Читать книгу Demand Driven Material Requirements Planning (DDMRP), Version 2 - Carol Ptak - Страница 17
ОглавлениеSupply Order Generation and Execution for the New Normal
At this point we are at a crossroads. We can continue to struggle with our conventional planning systems, or we can seek a break from convention, an alternative designed for the New Normal. That alternative design must promote and protect the flow of relevant information and materials. It must systematically break down the distortions to demand signals and material supply that characterize the bullwhip effect through the effective use of decoupling points. But where to go from here?
MRP Versus Lean—What Can We Learn?
The basic elements of this alternative design can be better understood by exploring a chronic conflict between two camps—the believers in Lean methodology and the believers in MRP.
Figure 5-1 illustrates a side-by-side comparison of conventional MRP and Lean approaches. On the MRP side, forecasted demand feeds a master production schedule (MPS). The MPS creates a statement of what will be built. This is then fed to MRP. MRP then explodes through the bill of material, creating synchronized supply orders (date and quantity) as dictated by the product structure. Safety stock is often used at the finished and purchased parts levels in order to absorb variability.
The Lean approach establishes kanban positions, which are independent inventory positions typically placed at each resource position. The kanbans are sized according to a required takt time rate. This rate can be established through a forecast or past consumption. The kanbans are connected with “loops” that provide easy-to-interpret signals for each position to produce or not produce. A “supermarket” can be placed at the intermediate or purchased component level that produces the same easy-to-interpret signal as the kanban. The difference between the supermarket and the kanban is simply that the supermarket is at the part (product structure) level and the kanban is placed at the resource level.
Many Lean implementations attempt to abandon the formal planning approach of MRP because it is seen as inappropriate, transaction intensive, non-value added, even antithetical, to what Lean is trying to accomplish. This causes tremendous friction between planning personnel and those pushing to eliminate these systems. Lean facilitators and advocates often see MRP as an overcomplicated and wasteful dinosaur that simply doesn’t work in a customer-centric world.
FIGURE 5-1 MRP and Lean comparison
Planning personnel, however, see it in a completely different way. They believe that without the ability to see and synchronize complex and dynamic environments, critical blind spots will exist in the planning process which will lead to shortages, expedites, and even excessive inventory positions to compensate. They see the simple pull approach for managing materials and inventory as a gross oversimplification for the complex planning and supply scenarios that are the norm in today’s more volatile environment.
What if both camps are right? What if in many environments today the traditional MRP approach is too complex and the Lean approach is too simple? Where would that leave supply chain management? It would create a situation where companies oscillate between the two options, depending on the political wind employing a constantly changing and unsatisfactory number of work-arounds and compromises. Executives get frustrated, in-fighting escalates, efforts are sabotaged, more money and time are spent, and improvements deteriorate to lip service.
Einstein once said, “Any intelligent fool can make things bigger and more complex. It takes a touch of genius—and a lot of courage—to move in the opposite direction.” He also said, “Everything should be made as simple as possible, but not simpler.” How prophetic.
Can traditional MRP be overly complex? Without a doubt. Most people in manufacturing companies don’t even fully understand what the planning system is or how it does what it does. Every day, planners are drowning in oceans of data and action messages. The hard-coded rules are rooted firmly in the old “push and promote” methodology that makes MRP ill-suited to today’s more volatile and service-oriented world. Furthermore, “fixing” or “cleaning up” the system seems to be a never-ending, transaction-intensive, and expensive journey; the end of which is to always be precisely wrong.
Can Lean be an oversimplification? When it comes to materials and inventory planning, the answer in many environments is yes. Oversimplification is defined as “To simplify to the point of causing misrepresentation, misconception, or error.”1 By failing to provide visibility to critical dependencies and relationships with regard to supply, demand, on-hand inventory, and product structure, the Lean tool set can attempt to oversimplify many environments. The larger, more complex, and variable these environments are, the more likely that Lean’s simple kanban controls and lack of material planning create an oversimplified approach.
Yet there is one thing they actually agree on: a common objective. Both camps can agree that flow is paramount. Now more than ever, a decisive competitive advantage can be achieved by companies with a high degree of flow through and to their customers. Chapter 2 highlights the need for and benefits of flow. The better the flow of relevant information and materials, the better the service levels and use of working capital. The better the service levels and working capital, the better the bottom line.
Do MRP advocates disagree with this? Certainly not! Materials and processes that flow reliably are the easiest to plan and manage. Having the right things at the right time is the key to flow. MRP’s entire reason for existence was to attempt to synchronize environments to have the right things at the right time. But does conventional MRP have deficiencies that hurt flow? Undeniably yes!
