This Powerful New Way Of Thinking And Working Fixes Broken Planning Systems And Transforms Manufacturing And Supply Chain Performance.

Every Supply Chain has several links; and if one or more of those links is a manufacturer, then there's a high likelihood of a particular problem developing that has ramifications for every other link in the Supply Chain.

If that manufacturing plant is using an ERP system, there's an excellent chance they are also using a key module of the software known as MRP, or Material Requirements Planning.

And that's where the problem lies; the MRP software, which was originally formulated in the 1950's and codified in the 1960 decade has remained almost unchanged since then - that's 50 years!. Unfortunately, the world has changed. And the material requirements planning logic that was so promising that it triggered a revolution in the 1970's and 1980's as more manufacturers could afford computers, no longer matches current realities.

The life cycles of many products have shrunk dramatically. After several decades of trying to reduce lead times, the strong and continuing trend to outsource from offshore has generated purchased parts and materials lead times that are longer than they have ever been. Regardless, customers now habitually order products with less lead time than ever before. And, customers have no hesitation in changing their minds or their orders. With the variability, volatility and short lead times, forecasts are the least accurate they've even been and of course they've never been accurate. And further after decades of formal efforts aimed at reducing the variability in processes of all kinds, the increased lead times, reduced product cycles and expanded demand volatility has created more variability than at any time in history.

Which gives us a real dilemma when it comes to MRP.

On one hand, the MRP logic - which takes either a forecast or actual demand and uses the Bill of Material and the inventory and demand order and supply orders to work out what's needed, how many, and when they are needed - has never been more important. The ability to re-run the calculations is crucial when so much is changing so fast.

On the other side of the dilemma, this volatility combined with MRP's recalculations means our MRP systems are swamping planners with reschedule messages, and planners can't keep up with the tsunami; and priorities shift so frequently that no-one can respond effectively.

One consequence of this is, manufacturing businesses in many environments (for example, those with any complexity in their BOMs) are living with permanent, chronic shortages of purchased materials and parts and manufactured parts, and finished goods that is causing havoc with inventory levels, customer service levels and plant productivity.

Now, because the manufacturing business is part of a Supply Chain, and is attempting to deal with demand signals and generate their own ..., the impact of this badly broken engine at the heart of a manufacturing enterprise has consequences for the whole Supply Chain.

Is there a solution? A new approach , in many ways a fusion of the best of MRP with concepts drawn from DRP (Distribution Requirements Planning), Lean manufacturing, Theory of Constraints and some pure innovative thinking. It's called Demand Driven MRP, abbreviated to DDMRP, and its impact on the users to date has been stunning.

The Demand Driven MRP technology has been extensively documented in the new, 3rd Edition of Orlicky's Material Requirements Planning an updated version of the book, Orlicky's MRP, that first documented the classic MRP approach almost 40 years ago.

Common results include major inventory reductions (as much as 60% for some users), along with major improvements in Customer Service, typically to the 98% order-fill-rate and better. When combined with reduced expenses from expediting (freight in, freight out, and overtime) the combination is without equal in terms of the potential for improved performance.

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