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.
BUSINESS TO BUSINESS: APPLYING e-COMMERCE
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.
BEGINNING THE PARTNERSHIP
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.