Season One, Episode Seven
Steps to Supply Chain Sanity and Success
First, recognize that Inventory is your leverage point. Having the right inventory in the right positions is the first step. Traditional MRP assumes that you wait for a customer order, get the required inventory (no more, no less) and after shipping, you have no inventory left. This obviously doesn’t work for so many reasons. Everyone tries to work around this false premise by implementing safety stock, which just exacerbates the bullwhip effect, creating more false chaos that you have to work around.
Step 1: An operating model that maintains a calculated inventory level for strategic parts.
Second, understand that nothing stays the same for very long. The days of “set it and forget it” are gone. Find a process and determine relevant data to create a system that auto-reacts to the variation in your business. Traditional MRP looks to the future due date and then mathematically determines when action is required. Usually, action WAS required before the current date. So you are expediting from the beginning.
Step 2: Ensure the operating model auto-reacts, or accurately informs when attention is needed.
Third, develop and follow the rules that you create. Setup a feedback system that gives you hints about where to adjust your rules. Acknowledge that there will be situations that you need to manually handle, but that those should be the exception, not the rule. Test the rules through a pilot program so you instill belief and gain support.
Step 3: Discipline, trust and belief in the operating model.
Fourth, build an understanding of the system through all levels of your company. One person can make a difference, but it’s so much easier if people from various departments understand the purpose. Find at least three people to learn the system and build support for the solution.
Step 4: Understand that no version of the future exists where learning isn’t important or valued.
Fifth, roll out the solution to your division, your region, your company. Build a team dedicated to creating a learning environment. Layout the vision of what success looks like and then introduce the tools to everyone.
Step 5: Imagine coming to work and there are no emergencies, no expedites, no panic. Your system shows the relative likelihood of a stock-out of your inventory positions. So, yesterday you reacted and prevented today’s emergency. Give yourself a high-five.
If it seems too difficult to create such a future, then come learn about the Demand Driven MRP methodology and create a reality where you STOP MANAGING CHAOS and keep your sanity.
For more information visit www.demanddriveninstitute.com
John Melbye, DDPP, DDLP, CSCP and President of APICS Twin Cities Chapter
Endorsed Instructor for Demand Driven Planner and Leader classes.