As already mentioned in this article, traditional “MRP II” planning methods are struggling to meet the new challenges of the industrial supply chain, leading to shortages, overstocking and destruction.
The logic of MRP is simple: backward planning of tasks with a breakdown of requirements using the bill of materials. So what are the problems with this planning method?
Let us take the case of cosmetics, manufactured and packaged in our factories, then shipped by boat to our customers. For a customer requirement positioned at the end of April, the logic of MRP retro planning places the different stages of the value chain in time: transport in April, one month of security in March, packaging of the cream in February and production of the same cream in January. In this example, we will take the case of a variation in our customer demand.
The customer finally asks us to supply them with the finished product in the middle of March:
Conventional MRP logic indicates via an alert that the cream needs to be filled earlier to meet this new customer requirement. However, as long as the cream packaging has not been brought forward, MRP does not display any alerts on the lower levels, as these are consistent with the packaging as planned.
It is therefore necessary to wait for an action from the packaging line planner (advancing the order to meet the new customer demand) before the information linked to this new demand is passed on to the cream production planner and to the jar and case suppliers. In this way, information about a variation in demand can take several days or even weeks to cascade down the value chain, limiting the supply chain's responsiveness to these changes and making the system very static and unagile.
Problems highlighted here:
- Information arrives too late
- The MRP is sequential, so it can take weeks for an upward or downward movement in demand to be perceived at the other end of the chain.
- By the time the information is available it's already too late to react
Consequence:
- A lack of agility
Beyond planning, the MRP logic is imperfectly applied to all functions in the value chain:
- Purchasing functions: no prioritisation of contract renewals according to customer demand
- Quality function: Poorly prioritised quality notices can block assembly stages and generate customer delays
- Methods: Creation of routings not yet industrialised, without MRP information, which can block production
- Design office: Late drawings, or tooling not yet defined, cause delays because the MRP does not extend all the way to the design office...
Conclusion
All these effects accumulate and amplify, making the MRP logic difficult to master, with impacts on service and inventories.
