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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