Demand Driven Material

Transcription

1 Demand Driven Material Requirements Flanning (DDMRP) Carol Ptakand Chad Smith INDUSTRIAL PRESS, INC.

2 Contents Foreword Definitions in This Book Introduction About the Authors Acknowledgments xiii xv xvii xix PARTI PERSPECTIVE CHARTER 1 Flanning in the New Normal 3 The Material Requirements Flanning Revolution 3 Evidence of a Problem 5 Return on Asset Performance Degradation 5 Work-Around Proliferation 7 The Inventory Bimodal Distribution 9 The New Normal 12 Summary 14 CHARTER 2 The Importance of Flow 15 Plossl's First Law 15 Establishing Flow as the Foundation 16 Relevant Information and Materials 18 The Bullwhip Effect 18 Summary 20

3 vi Contents CHARTER 3 Material Requirements Flanning in the New Normal 21 Whatls MRP? 21 Distortions to Relevant Information 23 Demand Signal Input 23 Nervousness 27 The Weekly Bücket 28 Flattening the Bill of Material 28 Distortions to Relevant Materials 30 Common Cause Variation 30 Delay Accumulation 30 Amplifying the Distortions to Relevant Information and Materials Batching Policies 33 Summary 34 CHAPTER 4 Unlocking a Solution The Power of Decoupling 35 Decoupling 37 Decoupling Point Büßers 39 Summary 41 CHAPTER 5 PART 2 BECOMING DEMAND DRIVEN Supply Order Generation and Execution for the New Normal 45 MRP Versus Lean What Can We Learn? 45 Dependence Versus Independence 47 Supply Order Generation (Flanning Versus Execution) 49 Lean and Technology 50 Demand Driven Material Requirements Flanning 51 The History of "Demand Driven" 51 Position, Protect, and Pull 52 Summary 55 CHAPTER 6 Strategie Inventory Positioning 57 Positioning Factors 57 Customer Tolerance Time 58

4 Contents vii Market Potential Lead Time 58 Sales Order Visibility Horizon 58 External Variability 59 Inventory Leverage and Flexibility 60 Critical Operation Protection.60 Applying the Positioning Criteria 60 A New Form of Lead Time 66 Advanced Inventory Positioning Considerations 71 Distribution Positioning Considerations 79 Summary 91 CHAPTER 7 Strategie Buffers 93 Inventory: Asset or Liability? 93 Introducing Decoupling Point Buffers 96 The Green Zone 97 The Yellow Zone 97 The Red Zone 97 Buffer Profiles 97 Factor 1: Item Type 98 Factor 2: Lead Time 99 Factor 3: Variability 101 Individual Part Attributes 105 Part Average Daily Usage 105 Part Lead Time 109 Part Minimum Order Quantity 110 Part Location 110 Calculating Replenished Part Buffer Levels and Zones 111 The Green Zone 112 The Yellow Zone 113 The Red Zone 113 Continuing with Company ABC 115 Iterations 117 Calculating Replenished Override Buffers 125 Calculating Min-Max Buffers 125 Summary 126 CHAPTER 8 Buffer Adjustments 127 Recalculated Adjustments 127

5 viii Contents Planned Adjustment Factors 131 Demand Adjustment Factor 131 Zone Adjustment Factor 146 Lead Time Adjustment Factor 148 Summary 148 CHAPTER 9 Demand Driven Flanning 149 The Shift to Actual Demand 149 The Net Flow Equation 149 Qualifying Order Spikes 151 Supply Order Generation Based on Net Flow Position 158 Simulating DDMRP Supply Order Generation 161 Calculating Average On-Hand Inventory 176 Average On-Hand Range 179 Average On-Hand Target 181 Average Open Supply Orders 181 Decoupled Explosion 182 Hybrid Model Supply Order Generation 188 Prioritized Share Supply Order Consideration 191 Discount Optimization 191 Freight Optimization 195 Coverage Optimization 195 Min-Max Supply Order Generation 198 Completing the Company ABC Example 198 Summary 205 CHAPTER 10 Demand Driven Execution 207 Buffer Status Alerts 207 Challenging Priority by Due Date 208 Flanning Versus Execution Display 212 Current On-Hand Alert 214 Projected On-Hand Alert 218 Synchronization Alerts 222 Material Synchronization Alerts 222 Lead Time Alert 226 Summary 229

6 Contents ix CHAPTER 11 DDMRP Impacts on the Operational Environment 231 DDMRP Strategie Buffer Criteria 231 The Decoupling Test 231 The Bidirectional Benefit Test 231 The Order Independence Test 232 The Primary Flanning Mechanism Test 232 The Relative Priority Test 232 The Dynamic Adjustment Test 232 DDMRP Versus Safety Stock and Order Point 233 Safety Stock and the Buffer Criteria 233 Order Point and the Buffer Criteria 235 DDMRP Impacts on Scheduling 236 DDMRP and Master Production Scheduling Assumptions 236 DDMRP Shop Floor Scheduling Implications 240 Finite Scheduling with DDMRP? 245 Additional Scheduling Sequence Impacts 246 DDMRP and WIP Priority Management 247 Summary 248 CHAPTER 12 DDMRP Metrics and Analytics 251 Measuring Relevant Information (Signal Integrity) 251 Measuring Decoupling Point Integrity 253 Outlying Event Reports 257 Measuring Velocity 261 Driving Improvement in DDMRP 263 Summary 266 CHAPTER 13 The Demand Driven Organization 267 The Demand Driven Adaptive System 267 Demand Driven Sales and Operations Flanning 269 Conventional Sales and Operations Flanning 272 The Five Steps of Demand Driven Sales and Operations Flanning Strategie Business Management Direction and Review Integrated Reconciliation Managing the Portfolio and New Activities Managing Demand Managing Supply 279

7 X Contents Demand Driven Sales and Operations Flanning Protections 280 Working Capital 282 Space 282 Capacity 283 Projected Order Frequency 286 Summary 287 Contribution of Dick Ling 288 CHAPTER 14 Implications for Technology 291 Operations and Information Technology Two Ships Diverging in the Night? 291 DDMRP Software Compliance Criteria 293 APPENDIX A PART 3 APPENDICES An MRP Example 297 The Scenario 297 Simulating the Scenario 297 APPENDIX B Simulating DDMRP Buffers 305 About the Simulation 305 Widget Simulation Results 307 Gazoonk Simulation Results 309 Simulating the Impact of Minimum Order Quantities 312 Summary 313 About the Author 313 APPENDIX C Applying DDMRP to the Apparel Retail Environment 315 The Need for a Retail Application of DDMRP 315 A Retail Apparel DDMRP Example 316 Special Characteristics and Challenges of the Apparel Retail Environment The Proposed Model 321

8 Contents xi Retail DDMRP Buffer Zone Considerations 323 Realized Results 325 About the Author 325 APPENDIX D Demand Driven MRP Dictionary 327 APPENDIX E DDS&OP Checklist 333 Endnotes 335 References 337 Index 339