Demand Driven MRP & The Demand Driven Adaptive Enterprise

The greatest barriers to supply chain delivering the desired service level at the lowest possible cost are lead-time and variability. Our lead-times are longer than customer expectations, meaning we must rely on forecasting and inventory to deliver service. The issue with forecasting is that it is never correct – meaning we never sell what we forecast, and the longer the lead-time the less reliable the forecast becomes. The combination of inaccurate forecasts and long lead-times with a conventional MRP planning solution (which relies on perfect demand, lead-time adherence and dependency between all nodes) results in a bimodal inventory distribution. The result is an excess of some items, and shortages of others, with the inventory position oscillating between feast and famine leading to poor service, despite high inventory and high expediting fees.

Read Article