Page 32 - Orlicky's Material Requirements Planning

CHAPTER 2 MRP in the Modern World 13

A B

Inaccurate forecasts 27% More product complexity and/or customization 32%
Long-lead-time parts/components 24% Demands for leaner inventories 30%
Complex synchronization issues 22% Shortened customer tolerance time 16%
More product variety 13% Global sourcing and demand 13%
Material shortages 9% Shortened product life cycles 9%
More offshore suppliers 5% New materials 0%
FIGURE 2-1

Indentified product (A) and market (B) issues.

At the 2008 American Production and Inventory Control Society (APICS)
International Conference, APICS professionals were surveyed about their number one
concern about volatility. They were given two lists of six factors related to volatility and
asked which were the biggest challenges to their company. Figure 2-1 represents the
results of that survey.
This survey did not show any overwhelming single cause but rather showed that
these challenges are widely varied across organizations. These factors combine to create
more complex planning and supply scenarios for manufacturers and supply chains than
ever before. A November 2010 Aberdeen Group survey noted that 48 percent of compa-
1
nies surveyed indicated that increased supply-chain complexity was a top priority. This
more volatile environment is not a temporary phenomenon. It is here to stay.
In attempting to maneuver through these complexities, companies are increasingly
running into a dilemma. Figure 2-2 is a conflict diagram depicting the two conflicting
operations modes. The top side of the diagram describes how in order to deal with
today’s complexities companies must be effective in their plans. Specifically, companies
must plan in advance of actual customer orders. Customers are not willing to wait for
companies to order long-lead-time materials, to incorporate sales and marketing data
and plans, to plan capital and staffing levels, and to develop contingency plans for poten-
tial problems. Customers want what they want when they want it and at a price they
want to pay. The successful operation is the one that can provide this at a profit to itself.
In the face of this, supply chains have extended and broadened, product life cycles have
shrunk, and product complexity has risen. This real need to plan drives the management
team to focus on systems and approaches that enhance predictability. Some companies
have developed a very sophisticated sales and operations planning process to minimize
the potential for problems within the planning horizon. Other companies have invested

1 Viswanathan, Nari, “Enabling Supply Chain Visibility and Collaboration in the Cloud,” November 2010, p. 4.