The Bee Hive

MRP: The Great Enabler?

Some years ago, when Just-in-Time (JIT) was a new and shiny concept, I went through a brief period of choosing sides in the philosophical argument over which was best: JIT or materials requirements planning (MRP). Leading thinkers in our field quickly diffused the conflict by pointing out that, while JIT was the better tool for managing the factory execution, MRP was still needed for planning of purchased material and analysis of capacity requirement.Shortly thereafter, I resolved that when a company becomes a JIT manufacturer and buys components and raw materials from other JIT manufacturers, it will need MRP only for capacity analysis. And if a company ever reaches a point where all parts are manufactured in syncronoulsy-linked cells, capacity analysis will be simple enough to no longer require a computer and MRP may be eliminated completely.

How To Forecast Intermittent Demand

Do your products exhibit intermittent demand patterns? I bet that anyone who is a capital goods manufacturer or service parts inventory manager has wrestled with this common and costly inventory management problem.

The Theory of Constraints

The Theory of Contraints (TOC) essentially is a managerial philosophy that focuses on helping managers identify impediments to their goal(s) and effect the changes necessary to remove them. In his best-selling business book The Goal, Dr. Eli Goldratt, the founder of TOC, says the essence of management is determining the answers to three questions:

Strategies For Trimming Inventory Carrying Costs

Each year, Asian companies spend an estimated $400 billion on logistiocs services. While most of that money is well spent, some 40 percent of it isn’t adding value becaue it falls under the line item of inventory carrying costs. In logistics terms, inventory carrying cost is the money a manufacturer has tied up in raw materials, work in progress, and finished goods, which includes materials and products in storage, transit, and production.