, you can read a couple of outstanding books that ought to be on the desk—not the bookshelf—of every supply chain leader, strategic CFO, and supply chain planner. Here they are:


We can help, too. Leave your comments below, or feel free to reach out to us directly, if you prefer.


Stop letting your traditional MRP system and old-think stand in the way of your supply chain success.


* Plossl, George W., and Raymond L. Lankford. "The Redirection of U.S. Manufacturing: Part 2--The Pivotal Period." Production and Inventory Management Review (November 1984), 50-51.


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If your job description is a supply chain manager, production manager, planner, or something similar, how many times have you said to yourself,


“I gotta get off this merry-go-round! Every month or so it’s the same thing!”Overtime Vicious Cycle graphic


You know. You’ve been doing it (probably) for years.


Your well-trained APICS-certified folks do their RCCP (rough-cut capacity planning) based on the forecast demand, and the planners dutifully create their MPS (master production schedule). Then, everyone goes to work doing what needs to be done.


Of course, it is likely that almost everyone—after all these years—already smirks a bit at the MPS, knowing that “it ain’t gonna stick.” Sooner or later, everyone knows it’s all gonna fall apart.


Here’s WHAT happens

  1. Variability from the forecast leads, sooner or later, to some shortages or delays at a critical point in manufacturing, assembly, or elsewhere in the supply chain.
  2. Work-in-process (WIP) starts to pile up here and there across the shop floor or in supply chain facilities.
  3. Just as Little’s law tells you it will, cycle times start to increase.
  4. Completions are delayed.
  5. Customers (or, maybe, the sales managers) start to complain because orders are late (or, it’s clear they will be late if something doesn’t change soon).
  6. Management decides “Something’s gotta give!”
  7. Overtime and excess freight costs are authorized to overcome the log-jamb of WIP.
  8. Capacity is increased (thanks to the overtime and expediting efforts).
  9. WIP starts to subside, orders start shipping, and everyone breathes a sigh of relief.
  10. Overtime restrictions go back in place, until the next time.


Here’s WHY it happens

The answer is simple. Nothing in the standard processes of sales forecasting, RCCP, or MPS creation has any possibility of addressing variability that propagates up and down your production operations and throughout your supply chain via the bullwhip effect.


Until you find an effective way

  1. To strategically place and size buffers (i.e., stock buffers, time buffers and/or capacity buffers),
  2. Strategically manage buffer sizes,
  3. Provide clear visibility across the shop floor and through your supply chain on the status of each buffer,
  4. Begin taking supply chain execution signals from the buffer status instead of forecasts,
  5. Set execution priorities based on the relative state of each buffer,

    ... you will continue to ride the overtime merry-go-round and have lower profits than you could otherwise enjoy.


It really is that simple.


We have the solution. Please leave your comments below, or feel free to contact us directly if you prefer. We would be delighted to hear from you.



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You know, medicine is not an exact science, but we are learning all the time. Why, just fifty years ago, they thought a disease like your daughter's was caused by demonic possession or witchcraft. But nowadays we know that Isabelle is suffering from an imbalance of bodily humors, perhaps caused by a toad or a small dwarf living in her stomach. Theodoric of York (Saturday Night Live) as quoted in Factory Physics (p. 205)

Future Reality Tree (FRT) Supply Chain Improvement


Some have accused adherents to demand-driven methods, as articulated by the Demand Driven Institute, of being followers of a “new religion” in supply chain management. In part, I suspect, this aspersion is cast against these folks because demand-driven concepts and realities expose the weaknesses in the other “belief systems” found in the supply chain management world.


These other supply chain belief systems include an unfounded faith in the ability of ever-increasing expenditures in better forecasting systems or the inclusion of more big data will fix supply chains and make them work.


This faith in the ability of more powerful computer systems and improved algorithms to successfully prognosticate future outcomes reminds me of the anecdote where, in the 1970s, meteorologists working for the federal government were predicting that more powerful computers would lead to the time when weather could be predicted with absolute certainty.


What they have discovered, instead, is that the more they attempt to create models to predict future outcomes of weather patterns, the more factors they find influence the outcomes. The growth of knowledge (and discovery of lack of knowledge) about influencing factors overwhelms gains made in computing power and software sophistication.


The failure of traditional MRP isn’t new

Wallace J. Hopp and Mark L. Spearman, writing in the outstanding work Factory Physics – Third Edition, spend the first several chapters tracing the history of manufacturing in America. They talk about the Second Industrial Revolution, the introduction of scientific management methods, and the rise of the modern manufacturing organization. The review in considerable detail various inventory control methods, and then launch into a discussion on the evolution of MRP, MRP II, ERP and supply chain management.


