Demand Driven MRP consists of five phases performed in the following sequential order. The first two phases establish your overall planning strategy and the remaining phases execute the strategy. MRP phases are summarized below and are covered in full detail over the next five chapters.
Planning Phases
These first two phases establish your overall planning strategy for time to shipment and inventory.
1. Plan Times to Shipment
Standard lead times and order policies are assigned to lower level items and combine to calculate top level item Time to Shipment targets for sales order required dates. A standard Lead Days is planned for purchased items and a standard Job Days is planned for manufactured items. Items are assigned a To Order or Demand Driven stocking order policy to determine lead time contribution. Item settings are refined as needed until Time to Shipment targets reflect your marketing objectives.
2. Plan Strategic Inventory
“Strategic inventory” is a plan for reducing times to shipment using the least amount of inventory to do so. You decide which items are to be made or purchased Demand Driven and against those items you enter a Monthly Potential Demand rate and a Supply Days interval target to drive stock replenishment.
Execution Phases
These three phases execute that planning strategy that was established by the first two phases.
3. Generate Demand Driven Jobs and POs
Time to Shipment targets generate sales order line item Required Dates to provide the demand that drives daily MRP generation. Jobs and POs are generated and converted level by level in response to current net demand within item planning periods relative to Reorder Points and Min Order quantities. Job and PO dates are derived and aligned from standard lead times within a coordinated schedule.
4. Release Jobs with Allocated Materials
Open purchase orders are tracked and expedited to ensure that jobs get released on time. Jobs are released to live production per planned start dates when allocated materials become available.
5. Run Work Centers by Job Priority
Each released job is given a calculated priority based on remaining production time relative to the job required date. Within work center queues, sequences are run in job priority order so that jobs trending behind schedule get priority over jobs trending ahead of schedule, which optimizes production flow and boosts shop throughput. Jobs with unusually large quantities get higher priority and thus experience less waiting time, which enables larger jobs to meet their target required dates.
