Theory of Constraints Handbook - James Cox Iii [226]
5. Manual Reorder Point Systems—With the implementation of kanbans, supermarkets and three-bin systems manufacturing have come full circle. Unable to overcome the shortcomings associated with MRP, some companies have abandoned it completely. It is essentially throwing the proverbial baby out with the bath water. In many environments, it is devastating. These systems tend to be manually intensive and very difficult to make responsive to changes in the environment. There is almost no ability to see either the truly available stock or the total net requirements picture (all demand allocations in relation to all open supply orders). Real data is masked in traditional systems by requirements coming from forecasts or other false demand signals. In fact, by definition, each parent–child relationship in the BOM is managed independent of any other connection. MRP consolidates the total requirements for each child part and only rarely can even an experienced planner understand why that quantity is being ordered. In environments with high variety and options, it often requires massive amounts of inventory on the floor in order to be able to provide components and parts when necessary. A 2007 AMR Report (Masson et al., 2007, 6) came to two important conclusions. First that, “Kanban cards and heijunka boards become unmanageable when there are hundreds or thousands of products and components.” Second, and most interesting, is that in large global manufacturers with many manufacturing sites and lines, “The pragmatist needs software to support lean manufacturing.” Remember that simply knowing the stock on hand cannot provide the information to know what to order unless the on-hand position plus the open supply orders minus the demand allocations is considered (this is called an available stock equation). This is just not possible with manual reorder point systems like kanbans.
Actively Synchronized Replenishment—the Way Out of MRP Compromises
For those who are familiar with constraints management and its thinking processes, the dilemma that manufacturing companies find themselves in can be seen in the conflict cloud in Fig. 12-2.
There are essentially two critical needs (B: Produce to demand and C: Visibility to total requirements) coming into contention behind the compromises (made at D and D’, the pull or push choices). From a manufacturing perspective, we must have a realistic way to respond and produce to demand. This way must include both capacity and materials. MRP tools simply do not create the correct “demand signals,” nor do they facilitate materials availability within increasingly shorter horizons that are inherently more variable and volatile. Additionally, many pull-based manufacturing implementations (e.g., Lean and DBR) are effectively blocked by this lack of material synchronization. In most cases, due to the shortcomings listed previously, this leads many manufacturing personnel within companies to think that they should ignore MRP. In fact, a frequent milestone for a Lean implementation is that the computer planning system has been eliminated!
FIGURE 12-2 The conflict in utilizing MRP.
On the other hand, from a Planning and Purchasing perspective we must have a way to effectively see, plan, synchronize, and manage the availability of all materials, components, and end items, especially critical and long lead time manufactured and purchased parts. With increasingly complex planning scenarios, it leads Planning personnel to insist on utilizing MRP.
The more complex the manufacturing environment, the more acute this conflict tends to be. The inability to effectively reconcile the dilemma in those environments leads to the ineffective MRP compromises listed previously and can also essentially relegate TOC, Lean, and Six Sigma implementations to lip service. The requirements must be achieved without the conventional inaccuracy, inconsistency,