2 Replies Latest reply on Feb 11, 2010 12:48 PM by Duncan Klett

    Has anyone used prioritized soft allocations to manage shortages?

    Duncan Klett Elite

      I have seen many companies trying to manage component materials by making “hard allocations” of material to critical work orders and/or customers.  The idea is to segregate inventory for the high priority demands so those demands will be satisfied on time.  However, the approach leads to many problems including:

      ·         Risk of unnecessarily late delivery of lower priority demands because materials on hand are being held for subsequent high priority orders

      ·         Increased handling and inventory transactions to “pull” the materials

      ·         Additional transactions whenever the demand changes

      ·         Risk of excess/obsolete materials if demands are reduced without reducing the allocated materials

      ·         Additional levels of managing transactions to allocate subassemblies through the product structure and distribution network

      It seems to me it would be a lot more sensible to have a system that manages supply allocations by priority.  A user would indicate that a particular demand (customer order or work order) has a high priority.  Based on committed, time-phased supplies, the system would determine the allocations required in order to ensure that the higher priority demands are satisfied on time or as close to on time as possible.  Note this approach does not simply reserve on hand supplies for the highest priority demands.  It would only reserve on hand supply if there is not enough committed supply closer to that demand’s due date.  If priorities are passed down from end customer orders, the system could automatically adjust its soft allocations whenever demand priorities, dates or quantities are changed.

      I am interested to hear of companies using an approach like this.  I am also interested to hear your comments about this approach.

        • Re: Has anyone used prioritized soft allocations to manage shortages?
          JABG2008 Newbie

          I found thisLink » http://www.navsup.navy.mil/navsup/ourteam/navsuphq/dpas


          "... The Defense Priorities  & Allocations System (DPAS) Program is a means to assure timely  availability of industrial resources to meet national defense  requirements and a way to provide a framework for rapidly expanding  industrial resources in a national emergency, specifically as needed to  support Navy/Department of Defense Weapon Systems. It guarantees on-time  delivery of items and services, contains a mechanism for resolving DPAS  disputes between the Navy and industry, and provides a process for  optimizing delivery of urgently needed material during wartime or  contingency operations.

          A DPAS "rating" is assigned to all military systems used in support  of national defense, from the largest finished platform to the smallest  component. It can be applied to all stages of acquisition research and  development, initial design, production testing, delivery, and logistics  support.'... "


          Rgds Jorge Arthur® - BRA-RJ.


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