There is a great amount of emphasis placed on MRP (Material Requirements Planning) and DRP (Distribution Resource Planning) in today’s ever-growing global supply chain world. However, there are problems with implementing these solutions without careful thought and accurate inventory data.
So let’s compare this with a subject we can all relate to, Grocery Shopping.
When I was in my twenties and did not have extra money to spare, I was very aware of what was in my refrigerator and cabinet. Basically not much was in there. Therefore, with a small budget and very visible inventory I never purchased what was not going to be used. However, as time passed and various scenarios changed (getting married and adopting a child) the contents in our refrigerator and cabinets grew. Hence, mistakes were made.
The mistakes included:
1.) Allowing Inventory to spoil therefore costing extra money and waste.
2.) Purchasing duplicate products unnecessarily.
3.) Forgetting to purchase products that were needed.
So finally, I got wise and decided to better store the groceries, canned goods and fresh produce in a very visible manner. This meant reorganizing all storage places, lining up like products and counting them. It also included moving older products up front for better visibility and usage. I developed certain tricks, such as putting grocery receipts on the refrigerator with a magnet for a quick scan of what was on hand and checking off items used. Additionally, and gosh I never was a list person, I made a list of what was needed after determining what the meal plans were, what the recipes required and what we did not have on hand. Of course this list was made before going to the grocery store and spending money.
So how does this relate to inventory control? It is very simple. The largest problems with MRP and DRP are created by an inaccurate basis. If your company does not know exactly how much product you have in stock even the most intelligent software and planners will fail. This is why accurate inventory and a true barcode and WMS system are imperative to growing companies. When your inventory reaches a point that it cannot be easily counted and tracked manually you will have issues. Those issues will hinder production, cash flow and customer service. Now, to complicate the matter even more; it’s pretty easy to run to the grocery store if you forgot an item (still wastes time and gas). However, depending upon your business, it may take quite a bit of time to bring in products from overseas or even order them domestically (lead time).
So the moral to the story is don’t even think an expensive MRP or DRP solution is going to solve your inventory problems if your data is incorrect to begin with. That is precisely why a barcoding and WMS system should be your first consideration before anything else.