Then, Hopp and Spearman insert chapter 5, entitled “What Went Wrong?”


After so much "progress," why does "Newton's law of consultants," which states that

For every expert there is an equal and opposite expert.

still remain in force? [p.176]


Writing regarding MRP specifically, Hopp and Spearman highlight the apparent dichotomy between the “success” of being widely purchased, implemented, and accepted, and the all too prevalent lack of positive return on investment (ROI) from its deployment.


From at least one perspective, MRP was a stunning success. The number of MRP systems in use by American industry grew from a handful in the early 1960s to 150 in 1971 (Orlicky 1975). The American Production and Inventory Control Society (APICS) launched its MRP crusade to publicize and promote MRP in 1972. By 1981, claims were being made that the number of MRP systems in America had risen as high as 8,000 (Wight 1981). In 1984 alone, 16 companies sold $400 million in MRP software (Zais 1986). In 1989, $1.2 billion worth of MRP software was sold to American industry, constituting just under one-third of the entire American market for computer services (Industrial Engineering 1991). By the late 1990s, ERP had grown to a $10 billion industry--ERP consulting did even bigger business--and SAP, the largest ERP vendor, was the fourth-largest software company in the world (Edmondson and Reinhardt 1997). After a brief lull following the Y2K nonevent, ERP sales picked up, exceeding $24 billion in revenue in 2005. So, unlike many of the inventory models [discussed in earlier chapters], MRP was, and still is, used widely in industry.


But has it worked? Were the companies that implemented MRP systems better off as a result? There is considerable evidence that suggests not.


First, from the macro perspective, American manufacturing inventory turns remained roughly constant throughout the 1970s and 1980s, during and after the MRP crusade. (Note that inventory turns did increase in the 1990s, but this is almost certainly a consequence of the pressure to reduce inventory generated by the JIT movement, and not directly related to MRP.)….


At the micro level, early surveys of MRP users did not paint a rosy picture either. Booz, Allen, and Hamilton, in a 1980 survey of more than 1,100 firms, reported that much less than 10 percent of American and European companies were able to recoup their investment in an MRP system within 2 years (Fox 1980). In a 1982 APICS-funded survey of 679 APICS members, only 9.5 percent regarded their companies as being class A users (Anderson et al. 1982). Fully 60 percent reported their firms as being class C or class D users. To appreciate the significance of these responses, we must note that the respondents in this survey were all both APICS members and materials managers--people with a strong incentive to see MRP in as good a light as possible! Hence, their pessimism is most revealing. A smaller survey of 33 MRP users in South Carolina arrived at similar numbers concerning system effectiveness; it also reported that the eventual total average investment in hardware, software, personnel, and training for an MRP system was $795,000, with a standard deviation of $1,191,000 (LaForge and Sturr 1986).


Such discouraging statistics and mounting anecdotal evidence of problems led many critics of MRP to make strongly disparaging statements. They declared MRP the "$100 billion mistake," stating that "90 percent of MRP users are unhappy" with it that "MRP perpetuates such plant inefficiencies as high inventories" (Whiteside and Arbose 1984). [pp. 183-184]


You don’t need to be told

Of course, if you work in supply chain management or operations, you don’t need to be told about the fact of the failure of traditional MRP systems to deliver effective results in today’s world. The plethora of spreadsheets, whiteboards, home-grown applications, and other work-arounds you have in your offices are clear evidence already of the failure that is part of your everyday life.


We just wanted to let you know that it isn’t just DDMRP (demand-driven material requirements planning) “fanatics” who articulate the failure of traditional planning approaches.


Why the failure?

A big reason for the failure of traditional MRP systems to deliver return on investment is because nothing in attempts to improve forecasting or tweak MRP truly addresses the root causes of the failure.


As the logic tree in the accompanying figure shows so clearly, the two changes that will lead to improved ROI are 1) reducing the negative impacts of variability on the supply chain, and 2) reducing cycle times. The latter improves agility—already recognized as a crucial factor to supply chain improvement; and the former leads directly to lower inventories, improved product quality, and increase throughput.


Neither traditional MRP methods, nor an emphasis on improved forecasting will deliver improvements at these root-cause levels. At a minimum, you would have to engage in MRP plus something else (such as Lean, Six Sigma, or other).


