Removing the Bottlenecks in your Supply Chain

Feb 19 2013

Best-in-class planning means you know where your bottleneck is and you let the bottleneck control the material flow upstream and downstream. It’s important to understand what factors constrain the throughput in your supply chain – whether it is finite capacity for suppliers, production, distribution or warehousing. Modern optimization techniques can help you do this.

Replenishment planning has traditionally used MRP and DRP, which takes the expected demand from customers and breaks it up step-by-step all the way back to suppliers. Unfortunately, MRP and DRP only calculate how much you need to purchase, produce and distribute in an ideal world of infinite capacity and just-in-time production –  it doesn’t help you factor in supply constraints. To minimize the shortcomings of MRP, planners often use a finite production scheduling tool, but unless you synchronize distribution and purchase proposals out from the production plan you are likely to end up with dates used for ATP (available-to-promise) which are not realistic. This is a serious problem as you will be making commitments to customers based on the wrong information.

How optimization will help.

Optimization handles this scenario very well. You can define all your potential supply constraints and it will calculate a replenishment plan for your entire supply chain where everything is synchronized. The main difference between optimization and MRP/DRP is that optimization looks at supply points in the supply chain concurrently instead of sequentially. This is the only way to get a synchronized plan.

To help allocate capacity for constraints in an optimal way you can define differentiated priorities for customers/products as well as minimum/maximum inventory targets for each product. The end result is that you will get synchronized and optimized purchase, production and distribution proposals, which you can now feed back to your ERP system. This means that the business will then use optimal and realistic dates for ATP, production scheduling and transport route scheduling.

ComActivity offers a full range of supply chain optimization solutions. Find out more

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