The best of both worlds!
Demand Driven MRP (DDMRP) ends the conflict between the two very important and relevant operating methods for today’s more complex and volatile environments. The world of formal planning (MRP) and the world of Lean clash because they approach the materials challenge from vastly different starting points; both of which are inappropriate for today’s market conditions. DDMRP builds on these methods to create a new approach that both formal planning and Lean can support.
MRP was brought to the market in the 1970s and was based on the concept of planning and time phasing the procurement of parts and materials to address the forecasted demand as documented in the Master Production Schedule. It was a major step forward at the time as it capitalized on the use of the computer to generate the supply orders. For large and complex manufacturing environments, this was a major advance over the manual order point systems that were in use at that time. In the ‘push and promote’ market conditions of the day, manufacturers were not dealing with the short customer tolerance times and wide range of competitive alternatives that are prevalent in today’s market. MRP is designed to make everything dependent and focuses on the strength of its planning.
Lean emerged as a new manufacturing and materials management strategy in the 1980’s. Based on the Toyota Production System (TPS), it was the first major innovation in the market that focused operational management on a rate timed to actual market consumption. In a Lean environment, successive replenishment signals cascade from the market back up the supply chain. As a ‘pull’ system it was proven to be effective in manufacturing environments that had a stable rate of flow. However, Lean environments tended to be ‘brittle’ when confronted with variability or changing conditions on either the demand or supply side. Lean was also very difficult to apply to mixed mode manufacturing environments which had resources shared across multiple products with unique rates of demand pull. A common complaint was that Lean implementations lacked visibility into the actual flow of materials through the supply chain. Lean is designed to make everything independent and focuses on the strength of its execution.
Demand Driven MRP is the first solution to effectively resolve the dilemma between MRP and Lean while creating a vastly superior planning and execution method. DDMRP starts with the foundation of flow creation and protection. It acknowledges that operational AND bottom line benefits will be the greatest when flow is the rule instead of the exception. DDMRP is a formal planning and execution solution that provides users with the ability to define where to place critical “decoupling points” that dampen variability, compress lead times and minimize working capital. It then uses easy to interpret priority signals to launch and manage the replenishment of these positions dictated by Sales Orders rather than forecasted orders. It is a solution that ends the daily and unsatisfactory compromises and work-arounds faced by users of Lean and MRP.
To learn more about DDMRP and Lean, please use the following link to download and review the whitepaper “Lean finds a friend in DDMRP”.