With DDMRP, you are directly attacking the root cause of the negative effects of variability using strategically positioned and sized buffers. And, as the buffers begin to have the calming effect and excess inventories are eliminated from the supply chain, cycle times (the other root cause) automatically improve as well.


So, stop relying on the “success” of widespread acceptance of systems that are also widely recognized as failing to deliver effective ROI. Instead, cast off your old “belief system” and try a new religion: DDMRP. Become a truly demand-driven supply chain.


It seems to me, you really have nothing to lose, and a lot to gain.



We would be delighted to hear from you. Leave your comments below, or feel free to contact us directly, if you prefer.


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Who says you can’t win ‘em all?Diagram of the unfocused supply chain

Most of the companies with which we work would really like to “win ‘em all.” They’d like to have the lowest costs, the best sales, lowest operating expenses and highest profits in their league.


The problem is that, no matter how much they try; no matter how many metrics and incentives they put in place; they just can’t seem to achieve the results they are after.


They’ve got sourcing and production people pounding away at reducing costs and improving efficiencies. They have given them powerful incentives to do so.


They also seen to it that their sales and marketing folks are incentivized to deliver the kinds of sales they need to be profitable.


And, of course, the whole C-suite keeps accounting, finance and the whole management team focused on holding the line on operating expenses and improving profits.


But, maybe the whole scenario describe above is the problem!!!


The purpose is FLOW

When manufacturing and distribution organizations are conceptualized—when the idea evolves into a business concept—the underlying purpose is understood to be FLOW.


That is to say products are…


  • Mined or grown
  • Manufactured or assembled
  • Shipped or warehoused

    … all of the purpose of FLOWing them to customers!


Interestingly, in the early entrepreneurial days of the enterprise, the focus is almost entirely on FLOW.


It is only as the enterprise grows and the bureaucracy of departments, divisions and functions evolve that the FOCUS becomes something else.


As a result, soon the wonderful unity of the organization becomes one of politics and finger-pointing.


Meetings end up sounding like this:

  • Sourcing – “The reason we can’t reduce our costs any more than we have is that finance doesn’t want us to buy any more inventory, so we can buy in the lot-sizes we’d really like to in order to get a better price.”
  • Production – “We could have better efficiencies, but sales keeps coming down demanding that we break our set-ups in order to get some order out for an important customer. Oh! And don’t forget the crazy mess at end-of-quarter when limits on overtime go out the window and we’re all driven to ‘get those orders shipped before the end of the month no matter what!’”
  • Shipping – “We can’t ship what we don’t have. If Production could be making what we need instead of what’s on their schedule, we could ship more orders on-time and complete.”
  • Sales & Marketing - “Our job is to get sales. But every time production and the warehouse let us down by not having what the customer wants when the customer wants it, we have to either cut prices or lose the sales. It’s a mess.”
  • Finance – “We’ve got $28 million tied up in inventory and work-in-process now! How can we even be in the situation of not having what our customers want on any given day of the week?”

Diagram of the focused supply chain

It’s “a house divided against itself.” But it is altogether too common. You have probably lived this—and may be are living it today.


What happened to the entrepreneurial focus on FLOW?

You really need to get back to this focus on FLOW.


Interestingly, the evidence is in that when the whole supply chain is focused on FLOW in an effective way, then…

  • Costs go down
  • Operating expenses are held to a minimum
  • Sales go up (because more customers are being satisfied), and
  • Profits rise


It’s sort of like driving your car.


Stop-and-go traffic reduces your mileage. Everything is less efficient.


But, when you get out on the highway, stops and slow-downs are reduced or eliminated, and speed is increased, your car automatically delivers more miles-per-gallon. Efficiency increases without a focus on efficiency.


In your business and supply chain, viewed as a system, system efficiency can be measures as


System Efficiency = Throughput / Operating Expenses
System Efficiency = (Revenues – Truly Variable Costs) / Operating Expenses


We can help you see this, find this, and live this. Contact us if you’d like to learn more, or simply leave your comments below. We would be delighted to hear from you.



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Are you still driving your 1950’s model supply chain management system?1952 Oldsmobile


I know. The MRP II system you’ve got was just updated in the latest release of your ERP (enterprise resource planning) system.


Looks good. Runs well. Shiny. Comfortable.


Look under the hood

Under the hood of your shiny new, just-upgraded MRP system is fundamental design that originated in the 1950s.


That’s right. The fundamental logic that is behind today’s MRP systems originated in the 1950s.


