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Part - II

• What are the specific problems that are delaying the schedule?

• What are the future schedule problems and when will they occur?

• What is the best schedule that can be executed now?

If management can answer predictive questions, its decisions will greatly improve. Preventive actions can offset what were once unforeseen problems. The supply chain will be managed more effectively and improve chances of gaining a competitive advantage.

In the early 1980s, with the introduction of just-in-time production to the United States, many were convinced that pull signals (kanbans) and instant material deliveries would eradicate the need for MRP. The announcement of MRP's death was premature, except for firms with simple products and absolute control of supplier deliveries. Those with more complex products requiring more supply sources for more parts discovered that longer lead times and demand and supply variability were still issues to be dealt with.

Simply put, the more diverse your product line and the more complex your products, the more valuable MRP is for planning raw material needs. This is not to say pull logic is not useful for raw material planning, because it is. Yet for most, it is not necessary (or desirable) to put every part number from every supplier on a pull system.

Scheduling production with MRP push logic, however, is like pushing a rope. You don't know what direction it will go. Pull systems will eventually dominate the entire supply chain - to customers and from suppliers, as well as internal material movement. Yet, MRP can, and must, coexist with pull scheduling.

Cycle time compression should be the first objective in the order-to-delivery process. Midrange manufacturers often have limited clout with suppliers, making across-the-board mandatory lead-time reductions unlikely. While there are many ways to work out mutually beneficial and necessary improvements with suppliers, the real enemy is time. The alternative is to work selectively on supply improvements while using a rationalized inventory deployment strategy to support the first objective - reducing order-to-delivery cycle time.

Good collaborative forecasting, good planning and realistic replenishment scheduling are essential to effective SCM. Further improvements come from redesigning supplier links to make them firm, fast and flexible for the benefit of the entire supply chain. During the transformation, companies have learned the value of minimizing cycle time and having predictable schedules, especially with mass customization. Both are necessary for effective supply chain performance.

Concluded.

* R. Michael Donovan is a management consultant based in Framingham, Mass.