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Supply Chain History

How Understand the Way APICS Sells Illusion

Executive Summary

  • APICS' has shown a distinct distaste for reality and provides inaccurate information to decision-makers and worker bees.
  • We cover the problems with APICS.
APICS would like you to think of the perfect world before contemplating supply chain management.

APICS' Distaste for Reality

Some people have a distaste for reality. Most of us prefer how we wish it were...

How to Understand Boeing’s Collaboration Problems

Executive Summary

  • Boeing created a massive boondoggle with the outsourcing of its Dreamliner, which has long-term implications for Boeing and the international aerospace business.
  • This is what happens when Boeing only cares about short-term profits and executive compensation.

Introduction to the Dreamliner Debacle

Supply chain collaboration and outsourcing for Boeing are not as straightforward as for other firms. Boeing owns decades...

Supply Chain Inventory Turn Benchmarking

Executive Summary

  • Companies regularly ask for supply chain inventory benchmarking.
  • We cover the topics of benchmarking and what it means.

Introduction

One approach sometimes proposed to determine the potential opportunity for supply chain improvement has been to find benchmark studies of companies' supply chain performance similar to the enterprise in question. This article will explain the availability of supply chain...

How to Understand The Earliest EDI

Executive Summary

  • The earliest EDI tells an interesting story about the usage of EDI.
  • How EDI messages were structured and the implications.

Introduction

Electronic Date Interchange or, more commonly, EDI is a structured way for companies to communicate with one another. EDI is also a document standard as well as how the data is transmitted. EDI documents can be transferred between...

How to Understand The Telegraph and Telex in the History of Supply Chain

Executive Summary

  • The telegraph, telex, and postal system have important implications in the history of the supply chain.
  • We cover how these technologies changed the supply chain.

Introduction to Earliest Technologies

The supply chain has always interacted with the communication technologies of the day. In today’s instant information environment from a distance, it is interesting to consider that this is quite...

The Natural Cost Advantages of Water Based Transportation

Executive Summary

  • The advantages of water-based transportation and what water-based transportation is best used for.

Introduction

Transportation by ship is the oldest form of large-scale transportation. To understand why transportation by ship has and had even more so in the past, such as greater ability to move material more economically than land and even air-based options, the reasons can be considered...

How to Understand The Electrification of Production Plants

Executive Summary

  • Fossil fuels were instrumental in promoting the first industrial revolution.
  • We cover power stations' growth, the line shaft in factories, and how the steam turbine improved and factory changes.

Introduction to Electrified Manufacturing

Infatuated with recent technology developments, the far more essential technology improvements that came before information technology. This article will learn about one of the most critical...

Supply Chain Optimization

How to Perform Cost, Duration and KPI Production Scheduling Optimization

Executive Summary

  • There are many ways to perform optimization for production scheduling.
  • We will cover three different ways, cost, duration, and KPI.

Introduction

In this article, we will cover three ways of running optimization for production scheduling.

Cost Optimization

Cost-based optimization or cost minimization has been the most common way to perform production planning and scheduling optimization. However, duration or time optimization offers...

How to Understand Duration Optimization for Production Scheduling

Executive Summary

  • Duration optimization is the best fit for production planning and scheduling.
  • We cover why duration optimization works so well.
optimize

Introduction

Cost-based optimization or cost minimization has been the most common way to perform supply planning, production planning, and scheduling optimization. Duration optimization means making the minimize objective time function of the optimizer. A duration optimizer requires that the...

Comparing PP/DS to Simio for Production Scheduling

Executive Summary

  • We cover the differences in production scheduling between PP/DS and Simio, what each system is designed to model, and what types of manufacturing environments work for each.

Introduction

PP/DS is a well-known advanced planning application for production planning and scheduling offered by SAP which is part of the APO suite. SAP is the largest enterprise (i.e., corporate) software company...

The Problem with SNP Optimizer Flow Control

Executive Summary

  • The SNP optimizer has two types of methods of deployment. The deployment optimizer has major problems with the second method, which is called cost optimization.
  • The deployment optimizer cannot fair sharing stock to locations.
  • This topic is hidden by SAP and SAP consulting companies from customers.

Introduction to Optimization in APO

In its early years, SAP APO was sold on...

How to Use The Simplex Method and Dual Simplex Method with CPLEX and Frontline

Executive Summary

  • There are several ways of solving a supply chain optimization problem with CPLEX.
  • These settings are made in both supply planning applications as well as off-the-shelf optimizers.
  • There is both a simplex method and a duplex method.

Introduction

The solution procedure is the optimization method that is applied. I often describe and differentiate optimizers based upon their...

What We Can Learn from the Link Flight Trainer for Simulation

Executive Summary

  • What was the link trainer, and how did it work?
  • What are the differences between flight simulation and supply chain planning simulation?
Link-Trainer A picture of the Link Trainer.

Introduction to the Link Trainer

The Link Trainer was developed back in 1929, although it developed through several incarnations, which eventually included instrumentation and a course plotter.  However, the story of how the Link Trainer...

A Sensitivity Analysis Approach for Supply Chain Optimization

Executive Summary

  • In the supply chain, sensitivity analysis is related to S&OP.
  • External optimizers are available for sensitivity analysis, and we cover how this all works.
Companies that do not perform sensitivity analysis can be in the dark about how many capital improvements in any one constraint will improve their operations. 

