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Distribution Requirements Planning

Distribution requirements planning (DRP) can also be used across company boundaries to facilitate customer/ supplier relationships. This time-phased logistics plan­ning system uses the same logic as MRP, and can be used to plan the replenishment of inventories of immediate customers, distributors, etc. It uses similar techniques to schedule sharing in that it allows a company to sub­stitute valid information for inventory. This informa­tion can be shared manually, or electronically input into the supplier's planning system. The need for the non-value-added activity known as forecasting can be re­duced, and even eliminated, as visibility is gained into customers' true requirements.

The benefits of each of these methods include

      Improved cash flow and increased profits

      Improved customer/supplier relationships

      Elimination of data redundancy and paper commu­

      Quicker throughput and reduction of control points

      More dynamic production scheduling

      Elimination of excess inventory at both sites, with­
out a reduction in service

      Reduction in lead times from days to hours

      Improved credibility as a result of increased delivery

      Effective long-range material and capacity planning
due to shared information.

Customer Relationship Management (CRM)

This new suite of applications allows for a personalized customer experience. Customer activities are tracked, and guidance provided about the company, products, and services. Immediate response is provided to produc­tion information requests as well as product availabil­ity information and delivery promises. Customers are allowed to configure, price, place, track, and revise or­ders electronically.


To survive in the e-world that is upon us, organiza­tions must be flexible to support ever-changing mar­ket needs. This will require an industrial-strength integration framework to support e-business models. These models necessitate incredible responsiveness, focus on the customer, and provide instant informa­tion gratification.


The Internet is redefining the traditional supply chain. ERP systems are becoming Web-enabled to sup­port closer coordination along the supply chain, even­tually creating a virtual manufacturing enterprise. Survivors of the e-business meteor will connect and be adaptable enough to satisfy their customers in near zero time, such as reflected in the new model in Figure S.


In the e-business model, customer orders are en­tered on Web pages, with immediate responses re­ceived with confirmation of ship dates. Online inquiries are available on status, inventory, revisions, specifications, and tracking of orders. Suppliers are able to download orders and sort by techniques such as group technology for efficient scheduling. The Web site becomes the sales office, showroom, supply chain hub, headquarters lobby, and corporate image. Agile companies will form virtual corporations with real-time information flows.



In order for any of the discussed methods to be effec­tive, relationships must be established between the customer and supplier. These types of relationships are dedicated to providing quality material, continu­ous cost reduction, and an overall commitment to service. The adversarial relationships between unrea­sonable customers and unresponsive suppliers must be changed. Suppliers are treated as extensions of cus­tomers' facilities, and must begin to see themselves in that manner. Production lines are tied together to form a continuous flow supply chain, where all par­ties are working together as partners to compete for the end user.


In this type of relationship, both the customer and supplier have a need for the other. Each has certain re­sponsibilities, including providing accurate and timely information, a willingness to share that information, and individual activities at each end of the supply chain to ensure the success of the partnership. An organizational structure that facilitates the management of these activi­ties is also critical, as well as a culture that fosters quality and continuous improvement. New levels of trust and

respect are reached, as companies open up to supply chain partners, sharing information such as demand patterns, inventor)' levels, and production plans. People become important in understanding the need for valid require­ments, and keeping the lines of communication open.


Master planning in the millennium is no longer an iso­lated activity. Applying customer-driven attitudes and techniques allows organizations to achieve maximum efficiency in the scheduling process, while delivering customer delight at the same time. The model of inte­gration is a proven method for realizing this objective, while providing the adaptability required for the future. Organizations today must face the fact that integra­tion of the master planning process is a prerequisite for doing business, especially e-business. The question is not if to integrate, but how quickly. Integrating ERP with the supply chain is only one method of seamlessly fus­ing ERP with a decision support tool for the common good of everyone along the supply chain. Although there are many ways to integrate systems, the model that is most compelling for the age of e-business is one based on business processes. Modeling your integration plan on business processes is a strategic imperative, not be­cause your business processes will never change, but because they will change, inevitably and continuously.

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

Lean Manufacturing Articles and click on Series 12


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