Page 93 - Orlicky's Material Requirements Planning

CHAPTER 4 Inventory in a Manufacturing Environment 73

The potential risks include the following:

■ End-item stocking levels are subject to the full internal lead time for both parts
(12 days for Part 300 and 9 days for Part 400).
■ Resource E is left unprotected from a long string of internal dependencies.
■ Part 200 is not leveraged against both end-item positions.
Finally, Figure 4-16 considers stocking all part positions in this example.
The benefits to this strategy include the following:
■ Customer lead times are fully compressed.
■ Internal processes are isolated against supplier variability.
■ Resource E is best protected from internal dependencies.
■ Holding stock at Part 200 allows the stock levels of parent Parts 300 and 400 to be
minimized because internal lead times are minimized.
■ Holding stock at Part 200 allows that stock to be directed or flowed to the differ-
ent parent items as the market pulls those items.
The potential risks are that there are more stock positions to manage. This can be
more difficult to manage and might be viewed as too much inventory.
Frequently, in the implementation of lean, companies will flatten their BOMs.
Flattening a BOM removes a level of the bill to make it more streamlined. Consider what
would happen if this company, with the purpose of flattening the BOM, removed Part
200 as a discrete part number, as in Figure 4-17. This is one of the MRP-related compro-
mises described earlier in this book. If Part 200 does not exist as a unique item, then this
company loses the ability to:
■ Decouple internal lead times for both parents, resulting in higher stock positions
for those end items.
■ Leverage a common component against multiple end items.
■ Protect resource E from a relatively long string of internal dependencies.

FIGURE 4-16

Part 300 and Part 400 cumulative lead time—all parts stocked.
5 Days 7 Days

Part 100 A B C Part 200 D E F Part 300
Purchased Component Parent
PLT = 10 days
Part 50 G E Part 400
Purchased Parent
PLT = 7 days
4 Days