To MRP or not to MRP?

"Everyone agrees that to reach a very high level of forecast accuracy is not possible. How much time, resources and budget do you finally want to invest in non-value adding forecasting information? Shouldn’t it be better for your company to invest in robust inventory...

Frequently Asked Questions

Q: How does Orchestr8 manage a large spike in demand from a priority customer within lead time?
A: Inventory buffer levels are calculated using past actual order fulfilment patterns therefore largely eliminating this concern. Where a Spike order is larger than the norm Orchestr8 has tools to identify and prioritise fulfilment. 

Q: What is the difference between using Orchestr8 and, for example, SAP Re-Order Point?
A: Three major differences, 1. SAP has no way of calculating the Re-Order Point levels, 2. Orchestr8 assigns a Colour to each order to assign priority when capacity is limited and 3. The Master Production Schedule in SAP still assumes Push (Make to Order) replenishment which corrupts future visibility. 

Q: How does Orchestr8 do finite scheduling/sequencing?
A: The need to finite schedule comes from having too many unstable orders in a wide planning horizon. Orchestr8 provides prioritised supply orders in a narrow planning horizon, which are firm within lead-time. Eliminating the need to use a software sequencing tool in almost all situations.

Q: Not all SKU’s are suited to Demand Pull / Kanban, how does Orchestr8 handle these?
A: Dynamic Segmentation. By matching amount of past order Qty variability within leadtime against the future daily rate of sale or supply, Orchestr8 can segment SKU’s into one of 7 replenishment types, and then where appropriate calculate Inventory Buffers. The process is repeated in sync with S&OP to track Segment changes and associated Buffer changes with life cycle.

Q: How can Orchestr8 reduce inventory and increase service at the same time?
A: By accurately calculating the right Inventory Buffer using only the Qty element of any Forecast and then only ordering to resupply this buffer. This means the Forecast Timings are no longer a factor in planning therefore eliminating the number one cause of unplanned inventory and the resulting obsolescence build up.

Q: What’s the difference between DDMRP and traditional MRP?
A: DDMRP works by Positioning Inventory and then using Pull reordering to maintain the correct Inventory Level and therefore Service. MRP works with 100% reliance on forecast accuracy to Push orders along the Supply Chain and to calculate Inventory Buffers. 

Q: How do we know that the targets/buffers are the correct size?
A: Simple and understandable mathematics. A combination of Lead-time, Batch Size, past Order Qty changes within leadtime and future Forecast Qty, will enable the correct Inventory Buffer for any level of Service required to be calculated. 

Q: How does Orchestr8 handle seasonality/events/promotions/shutdowns?
A: MTO and Demand Pull Planning at the same time. Making it possible to plan Make to Order for the exceptional demand at the same time as maintaining the agreed service and replenishment pattern on the regular orders. 

Q: Does using Orchestr8 require changes to the production process to achieve the advertised results?
A: No. All planning parameters are left unchanged. MOQ, Lead-time, Changeover times etc. Fewer plan changes will however release more capacity. 

Q: What is the likely impact on suppliers from using Orchestr8?
A: Total Order Stability, enabling the opportunity to take cost out of the supply process for all parties.

Q: What is the likely organisation impact from implementing Orchestr8?
A: Orchestr8 enables simple standardised processes to be quickly rolled out across any size of business. A common planning/ordering process and toolset for Distribution, Production and Purchasing provide new organisational opportunities. And near perfect order stability allows a 10-fold improvement in SKU/Planner ratios.

Q: What are the correct Supply Chain metrics?
A: Of equal importance, Inventory turns, Service level, End-to-end cash flow. 

Please if you cannot find answer to your question contact us today to learn more.

People Are Talking

Intuitive process flows with the ability to manage planning master data distinguish the Orchestr8 solution.
Lora Cecere, S&OP Technology Landscape in 2015 Supply Chain Insights

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