The Definition of Supply Chain Simulation?

Simulation is a planning run,...

3PL and 4PL

How to Best Understand 4PL Logistics

Executive Summary

  • Definition of 4PL Logistics, 4PL Services or 4 Party Logistics, etc..
  • 4PL Logistics Definition
  • What Are the Characteristics of a True 4PL?

Introduction to 4PL

4PL has many different names. This includes 4PL, 4PL Logistics, 4PL Services, 4 Party Logistics, and so on. The concept is evolving and many entities that don't meet the definition of 4PL have co-opted the...

The Overestimation of the Benefits of 3PL Versus Private Fleets

Executive Summary

  • Companies maintain private fleets and they have important advantages.
  • The largest private fleets are concentrated in specific areas.
  • Specific areas of logistics are more prone to outsourcing.
  • Private fleets are shrinking. Interestingly, outsourced transportation is highly promoted while it is infrequent to promote private fleets.

Introduction to the Overestimation of 3PL vs Private Fleets

There is a general misimpression presented...

How IBM, Accenture and i2 Failed in 4PL Supply Chain Services

Executive Summary

  • There is a fascinating history around the term 4PL for supply chain services, and there are several different types of 4PLs. 4PLs have been co-opted by companies that have no 4PL capabilities, such as IBM and Accenture.
  • In this article, we cover how these companies bombed in the 4PL services market.

Introduction

I have been asked to provide an example...

Was the Term 7PL Simply Made Up by 3PLs?

Executive Summary

  • 3pls made some enormous promises, but they were unable to meet these promises.
  • 7PL is a fake term created by 3PL providers to undermine the term 4PL.

Introduction

A few years ago the term 4PL was popularized by Accenture. 4PL created the idea of a company that managed outsourced logistics but did not own assets. A while after the introduction of...

How Good are the SAP Solutions for 3PL and 4PL?

Executive Summary

  • SAP's 3 PL and 4 PL solutions in the SAP APO suite are extremely problematic.
  • There are important trade-offs and costs and complexity with SAP APO.

Introduction into the Solutions for 3 PL and 4 PL

One question the sometimes comes up is whether SAP offers an efficient solution for 4 PL logistics companies. SAP has tried to target the...

How to Best Understand a Forward Stocking Location

Executive Summary

  • The term forward stocking location has a specific definition.
  • The forward stocking location applies to service parts, 4PL and transportation management systems.

Introduction

I recently had a discussion that involved the topic of a forward stocking location. We decided to look up this term and did not find very much about it. None of the major sites such as Wikipedia...

Is UPS Actually a 4th Party Logistics Provider?

Executive Summary

  • The 4th Party Logistics Provider Verbiage on the UPS Website
  • Why No 3PL Can be a Real 4th Party Logistics Provider
  • Why Asset Based Providers Want to Turn 4PL Into a Meaningless Buzzword
  • Note to 3PLs

Introduction

We came upon the UPS website and found several web pages, where UPS presents its 4PL services. So we have to ask the question:...

DDMRP

Is DDMRP Multiechelon Software?

Executive Summary

  • The Demand Driven Institute (DDI) claims that DDMRP is multi-echelon software.
  • We verify if this is true.

Introduction

The DDI has claimed that DDMRP is multi echelon software. The problem arose when one asked what is meant by this term.

Our References for This Article

If you want to see our references for this article...

How the Demand Driven Institute Tries to Make DDMRP Unfalsifiable

Executive Summary

  • The Demand Driven Institute has some rules they would like you to follow when critiquing DDMRP.
  • If you follow them, DDMRP cannot be critiqued.

Introduction

The Demand Driven Institute, led by Chad Smith and Carol Ptak, makes significant efforts to stop those with extensive experience in the MRP, forecasting, and supply planning space from critiquing their creation of DDMRP....

The Demand Driven Institute’s Approach to Suppressing Dissent on DDMRP

Executive Summary

  • The Demand Driven Institute spends a good chunk trying to suppress voices that dissent with DDMRP.
  • This article will explain the strategies they use.

Introduction

The Demand Driven Institute, led by Chad Smith and Carol Ptak, makes significant efforts to stop those with extensive experience in the MRP, forecasting, and supply planning space from critiquing their creation of DDMRP....

How Accurate is the Criticism of Lokad DDMRP Video?

Executive Summary

  • Lokad produced a video critiquing DDMRP.
  • We check this Lokad video and how logical are DDMRP commenters on their critique of the video.

Introduction

I analyzed DDMRP in the article Repackaged Lean as DDMRP and concluded that it is not an improvement on MRP and is just repackaged Lean with a few tweaks. In this article, I review...

How Convincing is the MIT DDMRP Study?

Executive Summary

  • The Demand Driven Institute proposes a master’s thesis at MIT that proves DDMRP’s efficacy.
  • We analyze this thesis.

Introduction

We analyzed DDMRP in the article Repackaged Lean as DDMRP and concluded that it is not an improvement on MRP and is just repackaged Lean with a few tweaks. In this article, I analyze the validity of an MIT...

How Did DDMRP Convert So Many Vendors?

Executive Summary

  • The Demand Driven Institute has been very successful in getting vendors to adopt DDMRP.
  • What does this mean for the validity of DDMRP?

Introduction

We analyzed DDMRP in the article Repackaged Lean as DDMRP and concluded that it is not an improvement on MRP and is just repackaged Lean with a few tweaks. DDMRP proponents are inconsistent in...

