Data Storage Software

When a manufacturer is involved in a Supply Chain - and of course, that's "always" if you extend a Supply Chain all the way from origin to consumer - there's an immediate potential for a problem.

If that manufacturer is using ERP software, there's a probability they are also using a key module of the software called MRP, or Material Requirements Planning.

And that's where the problem lies; this MRP module, which was first conceived in the 1950 era and codified in the 1960's has barely changed in the past 50 years. Unfortunately, our world has changed substantially in that time. And the material requirements planning logic that was so promising that it led a revolution in the 1970's and 1980's as computers became common, isn't a good fit any more for today's business environment.

The life cycles of many products have shrunk dramatically. After decades of attempting to reduce purchasing lead times, the trend to outsourcing has led to purchased parts and materials lead times that are longer than ever before. Nevertheless, customers now routinely place orders for products with less lead time than ever before. And, they feel free to change their minds. Forecasts are the least accurate they've ever been and they've NEVER. And in addition after decades of formal efforts aimed at reducing the variability in processes of all kinds, the longer lead times, reduced product life cycles and exploding demand volatility has created more variability than ever before.

Which poses a real dilemma with regard to MRP.

On the one hand, the MRP logic - which starts with either a forecast or real demand and uses the Bill of Material and a database of inventory and order data to calculate what's needed, how many, and when - has never been more necessary. The ability to recalculate is vital when so much is changing so fast.

On the other hand, the volatility combined with MRP's re-running the numbers means our MRP systems are overwhelming planners with reschedule messages, and planners can't keep up; and priorities change so often that it's impossible to respond effectively.

One consequence of this is, manufacturers in many environments (for example, those with any degree of complexity in their BOMs) are living with constant, chronic shortages of materials and purchased and manufactured parts, and finished goods that is having a devastating effect on inventory levels, customer service levels and whole plant productivity.

Now, because the manufacturing business is in a Supply Chain, and is attempting to manage demand signals and generate their own ..., the impact of this damaged engine at the heart of a manufacturing enterprise has repercussions for the entire Supply Chain.

The solution? An innovative new approach , in many ways a fusion of the best of MRP with concepts from DRP (Distribution Requirements Planning), Lean manufacturing, Theory of Constraints and some pure innovative thinking. It's labeled Demand Driven MRP, abbreviated to DDMRP, and its impact on the users to date has been nothing short of spectacular.

The DDMRP technology has been fully documented in the new, 3rd Edition of Orlicky's Material Requirements Planning an update of the book, Orlicky's MRP, that first documented the classic MRP approach almost 40 years ago.

Typical results include substantial reductions in inventory (as much as 60% for some users), in combination with serious improvements in Customer Service, typically to the 98% order-fill-rate and better. When this is combined with reductions in the expenses associated with expediting (freight in, freight out, and overtime) the combination is matchless in terms of the potential for improved performance.

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