A planner comes up with their isolated production plan. Purchasing agents utilize a variety of their own planning tools with their own rationale for their quantities and dates.
The sales department needs to quote shipment dates and order progress, so they develop their own procedures. Production workers tend to sequester and horde materials and often fall back on job linking to manage their jobs workflow. Accountants implement costing procedures that often conflict with operations. The end result are multiple planning silos that are very hard, if not impossible, to coordinate. No amount of training or custom programming can make up for the inherent flaws of isolated planning methods.
We have seen company after company throw employees and money at their planning silos to try to improve their business. We see a lot of talented people making heroic efforts to improve their various planning silos in their companies. There is a strong resistance to change and people do not want to give up their silos. This is understandable, because each individual is pretty happy with their part of the equation. The path forward is to commit to the DBA demand driven system that provides a proven solution that works across all departments.
All activities in every department in your company will be focused on the common goal of reducing time to shipment and increasing throughput and cash flow. When you introduce tentative demand into your planning profile small errors in your forecasts and projections get amplified through all levels of production and become very large errors in your inventory levels. DBA replaces forecasts, BOM explosions, blanket orders, shortage reports, and long term planning projections because all of these methods introduce tentative demand and errors that get multiplied through all levels of production DBA has a better path forward that has safety built into the item settings instead of relying on the accuracy of forecasts and long term tentative projections.
A common planning mistake we see in support is the attempt to manage production with linked Job chains and POs. Hard linking of jobs, subassemblies and components is very unforgiving when your actual demand changes. Job linking also leads to very poor time to shipment performance and reduces the very important benefits of stocking key subassemblies and components.
It is essential that you retain your flexibility to put a demand driven stocking order policy on key items if you have any hope to improve your shop throughput. The intent of a Stocking order policy is to have an item on hand for immediate use in Sales Orders and Jobs thus removing it as a lead day contributor.
The term for this in the demand driven literature is a decoupling point. Stocking key items decoupling can dramatically decrease your time to shipment, and improve your shop throughput and cash flow. This will allow you to strategically plan which critical subassemblies and components to stock in order to reduce your overall manufacturing lead days and time to shipment.
Once you choose to stock a component, the lead days for your manufactured items will dynamically adjust through all levels of production and automatically be reflected throughout your organization.
Many companies are reluctant to carry stock citing the expense and difficulty managing their stocking levels. The truth is that software industry has a terrible track record on providing solutions that handle inventory efficiently.
Forecast based planning, BOM explosions, blanket orders, shortage reports, and excessive Job linking are all seriously flawed approaches and lead to an inefficient use of inventory. The industry even markets the notion that stock is bad and should be avoided. This is nonsense. You should aspire to using stocking decoupling points efficiently and you can experience dramatic improvements throughout your entire organization.
DBA can deliver on the decoupling benefits of stocking key items while maintaining a lean inventory quantity on hand. Most companies in support think that in order to have more safety built into their profile that they need to expand their planning horizon further out in the future.
It is reasonable to think that the more you plan out into the future the better you can predict your stocking needs. In reality, the longer you plan out into the future, the more uncertainty and error you introduce into your system.
Safety is built into your item settings. DBA dynamically maintains your replenishment time planning periods for your items. The replenishment time ensures that you have enough time to make or procure the item before you run out of stock. The replenishment time also establishes the planning period action windows in MRP to ensure that you are acting only on firm demand. Your inventory will have purpose and be more directly tied to your actual demand. If you have a very critical item that you absolutely cannot run out of stock, you can increase your monthly safety factor value.
The safety factor is referred to as a buffer profile in the demand driven literature. As long as your overall settings and order policies are reasonable, the replenishment time of your planned item will give you the time to make or purchase your item to cover most reasonable scenarios. In the event that you do run out of the item, the auto calculated priority in the Work Center schedule will get you back on track. The Supply Days interval is essential for long lead day purchases.
It creates an inbound pipeline of supply to help mitigate any potential shortages. Nearly all companies that fear that they do not have enough safety in their plan, have a problem in their 3 core MRP settings: reasonable lead days on your purchased items, reasonable job days on your manufactured items, and a clear cut order policy based on lead day contribution. If those values are correct on all of your items, you will have the time and safety you need to execute your plan.
We see a lot of examples in support of customers trying to schedule their shop to the exact start and finish times. Inevitably, this leads to them creating linked chains of Jobs to facilitate rescheduling.
This leads to a pile of coat hangers that needs to be constantly re-arranged. The DBA demand driven approach with priority based activities blows traditional job scheduling out of the water.
DBA uses our system settings to dynamically calculate time to shipment targets. Actual demand triggers action and priority based activities get you back on track when your actual demand exceeds your expectations.
DBA dynamically allocates material system-wide based on your demand driven targets without the need for Job linking. Materials and subassemblies on hand are allocated to jobs in planned start date order so that jobs are released to production in the correct order of assembly and only when materials are fully available. Each released job is given a new finish date relative to its actual release date, which automatically updates the job schedule.
Work center queues, which are updated in real time as sequences are completed, are periodically examined to identify bottlenecks for deployment of workers and machines. Work center queues are run in job priority order so that jobs trending late get priority over jobs trending on time, which coordinates production flow throughout the shop.
Material issues and sequence completions are entered in real time to update stock status and work center queues. Reduced Time to Shipment Significant lead time reductions can be achieved by most companies. Improved Customer Satisfaction Users consistently meet their time to shipment targets. Easy and Transparent Priority based activities eliminate the conflicting messages of traditional planning. Reduced Staffing Removing the Bull Whip reduces complexity and reduces your workforce size.
Reduce Time to Shipment Stay competitive with demand driven manufacturing. Keep Right-Size Inventory Use dynamically calculated reorder points to pull inventory into your system when triggered by actual demand. Boost Shop Throughput Complete jobs faster and on time by running work centers in job priority order and deploying resources where they are needed.
We have seen company after company throw employees and money at their planning silos to try to improve their business. The path forward is to commit to the DBA demand driven system that delivers increased throughput while using less staff.
Keep using your accounting system for receivables, payables, banking, payroll, and financial reporting. DBA handles manufacturing accounting issues such as labor and manufacturing overhead costing and work in process tracking. We back our software with a day return policy on your initial system purchase, the strongest in the manufacturing software industry. The Manufacturing Miracle.
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