As demand continues to vary within a manufacturing operation, how can demand accurately plan for the amount of goods that are required on-site and to be positioned? How efficiently are goods able to arrive at the correct location in the amount of time provided? All of these questions pertain to distribution requirements planning (DRP) and are what many production and project managers find themselves working on on a frequent basis.
Distribution and logistics managers are faced with complex supply chain networks, which include various suppliers, manufacturing sources, warehouses, and transportation providers. Coordination amongst these suppliers is absolutely essential and vital. DRP is essential to your operation, but is traditional DRP enough anymore? Traditional distribution requirements planning (DRP) tools are not up to today’s planning challenges. Why isn’t traditional DRP enough? In this blog, we are going to discuss why traditional DRP is not enough and how collaborative supply chain planning is the next step in ensuring for operational efficiency.
Why Isn’t Traditional DRP Enough?
Traditional DRP is a bit outdated and the process needed is more sophisticated. A few of the reasons that traditional DRP is not enough pertains to the following:
- Unconstrained Planning - Unconstrained planning is a viable concern within traditional DRP. DRP doesn’t necessarily consider real constraints that exist within distribution networks. These constraints may include limited transportation capacity and schedules, limited storage space, and the ability of manufacturers and suppliers to satisfy requirements. DRP only generates a plan based on forecasted consumer demand and safety stock policies, ultimately leading toward a much less efficient distribution network and plan.
- Fixed Safety Stock - Safety stock should be variable. Year to year, or even month to month, your demand may be changing drastically and the amount needed on hand can change. With DRP, it assumes safety stock is a fixed quantity. There is no ability to vary safety sock and maintain a constant service level. DRP can create either excess inventory or not enough, which leads to issues with consumers.
- Zero Collaboration - Utilizing a collaborative and integrated system enables for a flow of information that can significantly enhance demand variances and any potential issues within the supply chain. DRP systems are not configured for collaboration and planners are unable to share information between sites or with customers and suppliers. This is a substantial area where DRP can fall short and ultimately leads to a lack of information between facilities and could create problems down the road.
Utilizing Supply Chain Collaborative Planning
What if there was a better solution when it pertains to ensuring that distribution requirements and customer demand is met in a timely fashion? What if there was a plan that considers necessary costs, constraints, creates safety stock allocations in the network, and optimizes the distribution network? Fortunately, this is where supply chain collaborative planning comes into play. Supply chain planning is able to conduct the following:
- Dynamic Safety Stock Networks - As opposed to DRP, supply chain collaborative planning is able to ensure for a variable safety stock network. The amount of safety stock needed should be based off of real-time demand changes, not a fixed quantity, ultimately leading to a constant service level to customers. If the goal is to maintain a certain level of service level, then safety stock requirements should fluctuate. This is where collaborative supply chain planning is an advantageous aspect to your operation.
- Optimized Deployment - Collaborative supply chain planning is able to optimize deployment plans based off of cost and profit objectives. All manufacturers should seek to minimize cost in all areas - transportation, overhead, labor, etc. Collaborative supply chain planning recognizes that the deployment network is dynamic and sourcing relationships may vary based off of customer priorities or unforeseen supply chain constraints. Planners need to view recommendations and understand the cost and profit implications of making “special decisions”.
- Visibility Across the Supply Chain - Visibility across the supply chain is an absolute must in terms of receiving information and ensuring that everyone is on the same page. Collaborative supply chain planning brings your suppliers, manufacturers, and customer into the distribution planning process. You are able to model partners outside the enterprise with just the level of detail required to make them a participant in the planning process.
Utilizing supply chain collaborative planning process within a manufacturing operation is absolutely essential for manufacturing facilities that are seeking to increase overall effectiveness and cutting costs. A software that is able to aid with adequate supply chain collaborative planning is PlanetTogether’s Advanced Planning and Scheduling (APS) Software. PlanetTogether’s APS software ensures for thorough insight and visibility into their supply chain and can aid with supply chain enhancement and efficiency increase. APS has become a necessity for manufacturers around the globe that are seeking to maintain a competitive edge within the operation.
Advanced Planning and Scheduling Software
Advanced Planning and Scheduling (APS) software has become a must for modern-day manufacturing operations due to customer demand for increased product mix and fast delivery combined with downward cost pressures. APS can be quickly integrated with a ERP/MRP software to fill gaps where these system lack planning and scheduling flexibility and accuracy. Advanced Planning and Scheduling (APS) helps planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans.
- Create optimized schedules balancing production efficiency and delivery performance
- Maximize output on bottleneck resources to increase revenue
- Synchronize supply with demand to reduce inventories
- Provide company-wide visibility to capacity
- Enable scenario data-driven decision making
Implementation of Advanced Planning and Scheduling (APS) software will take your manufacturing operations to the next level of production efficiency, taking advantage of the operational data you already have in your ERP.
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