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An MRP Change Initiative
Part 2 of 4

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Principles and

The Need of a Customer Driven Logistics

MRP has been the method of choice to support the MM business function for more than a decade now. All these years of MRP usage, in a way, have instituted a distinctive and specific cultural environment that spreads beyond the individual boundaries of companies.

Improvements to the MM function throughout this time have been primarily "modifications" and/or "enhancements" with no significant deviation from any of the basic initial concepts upon which MRP was created.

Despite the fact that products, customer expectations, competition and general market conditions of the 90's are significantly different from those in place when MRP was created, many companies and consulting firms are still desperately trying and promising to improve the execution of the existing MM systems.
These "improvements projects" can rarely predict, far less guarantee, the benefits to be drawn from the efforts. Numerous articles have recently appeared loudly voicing that a radical and fundamental change is needed. The "new demands of the 90's have been repeatedly sited, but no clarification or specifics have been provided as to what the change should be.

The western business world has found itself preparing for the 21st century with a "fantastically well rooted MRP-culture" which is at the stage where huge investments are required to draw only marginal improvements.

At most businesses, very powerful MRP/MM organizations have also been created during this time. These organiza­tions, in a way, run the company and unfortunately in many cases, their members are very reluctant to try, much less change to anything that deviates in any way from the basic fundamentals that we all worked hard to implement for the last 20 years.

The lack of practical and real-experience-data, as well as, the total absence of any meaningful non-MRP success story, is mainly due to a "strong resistance to change", and also to the fact that MM professionals truthfully, in gen­eral, simply just do not have the available time to try anything different.

The typically extremely large MRP supporting staff is normally and genuinely overwhelmed with mountains of urgent and "always-critical" tasks. A constructive exami­nation of these tasks, however, can clearly and rapidly reveal: first, that these activities do not add any real value to the customer, and second, that they all are mainly created and routinely generated by the now huge discrep­ancies between the MRP basic and outdated principals and the market characteristics and business conditions of today.

The facts just discussed, could and will be both the reason for the failure of many businesses in the 90's, and also the reason for success for those who make "the drastic change" to something more customer focused. These companies will benefit from an earlier start during these highly competi­tive times.
There is no doubt that MRP will give a strong and long fight against any and all challengers. This highly predictable event could, in fact, be one of the most important strategic advantages against competitors in the remaining part of the 90's.

3C was launched in late 1993 as new way of running the MM functions of the 90's. 3C is new because it is the first "full-stream" Logistics Flow completely and solely driven by the (real-final) Customers of the business.
3C focuses on the complete process, not on the functions like MRP II.

What Is 3C?

3C was first presented to the public in 1993 (1). The complete logic of the theory was documented in 1991 (2)(3) and some of the basic concepts during 1990 (4).
3C supports all the MM objectives with a strong focus on Customer satisfaction and Cost-Control. These objectives are accomplished through the installation and use of a chain of physical stock control points, production lines, transportation and distribution providing the link between our customers and our suppliers. 3C guarantees the service of materials at all points of the chain at the minimum cost.

All MM actions under a 3C controlled environment are unquestionably linked to or based upon one of the following 3 concepts: the maximum selling CAPACITY of the busi­ness, the maximum exploitation of the COMMONALITY content present in the end-products being sold by the business (the commonality among the subassemblies that make-up the end-products is also exploited) and lastly, the self-control of the system through the CONSUMPTION activities triggered by the paying customer and taking place throughout the entire Logistics flow.

Consumption occurs when materials or subassemblies are used, or when units of finished goods are sold. Under a 3C environment, these events "automatically" and "almost instantly" trigger "replenishment messages" mainly in the form of "prenegotiated" blank purchasing orders to suppliers or physical "kanban cards" to the "top-performing" and "ex­tremely fast" manufacturing lines. These cards represent the only mechanism used to start manufacturing actions, thereby eliminating the need for the expensive "production meetings" today practiced routinely in many businesses.

The new focus introduced by the three characteristics of 3C produces the elimination of the main root causes of "MATE­RIAL SHORTAGES" and significantly improves "Customer Service Performance."

To be Continued

For balance of this article, click on the below link:

Lean Manufacturing Articles and go to Series 01


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