Do Lean advocates agree with the need for flow? Absolutely. Information and materials that flow reliably generate considerably less waste. But does Lean have a complete tool set for fully protecting and improving flow at the plant, enterprise, and supply chain level in a more complex and volatile world? There seems to be something missing.
So if there is a common objective, why are these camps locked in a chronic conflict? As discussed previously, MRP is a perfect just-in-time system that nets to zero inventory. This sounds incredibly compatible with Lean’s approach. Yet the conflict persists because they represent diametrically opposed approaches with regard to two critical factors. These critical factors are essentially two sides of the same coin but are worth discussing specifically. Any solution must involve addressing this inherent opposition in these two areas.
Dependence Versus Independence
Figure 5-2 illustrates the area of this particular conflict. At the top of the structure is the common objective of protecting and promoting flow. MRP and Lean have different critical needs in order to accomplish this objective, and each method has a specific attribute designed to secure its respective critical need.
FIGURE 5-2 The dependence versus independence conflict between MRP and Lean
We will explore the MRP side first. MRP advocates understand that the protection and promotion of the flow of relevant information cannot occur without the ability to synchronize complex and dynamic environments. In order to accomplish this synchronization, MRP, as discussed in Chapters 3 and 4, is hard coded to obey the dependencies defined by product structure. A change anywhere creates change everywhere. MRP was designed in this way in order to make sure that the operating environment could understand the impact of changes as they occur.
On the Lean side we see that the protection and promotion of flow requires that resources have clear signals to operate by. When signals become confusing or conflicting, a resource’s ability to determine what is correct breaks down. Too many points of data or constantly changing signals create that confusion or conflict. Thus Lean makes everything independent. Resources only need to look to one place (the kanban that they feed) to determine if they should produce or not produce. It is literally that simple.
Making everything dependent versus making everything independent is certainly mutually exclusive. In fact, both sides’ attributes break down the other side’s critical need. By making everything dependent, MRP creates an incredibly confusing set of constantly changing and conflicting signals. By making everything independent, an environment loses the ability to synchronize to changes that can and will occur. This is particularly true in environments characterized by heavy demand fluctuations, long lead time parts, shared resource bases, and product innovation.
Is there an alternative that can have the benefits of dependence (synchronization) and the benefits of independence (clear signals) at the same time without conflict?
Supply Order Generation (Planning Versus Execution)
Figure 5-3 illustrates the area of another conflict. Once again, at the top of the structure is the common objective of protecting and promoting flow. MRP’s need remains unchanged from the previous conflict: synchronize complex and dynamic environments. Lean has a different critical need.
Both sides have a different attribute designed to secure their respective critical need with regard to supply order generation. One could argue that this is simply an extension of the dependence versus independence conflict. That is a valid argument, but there is an additional level of insight that could be brought to bear by discussing them separately.
As described in depth in Chapter 2, MRP is typically loaded with forecasted demand in order to attempt to synchronize the long manufacturing and procurement cycles with anticipated demand. This happens well in advance of consumption. The Lean side, however, seeks to protect and promote flow by pacing to actual demand because the inherent inaccuracy with forecasts directly impedes flow. Resources are squandered on things that are overproduced and overordered in advance, while expedites must accommodate the things that were underproduced or underordered as the picture becomes clearer. The only way to truly know if demand is real is after it has occurred. Consumption is definitive proof of demand.
As with the previous conflict, the attributes seem to be mutually exclusive. When MRP generates supply orders well in advance of anticipated consumption, it loses the capability to pace to actual demand at least by the amount of the forecast error. The longer the planning horizon, the greater the forecast error. When we generate supply orders at the execution level, there is a delay in responding to significant changes, as the supply orders must make their way through the entire connective structure one level at a time; there is rudimentary but extremely slow synchronization at best.
FIGURE 5-3 The supply order generation conflict between MRP and Lean
Is there an alternative that can have the benefits of supply order generation at the planning level (synchronization) and the benefits of supply order generation at the execution level (pace to actual demand)?
It is vital to understand that all the critical needs are required to protect and promote flow. Planning and execution systems must pace to actual demand, provide clear signals for resources, and synchronize complex and dynamic environments.
Focusing on only one critical need and discounting the others almost guarantees challenges to flow. Indeed that seems descriptive of the impasse between the MRP and Lean worlds. When it comes to the protection and promotion of the flow of relevant information and materials, both Lean and MRP have weaknesses in today’s more volatile and complex environments. Lean’s reliance on independent replenishment kanbans with little to no visibility or connectivity at the plant, enterprise, and product structure level is a problem for the protection and promotion of flow. But the antiquated and complex rules of conventional MRP that govern demand and supply order generation create unrealistic, constantly changing, and generally confusing plans and schedules.
