Theory of Constraints Handbook - James Cox Iii [233]
In Table 12-4 is a point-by-point comparison of the typical MRP implementation attributes that we detailed earlier versus applicable ASR attributes.
5. Highly Visible and Collaborative Execution
Simply launching purchase orders (POs) and manufacturing orders (MOs) from an ASR system’s more effective pull-based planning mechanism does not end the materials management challenge. These POs and MOs have to be managed effectively to synchronize with the changes that often occur within the “execution horizon.” The execution horizon is the time from which a PO or MO is opened until it is closed in the system of record.
TABLE 12-4 MRP versus ASR Attributes
ERP and MRP systems share the same “P” for planning. These are planning systems and not execution systems. Most ERP and MRP systems lack real visibility to the actual priorities associated with the entire queue of POs, transfer orders (TOs), and MOs throughout the manufacturing operation and supply chain. Without this visibility, the supply chain (Suppliers, Manufacturing, Fulfillment, and Customers) employs the usual default mechanism of priority by due date.
Priority by due date often does not convey the real day-to-day inventory and materials priorities. Priorities are not static; they change as variability and volatility occur within the active life span of POs and MOs—the time from when they are opened until they are closed. Once again, this life span is called the “execution horizon.” Customers change their orders, quality challenges come up, there can be weather or customs-related obstacles, engineering changes happen, and suppliers’ capacity and reliability can temporarily fluctuate. The longer the execution horizon, the more volatile the changes are to priority and the more susceptible a company is to adverse material synchronization issues.
Ask yourself the following questions:
How does the manufacturing floor really know the relative priorities of stock orders?
Does your operation ever have MOs to replenish stock that have the same due date (either a discreet date or “due now”)? How does the manufacturing floor decide what the priority is?
Do you ever have MOs to replenish stock orders that have different due dates? Is it conceivable that despite an MO being due later, it is actually a higher priority based on certain events that have happened during the execution horizon? Have you ever built inventory in a rush only to find it sitting there for weeks while another MO could have averted a shortage if only you knew?
How does the supplier know how to align its capacity to your priorities?
Do you ever have several open POs to a supplier all with the same due date? If yes, how do they know which is the most important to apply efforts to? If they call, can your Planner communicate the correct priority without having to research and peg or search for the source of various parts requirements up through the levels of the bills of materials. This is like searching through a spaghetti string mess.
Do you ever have several open POs to a supplier with different due dates? Is it conceivable that despite a PO being due later, it is actually a higher priority, once again, due to changes that have occurred within the execution horizon? Have you ever paid for overnight charges only to find dust on that box months later?
Any sort of visibility to or a specific answer about the real-time priority of stock orders often necessitates a manual workaround or subsystem, which requires massive daily efforts of analysis and adjustments.
ASR Alerts
ASR provides real visibility of priority using a system of various types of alerts including:
Current Inventory Alerts are for parts that are currently stocked out or in trouble. Is there demand for these parts or is the part just stocked out? There is a difference in priority between parts that are stocked out with demand versus those that are stocked