How to Understand DDMRP as Yet Another Repackaging of JIT and Lean

Executive Summary

  • The Demand-Driven Institute has created the DDMRP concept, which began with Orlicky’s 3rd edition MRP Book's perversion.
  • DDMRP is very simply a repackaged of JIT and Lean.

Video Introduction: The Real Story into DDMRP

https://youtu.be/rICCcO-Noa0

Text Introduction (Skip if You Watched the Video)

DDMRP is an adjustment to supply planning that is proposed to improve supply planning systems outcomes. While it has...

EOQ

Should You Implement EOQ Without Knowing the Assumptions of EOQ?

Executive Summary

  • EOQ is built on a series of assumptions that are most often unquestioned.
  • We answer the question of what are EOQ assumptions.

Video Introduction: What Are the Assumptions of EOQ?

https://youtu.be/z_q-n_4y9ig

Text Introduction (Skip if You Watched the Video)

EOQ is most often presented as a method of performing supply planning, but it is most common to skip the formula's assumptions. However,...

When Can EOQ Be Implemented?

Executive Summary

  • The question of when can EOQ be implemented is critical to the appropriate planning of products.
  • We cover when to apply EOQ versus forecast based planning.

Video Introduction: When Can EOQ Be Implemented?

https://youtu.be/fton9sCHnjo

Text Introduction (Skip if You Watched the Video)

When can EOQ be implemented is critical to determine when to use a non-forecast based method of supply planning (reorder...

What EOQ Model Types Can Be Used?

Executive Summary

  • The question of what EOQ model types can be used is critical to a deeper understanding of EOQ.
  • We cover multiple EOQ model types.

Video Introduction: What EOQ Model Types Can Be Used?

https://youtu.be/m7-mpo5LuvM

Text Introduction (Skip if You Watched the Video)

There are many different types of EOQ models. A few of the different types of EOQ models include EOQ with...

Where Can EOQ be Implemented?

Executive Summary

  • The question of where can EOQ be implemented is vital to answering how to apply this approach.
  • We cover the background of EOQ.

Video Introduction: Where Can EOQ be Implemented?

https://youtu.be/MtICxTIz5QE

Text Introduction (Skip if You Watched the Video)

The question of where can EOQ be implemented is critical to determine when to use a non-forecast based method of supply planning (reorder...

How to Best Calculate Ordering Cost for EOQ

Executive Summary

  • We cover the Economic Order Quantity formula and the applicability of the Economic Order Quantity and EOQ and perishability and quantity discounts.
  • EOQ can be calculated for both production and procured products.

Introduction: The Origins of the Economic Order Quantity

Economic order quantity (EOQ) is one of the oldest formulas in inventory management, and it preceded the development of ERP...

How to Best Understand the Limitations of the Economic Order Quantity Formula

Executive Summary

  • The Economic Order Quantity (EOQ) usually is not analyzed before using it.
  • We cover the limitations of EOQ.

Video Introduction: Standard EOQ Formula

https://youtu.be/souxwM9f6g4

Text Introduction (Skip if You Watched the Video)

The EOQ formula is used to determine order batching. Order batching is a method of setting the order size such that it is considerate of various costs and considerations. Order size...

How to Best Figure Out Ordering Quantity and Ordering Frequency

Executive Summary

  • Ordering quantities are often the focus of supply chain planning as they directly impact the frequency with which things are done.
  • We cover determining ordering quantities.

Video Introduction: The Safety Stock and Ordering Quantity and Frequency Scenarios

https://youtu.be/XeVuAq1r75g

Text Introduction (Skip if You Watched the Video)

While not often discussed, ordering frequency is linked to all...

Inventory

How to Best Understand PutAway and Goods Receipt

Executive Summary

  • There is a putaway, and goods receipts which involve the confirmed goods received post goods issue and post goods receipt.
  • There is also a putaway process.

Introduction to the Putaway Process

A goods receipt is the process of receiving goods into a facility. A goods receipt is performed both physically and in the computer system. Receiving goods is part of one of the major processes in a warehouse and...

How To Use ABC Inventory Classification

Executive Summary

  • ABC classification or ABC inventory is a way of segmenting inventory so that the product location combinations can be managed.
  • We cover how ABC classification works and how it compares to other comparative methods of segmentation.

Introduction to ABC Classification

ABC classification is probably the most common way of performing the segmentation of an inventory database. In this article, we...

How to Best Understand Inventory Planning

Executive Summary

  • Inventory planning differs from supply chain execution.
  • We cover the major aspects of inventory planning.

Introduction

There are multiple manufacturing environments that a company that sells products falls into. These are called make to stock, make to order, engineered to order, and others. Understanding these and the role of replenishment triggers and inventory is critical to understanding supply chain planning,...

How to Best Understand to Replenish or Replenishment in SAP

Executive Summary

  • Supply chain planning systems are intended to improve replenishment.
  • We cover automatic replenishment system or a continuous replenishment program, retail replenishment, and replenishment triggers.
  • We cover where replenishment is found in SAP.
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Video Introduction: Replenishment as the Objective of Supply Chain Planning

https://youtu.be/Xxoa-jCrEoc

Text Introduction (Skip if You Watched the Video)

Supply chain planning systems are intended to improve replenishment. Replenishment...