To protect and improve flow, a blend of simple visible pull signals and the computational and connective power of technology is necessary. This isn’t a compromise for the two sides to live in peace; it must be a harmonious integration where both sides’ critical needs are incorporated to create a stronger solution for the protection and promotion of flow. And it must be practical, consistent, and scalable!
What if there is a way to define a solution (rules and tools) that is not overly complex or overly simple? What if there is a way to take key and relevant aspects of both points of view and create an elegant blueprint that will work for and enhance both sides’ objectives? This solution must include a level of sophistication that can provide more visibility and synchronization from a planning and execution perspective while at the same time pace to actual demand and promote simple, clear, and highly visible signals across the enterprise. This solution is called Demand Driven Material Requirements Planning (DDMRP).
Lean advocates often get accused of being anti-technology, but do Lean advocates really want manufacturing companies to entirely abandon the promise of technology? The answer should be yes when that technology is wasteful, confusing, and not reflective of reality, when it force-fits concepts so as to simply permit their use. Unfortunately, this has been the situation for quite some time with regard to traditional MRP and DRP (distribution requirements planning) systems.
Point 8 of the Toyota Production System states, “Use only reliable, thoroughly tested technology that serves your people and processes.”2 Until now the prevailing materials and inventory planning and execution technology, while thoroughly tested, have been largely inappropriate to serve the people and processes in companies transforming to a leaner approach. Chapter 3 clearly demonstrated that point.
Yet the proliferation and sustainability of Lean implementations has been negatively impacted by the lack of appropriate supply chain materials planning and execution technology. Many well-respected manufacturing analysts have concluded that there is tremendous potential for the incorporation of better planning and visibility software into Lean implementations. Manufacturing needs Lean methods to stay competitive in the more complex environment of the twenty-first century. Lean needs an effective customer-centric planning approach to bring that vision to reality.
What if there were an appropriate technology? What if a reliable, thoroughly tested method for a customer-centric pull-based planning and execution of supply chain materials with high degrees of visibility could be introduced to the MRP world? Under that condition Lean and MRP would both find an effective solution. This method is Demand Driven Material Requirements Planning.
Demand Driven Material Requirements Planning
This section will serve to introduce DDMRP—its basic foundation and its major components. But first it may help to understand what the term “demand driven” really means and the history behind it. The term was originally defined as the ability to “sense changing customer demand and adapt planning and production while pulling from suppliers all in real time.”
The History of “Demand Driven”
The term was pioneered by PeopleSoft in 2002 while Carol Ptak was the vice president of manufacturing and distribution industries. When Oracle acquired PeopleSoft in 2003, the term was largely abandoned. It was then resurrected in 2007 by AMR. In 2010 AMR was acquired by Gartner, and Gartner used the term as part of what it called its “Demand Driven Value Network” approach.
In 2011 the third edition of Orlicky’s Material Requirements Planning (Ptak and Smith) introduced the initial blueprint for Demand Driven Material Requirements Planning as an alternative formal planning and control logic. The year 2011 also marked the foundation of the Demand Driven Institute by Carol Ptak and Chad Smith. The Demand Driven Institute has published dozens of white papers and case studies on the DDMRP topic. A repository of case studies and white papers on DDMRP is available free at http://www.demanddriveninstitute.com.
In 2012 the Demand Driven Institute developed the Demand Driven Planner (DDP) program. The DDP program was designed to provide consistent global standards for the DDMRP approach and to teach and certify practitioners in those standards. From 2012 to 2017 over 3,000 people took the DDP program on six continents. 2012 also saw a partnership between the Demand Driven Institute and the International Supply Chain Education Alliance (ISCEA). The ISCEA provided testing and certification infrastructure and issued the Certified Demand Driven Planner (CDDP) certificate.
In 2014 Demand Driven Performance: Using Smart Metrics was written by Debra Smith and Chad Smith. This book extended the term across the enterprise into finance, scheduling, shop floor control, and strategy, effectively defining the Demand Driven Operating Model. This will be defined and discussed later in this chapter.
In 2016, with Demand Driven Performance: Using Smart Metrics as a guide, the Demand Driven Institute released the Demand Driven Leader (DDL) program. The DDL program was designed to provide consistent global standards for the Demand Driven Operating Model (including DDMRP) and to teach and certify practitioners in those standards.
In 2018 the Demand Driven Institute launched it’s own testing and certification capability to support the growing body of demand driven knowledge and the proliferation of that knowledge around the world. These professional endorsements include the Demand Driven Planner Professional, Demand Driven Leader Professional and Demand Driven Fundamentals Professional certificates.