For most software companies, this MRP logic was encoded into their MRP and ERP products sometime between the 1970s and the 1990s. It really hasn’t changed much since then.


In the mid-1970s, Joe Orlicky wrote the book (literally) on material requirements planning: MRP – Material Requirements Planning: The New Way of Life in Production and Inventory Management. If you read the book, you will almost certainly discover that the fundamental logic by which your MRP system works today is the same logic found in Orlicky’s 1975 book.


So, how’s that working out for you?

How’s that working out for you?


Well, again, if you’re like most companies—90 percent or more of companies—you cannot and do not rely upon your MRP system to manage your production and inventory. You may run your MRP / MRP II system, but you then take the data it produces, and extract it or abstract it into Microsoft® Excel™ workbooks, Access™ databases, or homegrown applications to get to the numbers you actually use to drive production and replenishment.


You don’t do this because you want to. You do it because you value your job—and you know if you were to follow the recommendations of your MRP system to the letter, you’d be soon looking for work elsewhere!


It’s time for a new supply chain management model

I think it’s time we all admitted that traditional MRP has run its course. It served well in the economic times and conditions for which it was design. But—in case you hadn’t noticed—the realities of today’s business environment are nothing at all like the economic times and markets of the 1950s, 60s or 70s.


We are actually late in recognizing that old tools applied to situations with new rules just are not satisfactory.


There is a new supply chain management model available for you. One that is designed for, and works well, in today’s supply chain environments. That new model is called demand driven MRP, or DDMRP, for short.


You can learn about it from Demand Driven Institute, or by reading DDMRP – Demand Driven Material Requirements Planning. Then, you can look for solutions here.


And, of course, we can help you get started with your new, up-to-date supply chain management model, too. Contact us directly, or feel free to leave your comments below. We’d be delighted to hear from you.


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I appreciated Alexa Cheater’s article “Life is complicated. Supply chain management shouldn’t be” at the 21st Century Supply Chain Blog.DDMRP Capacity Buffers example


I appreciated it, I suppose, because the topic of Inherent Simplicity is near and dear to my heart when it comes to business management, in general, and supply chain management, specifically.


Ditching Excel

Frequently I find myself reminded, as I visit the offices of our clients and prospective clients, how the whole U.S. economy would grind to a halt if we woke up tomorrow morning and Microsoft Excel had suddenly stopped working everywhere.


Alexa Cheater’s advice to supply chain managers is this:


“The first step in re-gaining your work-life balance and getting your sanity back is ditching the plethora of Excel files littering your desktop. To do it, you have to take a deep breath and say goodbye to running your supply chain from Excel. Instead, bring a little peace back into your life by harmonizing all that disparate data from multiple sources and legacy enterprise resource planning (ERP) systems and bringing it together in one solution.”


Sadly, most of the companies we meet simply cannot imagine executing their supply chain operations without Microsoft Excel. This should show us just how poorly the traditional ERP and MRP tools we are trying to use are serving the needs of supply chain managers.


Authors Carol Ptak and Chad Smith, in their outstanding new book, DDMRP – Demand Driven Material Requirements Planning, tell us:


Perhaps the biggest indictment of just how inappropriate modern planning rules and tools are can be observed in how frequently people choose to work around them. The typical work-around involves the use of spreadsheets.... Recommendations and orders [from the spreadsheets] are... put back into the planning system [ERP/MRP], essentially overriding many of the original recommendations.


Consider polling on this subject by the Demand Driven Institute from 2011 to 2014. With over 500 companies responding, 95 percent claim to be augmenting their planning systems with spreadsheets. Nearly 70 percent claim these spreadsheets are used to a heavy or moderate degree.... Validation for this proliferation can be easily provided by simply asking the members of a planning and purchasing team what would happen to their ability to do their job if their access to spreadsheets were taken away.


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


How simple can supply chain management get?

So, just how simple can the seemingly complex world of supply chain management really get?


Very simple.


By strategically placing, sizing and dynamically managing buffers across your supply chain, determining actions and priorities can become as simple as considering two—and only two—key factors: a color and a number.


That’s right. Just two factors to determine priorities across potentially thousands or tens of thousands of buffers situated along your supply chain.


What’s a buffer?

In DDMRP, a buffer may be one of three types:

  • Stock buffer (most common)
  • Time buffer (for replenishments not buffered by stock)
  • Capacity buffer (for resources)


As shown in the accompanying figure, every buffer in DDMRP reports two comparative factors: a color and a number (percent). The color represents the relative priority situation of the buffer in a way that is easily understood by virtually everyone: the buffer is red, yellow or green. Red being higher in priority.