How to Best Understand What the SKU Stands For and the SKU Number

Executive Summary

  • The term SKU stands for something specific and is associated with the SKU number.
  • The SKU number tells us important things about the properties of the SKU.

Video Introduction: How to Best Understand What the SKU Stands For and the SKU Number

https://youtu.be/ErLtNSrN4WI

Text Introduction (Skip if You Watched the Video)

SKU stands for "stock keeping unit," a commonly used term in...

Japanese Production Methods

How Good is Taiichi Ohno’s Book on Toyota Production System?

Executive Summary

  • Taiichi Ohno's book on the Toyota Production System is considered the definitive classic of JIT/Lean.
  • The question remains, how well does this supposedly classic book hold up?

Introduction

When you talk to JIT/Lean proponents, they often tell you that to understand the Toyota Production System (TPS), you should go back and read Toyota Production System: Beyond Large-Scale Production by...

How Did Toyota Communicate Material Needs with Suppliers?

Executive Summary

  • Something little-discussed regarding the TPS is how Toyota communicated requirements.
  • We cover what makes the TPS different from the conventional explanation.

Introduction

This article was created to answer a question in the article How to Understand DDMRP as Yet Another Repackaging of JIT and Lean.

Question: On Material Need Communication

I have no issues with Toyota's quality, but its...

How Deloitte Misrepresented Toyota’s Supermarkets to a Clients

Executive Summary

  • How Deloitte's strategy consultants make up false stories about what other companies do.
  • What Lessons can be Taken from This?

How Deloitte Works

This comes out of Deloitte's strategy consulting. Their approach is to make a change, change, and propose enormous cost savings with the result from it. One partner who works out of the Northeast recommends supplier...

Why the Standard Analysis of Japanese Manufacturing is Incomplete

Executive Summary

  • What was missed when people went to try to figure out what the Japanese had done with quality?
  • What role did unionization play in the Japanese success story, and why was it de-emphasized?

Introduction

An entire cottage industry was built around taking manufacturing concepts perfected by the Japanese and applying them to the US. It is effortless to...

How to Best Understand Manufacturing Bottlenecks

Executive Summary

  • We cover the definition of a bottleneck resource, as well as the bottleneck production rate.
  • The concept of bottleneck resources was based upon Eliyahu Goldratt and the book The Goal.
  • Bottleneck resources don’t apply to non-sequential production lines.

Introduction to Bottlenecks

Much of the production planning and scheduling philosophy is based upon managing the bottleneck process, bottleneck resource, or bottleneck...

How to Best Understand Cycle Time Versus Takt Time Versus Lead Time

Executive Summary

  • Cycle time calculation has a definition along with production cycle time and the manufacturing cycle time.
  • There is also something called the cycle rate, which is critical for production planning.
  • We cover how to perform cycle time analysis and calculate cycle time with a cycle time calculator and cycle time formula.

Introduction to Cycle and Takt Time

Cycle time and...

How Statistical Process Control Was Misrepresented to US Audiences

Executive Summary

  • Statistical process control was one leg of the methods applied by Deming and the Toyota Production System.
  • While the other methods have been de-emphasized, statistical process control has been overemphasized, which is for a premeditated reason.

Introduction

Toyota is often put forward as an exemplar of what to follow -- and there is a cottage industry in consulting which often...

MRP

How to Achieve Lean Supply Chain

Executive Summary

  • Many people want to know how to achieve a Lean supply chain.
  • We cover important background on Lean.

Introduction

When people try to find out how to achieve a Lean supply chain, the first thing they run into is a large quantity of false information about the Lean supply chain. The following quotation is a good example.

Our References...

How to Mix Reorder Points and MRP in SAP APO

Executive Summary

  • The question of how to mix reorder points and MRP is what sets part of the planning strategy.
  • We cover when to use reorder points versus MRP planning.

Introduction

When to use Lean versus MRP, the question of when to use Lean versus MRP is critical to determine when to use a non-forecast based method of supply planning (reorder...

When MRP Should be Run?

Executive Summary

  • The question of when MRP should be run has several different answers.
  • We cover several answers to the question of when MRP should be run.

Introduction

The question of when MRP should be run is typically a question about timing. In most companies, MRP is run according to the following schedule.

Our References for This Article

If you want to see our...

When MRP is Applicable or When is MRP Appropriate?

Executive Summary

  • MRP is not always applicable to companies.
  • We cover when MRP applies to situations and why.

Introduction

When MRP is applicable, we occasionally receive a question, and it is a critical question and not asked as often as it should be. It is critical to select to run an MRP system and when there are better alternatives for the...

What is Net Requirements in MRP?

Executive Summary

  • Net requirements calculation is one of the most important functions in MRP.
  • We cover what is net requirements in MRP and how it connects to other things.

Introduction

What are net requirements in MRP is a question we receive occasionally. It is critical to understanding the MRP output.

Our References for This Article

If you want to see our references for...

How MRP Works

Executive Summary

  • How MRP works is a common question, and companies usually invest little in MRP education.
  • We cover how MRP works.

Introduction

The question of how does MRP works is a common question. Companies purchase and implement MRP systems (or MRP from within ERP). Still, as we cover in the article The Weak General Knowledge of MRP Systems, they...

How to Solve MRP Problems

Executive Summary

  • MRP has a well-known list of problems or limitations.
  • In this article, we analyze the problems to see what can be done about them.