The original definition of “demand driven” still works in today’s more mature and larger demand driven body of knowledge. Additionally, this maturation and expansion has provided clarity on precisely what demand driven does not mean. It does not mean “make to order everything.” It does not mean “put inventory everywhere.” It does not mean “forecast better.” Becoming demand driven requires a fundamental shift from the centrality of supply- and cost-based operational methods (commonly referred to as “push and promote”) to a centrality of actual demand- and flow-based methods (commonly referred to as “position, protect, and pull”). The term “actual demand” is extremely important in distinguishing it from a rebranded and somehow superior forecasting approach.
Demand Driven Material Requirements Planning is a formal multi-echelon planning and execution method to protect and promote the flow of relevant information and materials through the establishment and management of strategically placed decoupling point stock buffers. DDMRP has roots in many conventional methods. Figure 5-4 shows the methodological foundation for DDMRP.
FIGURE 5-4 The methodological foundation of DDMRP
DDMRP combines some of the still relevant aspects of MRP and DRP with the pull and visibility emphases found in Lean and the Theory of Constraints and the variability reduction emphasis of Six Sigma. Do these methods all just naturally fuse together? No. At a minimum, as noted earlier in this chapter, there are conflicts between Lean and MRP. A similar conflict occurs with MRP and the Theory of Constraints. The final component of this fusion requires a few key innovations that are unique to DDMRP. While the remainder of this book will provide the detailed aspects of these innovations, Appendix E provides a brief summary of the four primary unique innovations.
Demand Driven Material Requirements Planning has five sequential components. Figure 5-5 illustrates these components, their sequence, and how they relate to the mantra “position, protect, and pull.” These five components are respectively featured in sequential chapters starting with Chapter 6.
The first three components essentially define the initial and evolving configuration of a Demand Driven Material Requirements Planning Model. Strategic inventory positioning will determine where the decoupling points are placed. Buffer profiles and levels will determine the amount of protection at those decoupling points. Dynamic adjustments define how that level of protection flexes up or down based on operating parameters, market changes, and planned or known future events.
The fourth and fifth elements define the actual operational aspects of a DDMRP system: planning and execution. In DDMRP, demand driven planning is the process by which supply orders (purchase orders, manufacturing orders, and stock transfer orders) are generated. Visible and collaborative execution is the process by which a DDMRP system manages open supply orders.
FIGURE 5-5 The five components of DDMRP
DDMRP is at the heart of the Demand Driven Operating Model, which is defined this way:
Demand Driven Operating Model—a supply order generation, operational scheduling, and execution model utilizing actual demand in combination with strategic decoupling and control points and stock, time, and capacity buffers in order to create a predictable and agile system that promotes and protects the flow of relevant information and materials within the tactical relevant operational range (hourly, daily, and weekly). A Demand Driven Operating Model’s key parameters are set through the Demand Driven Sales and Operations Planning process to meet the stated business and market objectives while minimizing working capital and expedite-related expenses.
Figure 5-6 depicts the Demand Driven Operating Model schema. Model and part parameters, commonly referred to as “master settings,” are supplied by the Demand Driven Sales and Operations Planning (DDS&OP) process to Demand Driven MRP. These settings will be thoroughly described in Chapters 6, 7, and 8. DDS&OP is the subject of Chapter 13. These master settings configure the DDMRP system and are combined with inventory and product structure records and actual demand to generate supply orders. If these supply orders are manufacturing orders, they are sent to scheduling. If the supply orders are purchase or stock transfer orders, they go directly into execution.
This book provides limited content on Demand Driven Capacity Scheduling or its respective master setting inputs. What content there is on this topic is found in Chapter 11. Additionally, the execution aspects in this book are confined to the execution elements of DDMRP—the management of open supply orders. For in-depth content on Demand Driven Capacity Scheduling and related shop floor execution tactics, refer to Smith and Smith’s Demand Driven Performance: Using Smart Metrics.
FIGURE 5-6 Demand Driven Operating Model schema
This chapter combined with Chapters 3 and 4 has laid the basic foundation for the critical elements of a new supply order generation method for the New Normal called Demand Driven Material Requirements Planning.
What do we know so far about the requirements for DDMRP?
1. It should be based on the protection and promotion of the flow of relevant information and materials. This connects it to driving better returns on investment. This was explained in Chapter 3.
2. It must allow for decoupling in order to mitigate demand signal and supply continuity variability as well as to compress lead times. This was explained in Chapter 4.
3. It should use the most relevant demand information available—actual demand. The problems associated with forecast error were described in Chapter 3 and previously in this chapter
4. It must provide easy-to-interpret signals for all resources. This was described previously in this chapter.
5. It must provide for a way to synchronize complex and dynamic environments.
