Page 24 - Orlicky's Material Requirements Planning

CHAPTER 1 Overview 5

FIGURE 1-1
1920s: Inventory Management
Planning tool
evolution.
1961: BOMP

1965: MRP

1972: Closed-Loop MRP
1980: MRPII

1990: ERP
1996: APS

One of the most remarkable passages in the first edition was Orlicky’s description
of the vast changes and removal of limitations taking place in the 1970s. These changes
and more degrees of freedom allowed fundamental changes to the way companies
planned, ordered, and manufactured. Consider the following passage:

Traditional inventory management approaches, in pre-computer days, could
obviously not go beyond the limits imposed by the information processing
tools available at the time. Because of this, almost all of those approaches and
techniques suffered from imperfection. They simply represented the best that
could be done under the circumstances. They acted as a crutch and incorpo-
rated summary, shortcut, and approximation methods, often based on tenu-
ous or quite unrealistic assumptions, sometimes force-fitting concepts to real-
ity so as to permit the use of a technique.
The breakthrough, in this area, lies in the simple fact that once a com-
puter becomes available, the use of such methods and systems is no longer
obligatory. It becomes feasible to sort out, revise, or discard previously used
techniques and to institute new ones that heretofore it would have been
impractical or impossible to implement. It is now a matter of record that
among manufacturing companies that pioneered inventory management
computer applications in the 1960s, the most significant results were
achieved not by those who chose to improve, refine, and speed up existing
procedures, but by those who undertook a fundamental overhaul of their
systems [Orlicky, Material Requirements Planning, p. 4].

Almost 50 years later we are at another time of reexamination and transition.
Shortly after the turn of the millennium, the world of manufacturing turned upside
down. Production became more efficient in the United States. Eastern Europe was incor-
porated into the European Union, putting low-cost production very close to a lucrative