The buffer percent represents the remaining (unconsumed) buffer as a percent of the total buffer size.


In the accompanying figure, Work Center 400 has only 9.70% of its capacity remaining, whereas Work Center 200 has 10.60% of its capacity remaining. If a choice must be made, then attention should be given to Work Center 400 before addressing the need at Work Center 400. Both are in their red zones, however.


The same color and number principle sets action priorities for stock and time buffers: red before yellow, yellow before green; and buffers with lower percentage remaining before those with higher percentage.

Now, isn’t that better than spreadsheets?

Why comb through rows and pages of data looking for priorities that may, in fact, not be the real priorities to keep your supply chain FLOWING? And, it’s all about FLOW!


There are applications that can bring all these data together and display them just as we have described here.


Where can you find such applications?


Look here.


And, we can help. Please leave your comments and questions below, or feel free to contact us directly, if you prefer.



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“Jeff, what does Day 2 look like?” logo


That was a question Jeff Bezos, founder and CEO of, was faced with at an Amazon “all-hands meeting” in 2016.


For most of us, the “Day 2” reference probably needs to be put into context.


What is “Day 1”?

In Jeff Bezos’ 1997 letter to stockholders in the company’s annual report, he said:


“[T]his is Day 1 for the Internet and, if we execute well, for Today, online commerce saves customers money and precious time. Tomorrow, through personalization, online commerce will accelerate the very process of discovery. uses the Internet to create real value for its customers and, by doing so, hopes to create an enduring franchise, even in established and large markets.”


So, “Day 1” for Amazon was the time of its IPO in 1997.


And, Jeff Bezos has “been reminding people that it’s Day 1 for a couple of decades.” In his 2016 letter to shareholders he says, “I work in an Amazon building named Day 1, and when I moved buildings, I took the name with me. I spend time thinking about this topic.”


So, what is “Day 2”?

“Day 2 is stasis,” Bezos says. Stasis that is, according to Bezos, “Followed by irrelevance. Followed by excruciating, painful decline. Followed by death.”


A state in which there is
neither motion nor development,
often resulting from opposing forces
balancing each other


“To be sure,” Bezos points out, “this kind of decline would happen in extreme slow motion. An established company might harvest Day 2 for decades, but the final result would still come.”


How to fend off “Day 2”

“I’m interested in the question, ‘How do you fend off Day 2’?” Bezos continues in his 2016 letter to shareholders. “What are the techniques and tactics? How do you keep the vitality of Day 1, even inside a large organization?”


Acknowledging the challenge, Bezos tells his reader flatly: “Such a question can’t have a simple answer. There will be many elements, multiple paths, and many traps. I don’t know the whole answer, but I may know bits of it. Here’s a starter pack of essentials for Day 1 defense: customer obsession, a skeptical view of proxies, the eager adoption of external trends, and high-velocity decision making.


Fending off “Day 2” in your company and supply chain

A genuine obsession with customer service

“There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more,” Bezos tells us. Be he goes on to say, “in my view, obsessive customer focus is by far the most protective of Day 1 vitality.”


If your company or supply chain is “efficiency” or “cost” focused at that is in any way interfering with FLOW—the flow of product and services to your customers—then you cannot also claim to be customer-focused. (And, by the way, I have never met a company or supply chain that spent its time, energy and money on silo-measured costs and efficiencies where there were not also detrimental effects on FLOW.)


A skeptical view of proxies

What are these “proxies” to which Bezos refers.


Bezos explains: “As companies get larger and more complex, there’s a tendency to manage to proxies. This comes in many shapes and sizes, and it’s dangerous, subtle and very Day 2.”


“A company example,” Bezos reminds us, “is process as proxy. Good process serves you so you can serve customers. But if you’re not watchful, the process can become the thing…. The process becomes the proxy for the result you want. You stop looking at outcomes and just make sure you’re doing the process right. Gulp. It’s not rare to hear a junior leader defend a bad outcome with something like, ‘Well, we followed the process.’”


It doesn’t really matter how many other people, companies, or supply chains endorse some process. It especially doesn’t matter if the process isn’t really working for any of them.


Take the traditional MRP (material requirements planning) process. This process isn’t working for most companies. We know this because your company—and more than 80 percent of your competitors—is likely to be supplementing the data you are getting from your MRP system with spreadsheets, home-grown applications, or even whiteboards.


