Mike on Manufacturing

The Demand Driven MRP Revolution

By Mike Hart

Demand Driven MRP (DDMRP) is a revolutionary planning methodology that solves the inherent flaws of traditional forecast-driven MRP.  DDMRP is a major focus of this blog because it is a game changer for small business and should be given serious consideration when selecting an ERP software package.

The Demand Driven Institute is leading the revolution

The DDMRP methodology evolved in the early 2000’s and was formally introduced in 2011 by Carol Ptak and Chad Smith, who have written numerous books and white papers on the subject.  Their Demand Driven Institute is an organization dedicated to promoting demand driven methods throughout the world with workshops and certification programs for consultants and compliant software packages.  The institute’s website includes numerous case studies of dramatic results achieved with DDMRP.

The MRP Catch-22 for Small Business

By Mike Hart

Why do most small manufacturers get poor results with ERP systems?  It’s because of the MRP Catch 22:

You invest in ERP to boost manufacturing efficiency.

Traditional MRP is unusable, so you revert to legacy planning methods. 

Legacy planning methods cannot boost manufacturing efficiency.    

The MRP Catch-22 traps small businesses in a costly ERP system that cannot boost manufacturing efficiency. 

What is manufacturing efficiency? 

Manufacturing efficiency is the ability to reduce time to shipment with efficient utilization of inventory.  The only way to boost manufacturing efficiency is with better planning.    

Why Your Small Business Needs MRP Software

MRP stands for “manufacturing resource planning.”  It is the process by which jobs and POs are generated and scheduled to ultimately fulfill customer orders.

All manufacturing companies must use some form of MRP

All manufacturing companies must use some form of MRP to create jobs and POs.  MRP can be done using manual planning or using a formal MRP system such as DBA Manufacturing.

MRP Is a Time-Phased Shortage List

By Mike Hart

In my last post, I wrote about the inefficiencies involved in using shortage lists for job and PO planning. 

If you operate with a general accounting software package, you do not have an MRP capability and must use shortage lists out of necessity. 

Ironically, many planners who operate with a manufacturing software package persist in using shortage lists, even though an MRP capability is available.  This is due to habit, meaning that it’s always been done that way, and mistrust of MRP due to not fully understanding how it actually works.  

Why Shortage Lists Fall Short

By Mike Hart

Knowing what to make or purchase and when to do it is a big challenge.  Do it right and you can deliver on time using less inventory and WIP.  Do it wrong and you are plagued with excess inventory, chronic shortages, high expediting costs, and late deliveries.    

If you do not have an MRP system, most likely you are using some type of shortage list methodology to figure out what to make or buy.  Most accounting systems offer an item  reorder level that enables you to use a shortage list to compare the reorder level with stock on hand, demand from open orders, and supply from open jobs or POs.  In theory, any item that falls below its reorder level is a candidate for a new job or PO. 

Fear of MRP

By Mike Hart

Many companies invest in a manufacturing software package, yet choose to enter jobs and POs manually instead of generating them automatically through MRP.  Why is there such a widespread fear of MRP?  

I think this fear stems from a perception that MRP is highly complicated.  Before manufacturing software packages started labeling themselves "ERP systems" in the late 1990s,they were called "MRP systems" and were commonly felt to be too complicated and costly for smaller companies.