Introduction

The list of commonly listed problems with MRP is analyzed in this article and our analysis of how to solve MRP problems.

Our References for This Article

If you want to see our references for this article...

Procurement Software

Evaluating the Information Quality From ERP Vendors and Consulting Firms About Procurement in ERP Functionality

Executive Summary

  • It is amazing to read the information that is provided online about the effectiveness of procurement in ERP functionality. 
  • We dissect information from population websites on the topic. 

Introduction

A number of websites provide misleading information about the procurement functionality in ERP systems. This provides an insight into the false information provided in private by ERP...

Evaluating the Information Quality From ERP Vendors and Consulting Firms About Purchase Module in ERP Functionality

Executive Summary

  • It is amazing to read the information that is provided online about the effectiveness of purchase module in erp functionality. 
  • We dissect information from population websites on the topic. 

Introduction

A number of websites provide misleading information about the procurement functionality in ERP systems. This provides an insight into the false information provided in private by...

Evaluating the Information Quality From ERP Vendors and Consulting Firms About ERP System in Procurement Functionality

Executive Summary

  • It is amazing to read the information that is provided online about the effectiveness of ERP system in procurement functionality. 
  • We dissect information from population websites on the topic. 

Introduction

A number of websites provide misleading information about the procurement functionality in ERP systems. This provides an insight into the false information provided in private by...

Evaluating the Information Quality From ERP Vendors and Consulting Firms About Procurement ERP Software

Executive Summary

  • It is amazing to read the information that is provided online about the effectiveness of procurement ERP software functionality. 
  • We dissect information from population websites on the topic. 

Introduction

A number of websites provide misleading information about the procurement functionality in ERP systems. This provides an insight into the false information provided in private by ERP...

Evaluating the Information Quality From ERP Vendors and Consulting Firms About ERP Software for Procurement

Executive Summary

  • It is amazing to read the information that is provided online about the effectiveness of ERP software for procurement functionality. 
  • We dissect information from population websites on the topic. 

Introduction

A number of websites provide misleading information about the procurement functionality in ERP systems. This provides an insight into the false information provided in private by...

Evaluating the Information Quality From ERP Vendors and Consulting Firms About the Purchasing Module in ERP

Executive Summary

  • It is amazing to read the information that is provided online about the effectiveness of the purchasing module in ERP functionality. 
  • We dissect information from population websites on the topic. 

Introduction

A number of websites provide misleading information about the procurement functionality in ERP systems. This provides an insight into the false information provided in private...

Evaluating the Information Quality From ERP Vendors and Consulting Firms About Oracle ERP Procurement Functionality

Executive Summary

  • It is amazing to read the information that is provided online about the effectiveness of Oracle ERP Procurement functionality. 
  • We dissect information from population websites on the topic. 

Introduction

A number of websites provide misleading information about the procurement functionality in ERP systems. This provides an insight into the false information provided in private by ERP...

Production Planning and Scheduling

Is it True that MRP is a Poor Fit for ETO and Project Based Production Scheduling?

Executive Summary

  • Waterloo Manufacturing Software states that MRP is poorly suited for ETO and project-based production scheduling.
  • We evaluate this claim.

Introduction

The first thing to know is that when searching for the material on ETO production scheduling or project-based production scheduling, the material I found on ETO or project-based production planning was very shallow. Consulting firms commonly create articles...

How to Understand Production Planning with Constraints Versus Capacity Leveling

Executive Summary

  • There are two methods to perform capacity management.
  • One is capacity leveling, and the second is capacity constraining.
  • Capacity leveling is a two-step method, while capacity constraining is a one-step method.

Constraints Versus Capacity Leveling in Production Planning

Capacity levelling uses unconstrained resources, which allow any load to be placed on any resource. Without something to constrain how demand flows...

How to Best Understand Bottling, Contract and Green Packaging

Executive Summary

  • We cover the major packaging areas in this article, which include bottling, contract, and green packaging.

Bottling Plant and Packaging Industry

The bottling Plant and packaging industry are one of the early forms of what is now known as contract packing. The packaging industry is divided into companies that perform their packaging and those that outsource to contract packagers. One...

How to Best Understand Buffer Stock or Buffer Inventory

Executive Summary

  • A buffer stock or buffer inventory is used to account for variability in supply or demand.
  • We cover the definition of buffer stock or buffer inventory as well as a buffer stock calculation.

Video Introduction: Buffer Stock or Buffer Inventory

https://youtu.be/LFVGgbzMt_M

Text Introduction (Skip if You Watched the Video)

Buffer stock or buffer inventory is a common term used in production planning and...

How to Grade Your Production Scheduling System

Executive Summary

  • Companies generally don’t know what their production scheduling systems should be able to do.
  • We explain how to grade your production scheduling system against essential criteria.

Introduction

Production scheduling software will never be considered the sexy category of enterprise software. That may be hard for people who work in this area to read; however, Gartner will never write an...

How to Combine MES and ERP for Production

Executive Summary

  • How ERP requires support from specialized manufacturing systems like the MES application.
  • We cover MES ERP or ERP MES for complete production management.

Introduction

For decades ERP companies, along with most of the major consulting companies, have overestimated to their customers how much ERP software can be used for. Several reasons for this are too involved...

What Production Planning Does with Forecast Error

Executive Summary

  • Production planning must absorb the forecast error created by the forecasting system. This has important implications for stock and safety stock management.
  • This brings up the topic of both make to stock versus assembles to order and estimating the costs of forecast error.

