Season One, Episode Eight
Does everyone understand why MRP doesn’t work today?
Let’s look at an example of one MRP issue.
An order arrives for 20 pieces of part number ABC due in 3 weeks. One of the key components, part number 123, has a lead time of 2 weeks. So, great, right? You have time to order and receive part number 123 and still produce and ship part number ABC. The system tells you to order the part exactly 2 weeks from when it is needed. To test our hypothesis, you follow the system, you wait. And you order exactly how many you need for the order on precisely the day that you need to so that the product will arrive exactly when you need it. A high percentage of the time, this will fail. Supplier is late, parts aren’t to spec, one part was dropped and damaged, and a myriad of other things that can go wrong. Multiply that times the 50 parts in the bill of materials and the chances that everything will go exactly according to plan is closer to zero than to 100. I didn’t even list the customer related issues, like due date moves and quantity changes.
Every argument you can give, every tweak that you perform, every data export and re-analysis that you explore that prevents MRP from failing, is exactly my point. The system doesn’t work as it is today. We must tweak, adjust, compensate and revise all day long, just to make it right. And, heaven forbid that we miss one of the 1000+ part numbers that we are watching and cause a shortage. Or, that we have thrown a new employee to the wolves and suggested they “figure it out in a hurry.”
There are many solutions to the scenario I’ve outlined. But most of us rely on experience. Wouldn’t it make more sense to develop a process and a system that worked independent of our historical memory? A better system to alert you to the adjustments you need to make would be invaluable, wouldn’t it? Enter Demand Driven MRP. I encourage you to explore the solution. It exists.
What is unique about Demand Driven MRP is that it isn’t a rip and replace. It builds on the good things that you are already doing. It is a solution that fills the gaps and addresses a few of the assumptions that drive us to make the wrong choices.
Instead of constantly tweaking and adjusting our data and our MRP system, we can simply apply a handful of adjustments to our thinking.
www.demanddriveninstitute.com for more information.
John Melbye, Instructor of the Demand Driven Methodology