Page 25 - Orlicky's Material Requirements Planning

6 PART 1 Perspective

market. China became the manufacturing powerhouse of the world. Manufacturing
capacity now far exceeds market requirements. Customers have become increasingly
fickle. Product life cycles have plummeted. The Internet now allows global sourcing with
a few clicks of a mouse. Manufacturing companies worldwide are faced with more
volatility than ever before. Exacerbating this situation is the global economic slowdown
of 2008–2011.
No longer can a company achieve a sustainable competitive advantage using the
old business rules. These fundamental shifts taking place in the current global manufac-
turing environment are forcing companies to reexamine the rules and tools that manage
their business. The world has changed, and additional technology barriers have been
removed. Companies will succeed not because they improve, refine, and speed up the
enforcement of obsolete rules and logic but because they are able to fundamentally adapt
their operating rules and systems to the new global circumstances. A new approach to
planning is required.

FOCUS AND ORGANIZATION OF THIS BOOK

This book is not meant to serve as a basic text on the general subject of production and
inventory management or even inventory control. At least elementary knowledge of
these subjects on the part of the reader is assumed, particularly knowledge of the funda-
mentals of conventional (statistical) inventory control. (See the Bibliography at the end of
this chapter.) The book is written primarily for users and potential users of material
requirements planning systems, that is, for manufacturing managers, materials man-
agers, production control managers, inventory planners, systems analysts, and interest-
ed industrial engineers. It also can serve the needs of students of production and inven-
tory management. More universities will need to include the subject of demand-driven
material planning and scheduling techniques in their business curricula to better prepare
their students to enter this demand-driven world.
This book’s scope is limited to the system of logistics planning in a manufacturing
environment (as contrasted with the pure project environment). Figure 1-2 shows the
continuum of production from the extremely high variety of the project to the consisten-
cy of the flow shop. The scope of this book will include job shop, batch, assembly-line,
and continuous-flow organizations. This matrix provides the framework for the industry
application in Chapters 15 through 19.
This book does not extend to traditional execution subsystems, although it stresses
that a high quality of the outputs generated by the planning system is a prerequisite for
the effective functioning of such subsystems. The book will, however, propose an execu-
tion approach that can be used by these subsystems. A simplified chart, applicable to any
manufacturing operation, of the relationships between the planning system and the exe-
cution (control) subsystems is presented in Figure 1-3. This is a closed-loop system where
the execution subsystems have a direct effect on the planning system. However, the mul-
tiple linkages and feedback loops would quickly overwhelm this simple diagram.