Do not co-opt item order policies for cross-purposes
Do not co-opt item order policies for cross-purposes where you sometimes plan an item to order and sometimes you plan it demand driven. The only proper use of item order policies is for each item to always be planned to order or to always be planned for demand driven. Consistent and proper use of item order policies is essential for the following reasons:
•Consistent dates are essential to avoid conflicting priorities among multiple sales orders for the same item.
•Consistent dates are essential to provide multi-level date alignment within MRP generation.
•Using consistent order policies avoids introducing anomalies between planned inventory and stock on hand. When an item is planned for stock, the system expects stock to be available. When an item is planned to order, the system does not expect any stock to be on hand.
•Using consistent order policies avoids introducing distortions into M item Lead Days allocations. Items with To Order policies always contribute to M item Lead Days allocations, regardless when stock on hand exists.
Do not use manual reorder points
Strategic inventory cannot be achieved using arbitrary Manual Reorder Point order policies, for the following reasons:
•With arbitrary reorder points there is no ability to use Supply Days targets, which are essential for keeping inventory to a minimum.
•With arbitrary reorder points there is no calculation basis for establishing the Reorder Point and Min Order settings.
•With arbitrary reorder points there is no dynamic updating of Reorder Point and Min Order values to reflect changes in demand or replenish time variables.