An Introduction to Forecast Error Usage

When a company has a low forecast error in a...

Reorder Point

When to Use Lean or Reorder Point Planning Versus MRP

Executive Summary

  • The question of when to use Lean versus MRP is what sets part of the planning strategy.
  • We cover when to use reorder points versus MRP planning.

Video Introduction: When to Use Lean or Reorder Point Planning Versus MRP

https://youtu.be/_7CKeVHY_zs

Text Introduction (Skip if You Watched the Video)

The question of when to use Lean versus MRP is critical to determine when...

When to Use Reorder Point Planning

Executive Summary

  • The question of when to use reorder point planning relates to several important factors.
  • We cover when to use reorder points versus forecast based planning.

Video Introduction: When to Use Reorder Point Planning

https://youtu.be/_dICKGCHxEw

Text Introduction (Skip if You Watched the Video)

When determining when to use reorder point planning, it is critical to determine when to use a non-forecast based method...

How to Implement Lean Supply Chain

Executive Summary

  • Many people want to know how to implement Lean supply chain approaches.
  • We cover important background on Lean.

Video Introduction: How to Implement Lean Supply Chain

https://youtu.be/Ybg-rGC7Wog

Text Introduction (Skip if You Watched the Video)

When people try to find out how to implement Lean supply chain, the first thing they run into is a large quantity of false information about the...

What is Lean Supply Chain Definition?

Executive Summary

  • A lean supply chain is often proposed to improve outcomes, but what is it actually?
  • We provide our definition of Lean supply chain.

Introduction

There is an enormous amount of false information provided about what is Lean supply chain definition.

See our references for this article and related articles at this link.

The following quotation is a good example.
Top...

How Does Reorder Point Work in SAP?

Executive Summary

  • The question of how does reorder point work in SAP is important to using it properly.
  • We cover how does reorder point work in SAP in both ERP and APO.

Introduction

Reorder points have a poor reputation. Many people that critique them do so on the basis that they do not "look forward." Reorder points are underused. However, they are...

The Definition of Reorder Point

Executive Summary

  • Reorder points are one of the oldest methods of supply planning. We cover the definition of reorder point as well as their origin.

Video Introduction: The Definition of Reorder Point

https://youtu.be/Dg6vL3y22yM

Text Introduction (Skip if You Watched the Video)

The definition of a reorder point is necessary to understand a major method of supply planning. Reorder point was the first of the supply...

How to Best Understand Reorder Point Versus MRP

Executive Summary

  • Reorder points have a poor reputation, and they are underused, but they are appropriate under certain circumstances.
  • It is critical to understand how to reorder point contrasts with MRP or a non-forecast based planning versus forecast-based planning.

Video Introduction: Understanding Reorder Point Versus MRP

https://youtu.be/9UdW54UX6p0

Text Introduction (Skip if You Watched the Video)

MRP is a forecast based planning method. Reorder points...

Safety Stock

How is DDMRP Buffer Stock Different from Safety Stock?

Executive Summary

  • The Demand Driven Institute (DDI) claims that buffers stocks are not related to safety stock and accuses those that make the correlation as not understanding DDMRP.
  • We evaluate if the DDI correct in this assertion.

Introduction

One of the core areas of DDMRP is how much it relies on setting buffer stocks. As we cover in the article <a...

The Problem with the Location Isolation of the Calculation of the Dynamic Safety Stock Formula

Executive Summary

  • The lack of consideration for relative inventory with the safety stock formula.
  • How inventory parameters should be calculated.
  • I am getting to the real question of safety stock.
  • Infinite planning (The norm) versus constrained planning.

Introduction

In this article, we will cover a significant limitation of how safety stock is calculated. This limitation is virtually omnipresent in supply chain planning...

Should Non Finished Goods Safety Stock be Carried?

Executive Summary

  • Safety stock is how a stock is kept to account for variability.
  • George Plossl discussed how safety stock ruins the credibility of MRP and whether safety stock should be applied to raw materials and components. Safety stock changes for make to stock versus assemble to order.

Introduction to Safety Stock

Safety stock is the quantity of stock carried to manage...

How to Use the Internet Based Reverse Dynamic Safety Stock Calculator

Executive Summary

  • This is the reverse dynamic safety stock calculator.
  • This puts a slight twist on dynamic safety stock.

Introduction to the Reverse Safety Stock Calculator

This dynamic safety stock calculator is designed to do the following:
  • Calculate safety stock.
  • Explain the logic behind the mathematics of the dynamic safety stock calculator.
See our references for this article and related articles at this...

How to Use the Brightwork Internet Based Dynamic Safety Stock Calculation

Executive Summary

  • This article introduces the dynamic safety stock calculation and reviews the current safety stock calculation explanations.
  • There is a general preference for talking about the standard dynamic safety stock calculation rather than diving into its math.

Introduction to Calculating Safety Stock

This dynamic safety stock calculation article has two purposes:
  • To calculate safety stock.
  • To explain the logic behind the mathematics...

How to Understand The Safety Stock Calculation in SAP SNP

Executive Summary

  • Safety stock calculated can be performed in several ways in SAP SNP.
  • We cover how safety stock methods compare in SNP versus SAP ERP and the common limitations of SAP's safety stock.

