Many businesses have to deal with the problem of buying product in one unit and selling it in another. It’s one of those items of ERP functionality that you don’t think of – unless you are in a business where it’s a necessity.
Many organizations, regardless of industry sector or geographical location, find themselves in a comfort zone when it comes to managing their inventory. A high percentage continue to use Material Requirements Planning (MRP), and some even use spreadsheets for their planning, despite having expensive systems in place. The problem is that MRP was developed at a time when businesses could use static demand forecasts over an extended time period to allow for long production runs. In the modern world, long runs are rare and demand can be highly variable.
A few months back, I wrote a blog entry comparing the uncanny similarities between building your own furniture and ERP selection. Reflecting back on that post, I decided to brainstorm additional daily/real-life scenarios that can also be compared to daily struggles that manufacturers and distributors face within their own businesses. What was the next issue I decided to address? Inventory management and, well…baking a pumpkin pie.
I have always loved food with the passion it deserves. Of course this has at times resulted in an increased waistline. A little over a year ago I decided to do something about it and take back some control. I soon discovered that all the energy I once dedicated to over-eating was now directed at over-analyzing everything I consumed – in detail. One thing became clear; I had always been ignorant of what I was eating, and in such vast unhealthy quantities.
For several decades, material requirements planning (MRP) has been the standard method for manufacturing and inventory planning. But in recent years it has come under criticism, and any manufacturing shops have adopted other approaches, such as kanban or lean manufacturing.