Here’s one of the things I don’t understand about why supply chain managers and executives are stuck in a rut using traditional planning methods. By “traditional methods,” I mean traditional MRP (material requirements planning), MRP II, DRP (distribution requirements planning), and most methods employed by the bulk of ERP (enterprise resource planning) systems today.
Why do they pay their planners to plan using these tools, and then, when the plans don’t work out in their real world, they pay these same folk—or other folks in addition to the planners—to expedite and fire fight.
Oh! And “when the plans don’t work out in their real world” is almost every day!
Here’s the reason I don’t understand.
While management is paying the planners to plan, they already know—with considerable certainty—that the plans will not be effective in the real world of actual demand. They already know that there will be lots of consternation, aggravation, (likely) shouting, firefighting and expediting to try to get things back in line with actual demand.
So, after the planners have planned…
So, after the planners have planned logistics, the production, the purchasing—the whole big deal—with quantities and dates and times and all the details, the expeditors are called in.
Whether “the expeditors” are, in fact, the same people, who have now left off planning and have begun to face their reality, or if they are actually a different group of folks altogether, in most organizations it’s the expeditors that have the real power!
They are authorized to spend money left and right on overtime, expedited shipping charges, or surcharges from suppliers for “rush orders.” They have authority to break setups and destroy the “efficiencies” that other have meticulously calculated into batch sizes.
The people doing the firefighting and expediting have the real support of top management. The C-suite recognizes that—despite what the fancy and costly planning systems told them—the real money is made by PROTECTING FLOW, and that’s precisely what an expeditor’s job entails.
What expeditors really do
We can condense into one sentence what expeditors really do:
Expeditors PROTECT FLOW by uncovering which time buffers, capacity buffers and stock buffers in the supply chain are most likely to FAIL to protect flow due to their current state relative to ACTUAL (not forecast) DEMAND.
They then attempt to direct the appropriately prioritized actions to restore the time buffers, capacity buffers and stock buffers to a state where these buffers are more likely to support and protect FLOW in light of actual demand.
Compare this to Demand Driven MRP
Implementing DDMRP merely cuts out the failing step above—the one with the plans that don’t work in reality.
The DDMRP approach, after configuration and implementation, takes over what your expeditors are doing now.
DDMRP automatically reveals which time, capacity and stock buffers are most likely to be at risk of failure to PROTECT FLOW in your supply chain. Priorities for actions are easy to set, because the signals are unambiguous. A simple signal of a color and a numeric value combine to tell every participant where that buffer’s priority falls relative to other buffer signals.
Why not put your money into a system that works the way you really work anyway. Let an automated DDMRP solution turn your failing two-step (planning to fail and then expediting) into a one-step success program.
Still doing the two-step?
Are you still doing the “failure then expedite” two-step?
Let us know. Leave your comments here, or feel free to contact us directly, if you prefer.