Video Introduction: How Safety Stock Calculation Works in SAP

https://youtu.be/lXoYJI68P5U

Text Introduction (Skip if You Watched the Video)

The safety stock methods is one of the...

Service Parts Planning

How to Understand the Availability Maximization Spare Parts Management Method

Executive Summary

  • There is basic parts selection logic of the availability maximizer, which includes the cost of the part.
  • Service parts management must be able to deal with zero demand situations.

Introduction

This approach and program were written expressly for a low demand environment at the dealer level. Most independent demand inventory algorithms ( EOQ, POQ, Silver-Meal, Parts-Period Balancing, etc.) rely...

How MCA Solutions Should be Remembered

Executive Summary

  • MCA has been acquired.
  • What will some of the critical MCA solutions contribute to supply chain planning software, and what will happen to the MCA product?

Introduction

Servigistics recently acquired MCA Solutions. This is a significant development as the two companies were the top two software vendors in the service parts planning space. Some articles will undoubtedly cover the...

How to Use Order Fill Rate Versus Backorder as a Service Measurement

Executive Summary

  • One can use backorders or the order fill rate.
  • We compare a recent paper and its use of backorder service measurement and why backorder is superior.

Introduction

The order fill rate is the most popular service level measurement method in supply chain management. However, there is another service level measurement based upon backorders. In this article, you...

How to Best Understand a Heuristic Algorithm for Service Parts

Executive Summary

  • What is a heuristic algorithm, and how can a heuristic be compared against an algorithm, and what is a meta-heuristic?

Introduction to Heuristic Algorithms

This post documents an email discussion between myself and Wayne Fu regarding the heuristic algorithm.

Question for Wayne Fu

"What is a heuristic based optimization algorithm, or...

Why SAP SPP Continues to Have Implementation Problems

Executive Summary

  • SAP created a partnership with MCA that was designed to get into the service parts planning market.
  • We cover the outcome of this partnership.

Introduction

The pathway is not clearing for SPP as the successes have been few and far between. However, there is a solution.

Bringing Up SAP SPP in the Market

SPP has been a long haul for SAP. First...

How to Understand Why Auto Parts Distribution is So Inefficient

Executive Summary

  • How the aftermarket car parts market in the US works.
  • The major problems with automotive dealer networks for aftermarket car parts.

Introduction

In our previous post, we discussed the problems with how dealers dominate automotive service parts websites. We also explained how this is inefficient and why these websites should be...

Is SAP PLM for Real?

Executive Summary

  • How SAP has been busy pushing a solution that does not exist as a distinct product.
  • An analysis of SAP PLM.

Pushing SAP PLM

For some time, SAP has been promoting its product lifecycle management (PLM) solution. PLM is a problematic term that more than a few companies have had a problem defining. [sc name="sap-top-of-page" ] [sc name="ending-spacer" ][/sc]

Analyzing SAP PLM

When...

Six Sigma

Why Don’t Six Sigma Devotees Want Their Claims Of Quality Improvement Checked?

Executive Summary

  • Six Sigma followers are very assertive in their claims of the effectiveness of Six Sigma on manufacturing quality.
  • They, however, become very defensive when we check for evidence.

Introduction

When we have brought up the topic of how we can't find evidence that Six Sigma leads to higher quality outcomes, we...

An Inspirational Story of Six Sigma Training

Executive Summary

  • Six Sigma training is so important -- to ripping off companies following an evidence-free approach to quality management.
  • This tells one person's story of how they became a Six Sigma guru.

Introduction

I just had by Six Sigma training called into question. And I want anyone reading this to know, and I am...

Six Sigma Was Not Based Upon the Quality Work of Deming

Executive Summary

  • Six Sigma proponents and many articles have claimed that Six Sigma or "Japan Six Sigma" was based upon Deming.
  • This is untrue, and we cover why this claim is false.

Introduction

Six Sigma proponents have, for decades, proposed that Six Sigma or "Japan Six Sigma" is based upon Japanese quality methods.

Quarts on the Foundation...

Jack Welsh Did Not Understand the Math of Six Sigma

Executive Summary

  • Jack Welsh pushed Six Sigma aggressively both at GE and outside of GE.
  • Unknown to most was that Jack Welsh did not understand the statistics of Six Sigma.

Introduction

This story seems to have been hidden, even though it is published in a book by Jack Welsh and something he readily admitted, but it...

Why Did No One Notice that GE Was Not Known For High Quality Manufacturing?

Executive Summary

  • With the decline of GE, the question is how Six Sigma proponents react.
  • One question that surfaces is why if GE was so quality-focused, was GE not known for high-quality items?

Introduction

There was an enormous amount of build-up around how GE used Six Sigma to improves its businesses. However, as soon as one...

How Will GE’s Decline Impact the Cult of Six Sigma?

Executive Summary

  • GE is such a decline that it calls into question why GE and Jack Welch scammed Wall Street.
  • GE was a major proponent of Six Sigma, should it decline also.

Introduction

Currently, something is essential and exciting is happening, the company GE is in a severe nosedive. Curiously, GE...

Six Sigma is for Losers, Seven Sigma Sweeping the Nation!

Executive Summary

  • Six Sigma is illogical as it does not provide evidence for benefits provided from Six Sigma.
  • We cover the insanity of Six Sigma.

This poorly educated man spends lots of effort becoming certified in Six Sigma, only to find out that the new action is with Seven Sigma. This is why we made him stand in the...

