Page 33 - Orlicky's Material Requirements Planning

14 PART 1 Perspective

FIGURE 2-2
Mode of
Requirement 1 Operation 1
Current
operational Focus on
planning conflict. Effectively predictability
Business plan
tactics
Objective
Deal with Conflicting
increasing Modes of
complexity Operation

Focus on
Maintain
flexibility responsiveness
tactics
Requirement 2 Mode of
Operation 2

huge amounts of money and time in advanced forecasting algorithms in the hope of gain-
ing an insight into the future using past experience. Companies try to measure almost
anything and everything that can be measured in the hope that it will tell them some-
thing that they do not already know. Most every organization generates an ocean of data,
but sifting relevant information out of that ocean is quite a different matter. The reality is
that worldwide companies are drowning in data and starving for accurate, actionable
information.
On the bottom side of the diagram, however, the advanced commitment of capital,
inventory, and capacity means that organizations are much less flexible in the short term.
This forces a company into the situation of expediting, schedule deviations, and confu-
sion. This need for flexibility has driven many managers to clamor for reduced system
complexity and the implementation of highly visible and responsive pull-based strate-
gies such as lean and drum-buffer-rope. The APICS Dictionary (Blackstone, 2008) pro-
vides excellent insight into these tactics:

pull signal: Any signal that indicates when to produce or transport items in a pull
replenishment system. For example, in Just-in-Time production control systems, a kan-
ban card is used as the pull signal to replenish parts to the using operation. See: pull
system.

pull system: (1) In production, the production of items only as demanded for use or
to replace those taken for use. See: pull signal. (2) In material control, the withdrawal
of inventory as demanded by the using operations. Material is not issued until a signal
comes from the user. (3) In distribution, a system for replenishing field warehouse
inventories where replenishment decisions are made at the field warehouse itself, not
at the central warehouse or plant.

demand chain management: A supply chain inventory management approach that
concentrates on demand pull rather than supplier push inventory models.