This New Technology Fixes Ineffective Planning Systems And Transforms Manufacturing And Supply Chain Performance.

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 likelihood they are also using a module of the software called MRP, or Material Requirements Planning.

And that's where the problem lies; this MRP software, which was first conceived in the 1950 era and turned into detailed logic in the 60's has remained almost unchanged in the past 50 years. Unfortunately, our world has. And the MRP logic that was so promising that it triggered a revolution in the 1970's and 1980's as more manufacturers could afford computers, isn't a good fit any more for today's business environment.

The life cycles of many products have been compressed dramatically. After many years of trying to reduce lead times, the trend to outsourcing has led to lead times that are longer than they have ever been. Regardless, customers now routinely place orders for products with shorter lead times 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 further after decades of attempting to reduce variability in processes, the increased lead times, reduced product life cycles and exploding volatility in demand has created more variability than ever before.

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

On the one hand, the MRP logic - which takes a forecast or real demand and uses the Bill of Material and the inventory and demand order and supply orders to calculate what's needed, how many are needed, and when - has never been more important. The ability to recalculate is vital when so many things are changing.

On the other hand, this volatility combined with MRP's re-running the numbers means our MRP systems are overwhelming planners with exception messages, and planners can't keep pace; and priorities shift so often that no-one can respond effectively.

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

And since the manufacturing business is part of 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 business has implications for the whole Supply Chain.

The solution? An innovative new approach , 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 labeled Demand Driven MRP, abbreviated to DDMRP, and its success rate with users so far has been spectacular.

The Demand Driven MRP technology has been fully 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 in the early 1970's.

Common results include major inventory reductions (as much as 60% for some users), in combination with serious improvements in Customer Service, commonly 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 matchless in terms of the potential for performance improvement.

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