Supply Planning

The Brightwork Forecastable Non Forecastable Formula for Supply Planning

Executive Summary

  • Whether an item can be forecasted at a reasonable forecast accuracy is called the forecastastability of the item.
  • We cover the forecastability formula that we created.

The Forecastable or Unforecastable Formula

The formula I have developed is listed below. It certainly is not be used in a pure form for every company and should be adjusted per company. However,...

How to Understand Transportation Lane Configuration in SAP SNP Part 2

Executive Summary

  • This is part two of our article on transportation lane configuration.

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Introduction: How Transporation Lanes are Setup in APO

Transportation Lanes connect the nodes in the network. Transportation lanes are a complex and multifaceted master data object in SAP APO with enormous settings. You will learn about the many settings of Transportation Lane. In <a href="https://www.brightworkresearch.com/transportation-lane-settings/"...

How Likely and Cost Effective is it to Reduce Lead Time?

Executive Summary

  • Companies are often told they can relatively easily reduce lead time.
  • We cover how likely this type of program will be successful.

Introduction: Can You Really Reduce Lead Time?

Lead times are one of the major timing elements within the overall subject of supply chain planning. It is often proposed by Lean consultants that one can readily reduce...

How to Model Inventory Level Changes from Reduced Stock Locations

Executive Summary

  • How can one model the effect on inventory from a change in the stocked locations?
  • We cover two approaches.

Introduction

We received this question, so we thought we would place the answer and the question into an article.

Question #1

Is there an industry standard way to think about the number of source points impact on Case Fill Rate?...

Questions Around S&OP, MPS and Capacity Planning

Executive Summary

  • The following are questions and answers around S&OP.
  • These questions highlight the confusion around these planning topics.

Introduction

These questions were asked and answered on the topic of S&OP.

Question #1

I am not understanding how S&OP is technically done (at the supply side). There are so far three different approaches I found. But I am not sure...

How to Create a Functional Relationship with Service Levels

Executive Summary

  • Service levels are terribly managed within companies.
  • This is primarily because sales and marketing set service levels without understanding the implication on constraints and supply chain costs.

Introduction

The choice of service levels sets priorities for how much of each product to stock at each specific location (a warehouse or other internal stock location), which we’ll call the product/location combination. Placing...

Why Magical Ideas Are More Appealing than Standard Supply Planning

Executive Summary

  • Magical thinking permeates supply planning over implementing the fundamentals.
  • We explain why this is the case.

Introduction to Magical Ideas in Supply Planning

Several magical ideas are popular currently in supply chain management. The concept of Lean -- which has been popular for some time, and demand sensing, which has recently become quite popular. Both ideas are primarily attractive to executives...

Trucking and Transportation

The Real Story on the Delusion of Self Driving Trucks

Executive Summary

  • The trucking industry has gotten behind self-driving trucks, in part to distract from how bad truck driving jobs have become since trucking deregulation.

Introduction

The trucking industry has seen a continual decline in standards since deregulation.

See Our References

Our references for this and other related articles can be found at this link.

The Decline of Standards in...

The Real Story on the How US Trucking Deregulation Was Promoted

Executive Summary

  • Trucking has seen a continual degradation in standards since deregulation in the 1980s.
  • The economists that advocated for deregulation were never held accountable.

Introduction

The trucking industry has seen a continual decline in standards since deregulation. This decline has not been appropriately assigned to deregulation.

See Our References

Our references for this and other related articles can be found at...

The Real Story on How Trucking Companies Control Drivers With Training Costs

Executive Summary

  • The trucking industry has a strategy of making drivers work bad trucking jobs by establishing timelines until training does not have to be paid back.

Introduction

As part of a long term strategy to keep the pay of drivers down, the trucking industry has developed a highly cynical approach for keeping disgruntled drivers continuing to drive for them after...

The Real Story on How Truck Drivers are Tricked into Becoming Owner Operators

Executive Summary

  • The trucking industry has a strategy of funneling disgruntled truck drivers into becoming owner-operators.
  • We cover the lies the trucking industry tells.

Introduction

As part of a long term strategy to keep the pay of drivers down, the trucking industry has developed a highly cynical approach for keeping disgruntled drivers in the industry by giving them the false...

The Real Story on the Reduced Standards in Trucking

Executive Summary

  • Trucking has seen a continual degradation in standards since deregulation in the 1980s.

Introduction

The trucking industry has seen a continual decline in standards since deregulation.

See Our References

Our references for this and other related articles can be found at this link.

The Decline of Standards in Trucking

One outcome of led to the general degradation and <span...

The Real Story on the Environmental Behavior of Transportation and Logistics

Executive Summary

  • Due to the censored nature of the coverage of transportation and logistics, a false impression has been given of the behavior of this industry regarding the environment.

Introduction

While as with all industries, the transportation and logistics industry poses as one thing, the reality of transportation and logistics is that it is very is or has been done...

How to Best Understand Your Auto Transport Options

Executive Summary

  • An Introduction to Auto Transport
  • Car Carrier Trailer, Car Hauler Trailers, Car Trailer or Car Hauling Trailer
  • The Enclosed Car Trailer or Enclosed Car Hauler
  • Autorack for Car Transport by Train
  • Car Transport Companies and Other Large Items
  • Car Transport Companies, Cars Delivery, and Offerings

Introduction

Auto trucking and trucking services are broken into several divisions or dimensions. One is...