Nevertheless, most companies and supply chains cling to traditional MRP, substituting the proxy of “the process” for the result they really want.


Why? Because they can always claim: “We followed the process.”


Eager adoption of external trends

The fact that most companies and supply chains are still clinging to traditional MRP—a process designed in the 1950s, articulated in the 1970s, and encoded into software in the 1980s and 1990s—is evidence enough that most are not eager adopters of external trends.


Jeff Bezos warns: “The outside world can push you into Day 2 if you won’t or can’t embrace powerful trends quickly. If you fight them, you’re probably fighting the future. Embrace them and you have a tailwind. These big trends are not that hard to spot (they get talked and written about a lot), but they can be strangely hard for large organizations to embrace.” [Emphasis added.]


DDMRP (Demand Driven MRP) is one of those “powerful trends” that is getting “talked and written about a lot.” Just do a Web search for “DDMRP” and see what you come up with. Or, try this one. No shortage of excellent material on this new and powerful trend.


But most companies and supply chains are still trying to get their proxy (read: traditional MRP process) to work for them—and rapidly becoming “Day 2” companies.


High-velocity decision making

Day 2 companies make high-quality decisions, but they make high-quality decisions slowly. To keep the energy and dynamism of Day 1, you have to somehow make high-quality, high-velocity decisions. Easy for start-ups and very challenging for large organizations…. Speed matters in business….” Bezos observes.


By the time most have adopted DDMRP, most of the business advantage will have dissipated. It’s the early adopters who will benefit most.


So, what’s keeping you and your company or your supply chain from adopting DDMRP now?


The evidence is in. Adopting DDMRP is already proven to be a high-quality decision. See case studies here.


How s-l-o-w will your company be in making this quality decision? It’s really up to you.


Now it’s your turn

Do you agree or disagree with Jeff Bezos on Day 1 versus Day 2? Why?


We would be delighted to hear from you. Please leave your comments below, or feel free to contact us directly, if that suits you better.






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Why switch to a demand-driven supply chain?

Demand Driven Institute - Position, Protect, Pull and Adapt


Well, have you every stayed awake at night thinking about how to both improve FLOW in your supply chain, and get everyone on the same page on the goal of customer satisfaction?


Here’s what Felipé Gonzalez, President at Acesco - Acerías de Colombia, discovered about becoming demand-driven:


"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."


That’s two reasons for becoming demand-driven, right there—in one sentence.


What do we mean by demand-driven?

We don’t mean becoming make-to-order. We also don’t mean trying Lean’s implementation of Kanban. And, we certainly don’t mean attempting to improve forecasting in vain attempts to align production with demand.


By becoming demand-driven, we mean demand-driven as articulated by Demand Driven Institute. You can read more about the concepts here.


But, there are many more reasons to consider switching to truly demand-driven.


How about simplifying planning and purchasing?

Tim Hendrickson, Executive VP of Operations at Saint Paul, Minnesota-based Wipaire, Inc. discovered that both rapid-deployment and quick results were possible with DDMRP (demand driven material requirements planning):


"We now manage 70 percent of our materials (by dollar-value) for manufacturing and customer service under DDMRP. We started our pilot program in April (of 2017), and have been fully implemented since mid-May. Our average lead time to our customer has been reduced 11 days to 2.2 days, while also realizing a three percent reduction in inventory investment."


Maybe you need to cut lead-times without sacrificing customer service levels

At ALBEA Group, that’s exactly what becoming demand-driven did for them. Vincent Thibault, Global Lean Director, reported:


"The Demand Driven Planner Program was a cornerstone of our lotion pumps business transformation. We now offer much shorter lead times (down by 75 percent) with 100 percent service."


Stop the expediting nightmares

Maybe what you would really like to do is stop the constant headaches and high expenses of expediting. Leila Bouhali, Supply Chain Manager, at Sames Kremlin found they could do just that very thing by moving to a truly demand-driven supply chain management approach:


“The Demand Driven Planner Program eradicated our stock-outs transforming us from constant expediting into on-time shipment. Everyday life is now much easier."


How about you?

Isn’t it time for your company and your supply chain to become demand-driven? You can. Companies around the world are doing it—from small businesses to huge enterprises like Michelin.


We can help.


Let us know what you’ve tried. What’s working and what’s not working. Leave your comment below, or feel free to contact us directly, if you prefer.



Read full case studies from companies that moved to becoming demand driven using this link.



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