This Powerful New Way Of Thinking And Working Fixes Materials Planning Systems And Transforms The Performance Of Manufacturers And Even Supply Chains.

Every Supply Chain has to have at least one manufacturer somewhere along it's length, and that almost always means there's the potential for a problem.

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

And this is where all the problems begin; this MRP software, which was conceived in the 1950's and codified in the 60's has remained almost unchanged in the past 50 years. Unfortunately, the business world has changed enormously in that time. And the material requirements planning logic that was so promising that it triggered a revolution in the 1970's and 1980's as computers became affordable to even small manufacturers, no longer is a good fit for today's operating realities.

Product life cycles have shrunk dramatically. After many years of efforts aimed at reducing the lead times of purchased parts and materials, the trend to outsourcing has created purchased parts and materials lead times that are longer than they have ever been. Regardless of this reality, customers now routinely order with less lead time than ever before. And, customers feel entirely free to change their minds. With the variability, volatility and short lead times, forecasts are the least accurate they've even been and they've NEVER. And to add salt to the wounds after decades of seeking to reduce process variability, the increased lead times, compressed product life cycles and increased demand volatility has created more variability than ever before.

Which presents us with a Catch 22 when we examine MRP.

On the one hand, the MRP logic - which starts with either a forecast or actual demand and uses the Bill of Material and demand and supply and on-hand information to calculate what they need, how many, and when - has never been more important. The ability to recalculate is essential when so much is changing so quickly.

On the other side of the dilemma, the high level of volatility combined with MRP's reworking means our MRP systems are flooding planners with reschedule messages, and planners can't keep pace; and priorities shift so often that it's impossible to respond effectively.

One outcome of this is, manufacturing businesses in many environments (for example, manufacturers with any degree of complexity in their Bills of Material) are living with constant, chronic shortages of materials, purchased parts and manufactured parts, and finished goods that is having a devastating effect on inventory levels, customer service levels and whole-business productivity.

Given the reality that the manufacturing business is part of a Supply Chain, and is trying to cope with demand signals and generate their own ..., the impact of this broken engine at the heart of a manufacturing enterprise has implications for the whole Supply Chain.

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

The Demand Driven MRP 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.

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

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