Page 460 - Orlicky's Material Requirements Planning

438 PART 4 Looking Backward and Forward

stocking via a replenishment designation, but when there is a requirement for
them, historically it has been difficult to maintain control and visibility. Ask most
seasoned materials managers in major manufacturers and they can immediately
recite a list of these types of components and the suppliers that make them. These
components can be very difficult to manage, especially if they have long lead
times and/or are sourced from a remote supplier. Without an effective way to
manage these parts, there is a risk of major synchronization problems, costly
expediting, and/or poor service-level performance.
Figure 26-3 is a conceptual picture of how LTM parts work. In this case, the
part has a 60-day lead time. The last third of that lead time becomes the LTM alert
zone. In this case, the LTM alert zone is 21 days. The LTM alert zone will have
three distinct color-coded subzones: green, yellow, and red. In the example, each
subzone will be seven days in length. Additionally, there will be a zone dedicat-
ed to an order that is late. A notification is given to the planner/buyer each time
the part enters a subzone. Green zone entry = 21 days in advance of due date; yel-
low zone entry 14 days in advance of due date; red zone entry 7 days in
advance of due date; late an order that is past due. These notifications are
intended to prompt planning and purchasing personnel to follow up and docu-
ment the status of these orders beginning at a reasonable time frame in advance
of the order being due.

In traditional planning systems there is very little done about the management of
these types of parts. They are managed by due date with no formal system of visibility
and proactive management to reflect real priorities. The assumption remains that all the
parts will be available by the release time of the order that needs them. The problem is
identified only when the part is late. Orders using that part then are possibly released
short those parts, causing possible rework on the shop floor and increasing work-in-
process. Alternatively, some companies will begin to pull parts ahead of time to identify
this kind of shortage. This process results in a storehouse of partially filled kits and a
manual system to track the missing parts. Robbing from one pre-pulled kit to fill anoth-
er kit makes the situation even worse. Additional information on LTM parts will be avail-

FIGURE 26-3
Lead-time-managed buffer schema.

63 Day Lead Time
Order Order Due
Release Date Date

21 Day LTM Alert Zone

G Y R LATE

Notification Notification Notification Notification