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Comparing MRP Against Its 3C Challenger

Even though no significant proof of the cost/benefits of MRP were ever offered when we embraced it in the 70's, the new alternative's claimed advantages are rigorously chal­lenged by MRP practitioners and often disqualified as looking good "in theory" but doubtful as to working well "in practice."

In view of these circumstances, it became necessary to find a way to provide reasonable proof and understanding of the significant positive impact that 3C could have for businesses.

Having as a primary objective the achievement of excel­lence for a real factory, the authors launched several 3C-based Logistics pilots during 1991 and 1992. To date we count 3 years of successful operations of a factory sup­ported solely and completely by 3C.

A secondary objective of the authors has been to demostrate and provide proof of the power of 3C for any other business environments. GAGE has been used to perform rigorous scientific studies based on simulation modelling.

GAGE is a MM generic simulation model that was created with the purpose of obtaining the capability of experiment­ing with variations of MM rules while measuring the GLOBAL impact that these variations might have on the system performance metrics.

GAGE calculates the values of the most relevant business performance metrics, varying only the way the MM func­tion of the business is executed, and keeping "everything-else equal."

As business transactions occur through time, GAGE, in parallel, simulates the appropriate events as defined un­der two radically different methods: the MRP (Material Requirements Planning) method and the newer 3C (Capac­ity, Commonality and Consumption) methodology.

GAGE was also designated to specifically search through the entire Bill of Material (BOM) structure of the business looking for any presence of Commonality and report a quantitative evaluation of the findings.

Variations between the sales and manufacturing plan and the actual customer orders received and actual production mix achieved, are considered the major evil and main cause of poor performance. Consequently, GAGE allows MM simulations submitted to various degrees of stochasticity.

Once the simulation time has been reached, GAGE pre­pares various summary and (optionally) detailed reports that show the values of the business performance metrics attained through the application of the different action rules of the two different MM approaches.

A number of MRP simulators have appeared in the market recently. These tools allow the user to run "what-if" sce­narios aimed at improving "delivery performance" by allowing a certain level of "over-planning." An important purpose of these simulators has also been to provide the capability of measuring the potential negative impact that inventory reductions could have on "customer service."

The idea is to have a way of knowing and understanding the "trade-offs" associated with the different MM alternative decisions.
As far as we know, however, all these packages only emulate and simulate MRP-based systems. This brings the MM professionals back to what we had been doing for the last 10 years, that is, trying to improve the business performance constrained by a method whose basic prin­ciples are no longer appropriate.

GAGE today is the only "what-if" MM tool that simulates both an orthodox MRP and 3C (an MRP-alternative). This characteristics provides valuable benchmark information that can truly provide insight into activities that have the potential of generating real "quantum leap" business per­formance improvements. GAGE is also the only tool that measures the COMMONALITY index for the business products being simulated.

To be Continued