Distribution Scheduling

The cases above reflect the efforts of some companies to manage around the shortcomings of their DRP systems. In fact, that term is overly euphemistic; these companies are actually managing despite those systems. Meanwhile, a few leading companies are looking past the problem of reconciling their DRP and finite capacity production scheduling systems, toward replacing DRP with a more robust approach to distribution management.

The new approach, master distribution scheduling, is the out­growth of two new realities: the heightened need for better distribution management, and the recent advances in information technology that are making it possible.

Certainly, today's marketplace places more stringent demands than ever on manufacturers for service excellence at competitive prices. And meeting these demands profitably requires closer control of operating costs, and more intelligent balancing of complex trade-offs. As these challenges continue to mount, the limitations of DRP are becoming less and less tolerable. Compa­nies at the operational cutting edge realize they need a replacement for DRP that can:

• Implement pull strategies, push strategies, or a combination of both.

• Respond to a variety of demand specifications according to demand priority.

• Allocate short supplies globally, according to demand priority.

• Position unwanted supplies until they are needed, so as to minimize future transshipments.

• Determine precisely when and how stock rebalancing should occur.

• Override customary sources of supply, as required, to meet pressing demands.

• Create schedules that adhere to resource restrictions, such as storage and handling capacity limitations.

• Provide sophisticated inventory management by determining how to maintain safety stock and target inventory levels.

• Respond automatically to backorders, according to demand priority and age of backorder.

• Support problem description changes and iv/!a?-j/evaluations.

Needs such as these are more pressing now than in the past, but certainly are not new; the same basic wish list might have been constructed by a visionary distribution planner a decade ago. What is new, however, is the decision-support technology capable of attacking these issues. Only very recently has the power of desktop computing reached the point—and the cost of it fallen to the point—that it is viable to subject such complex problems to mathematical optimization techniques.

The companies who are in the vanguard of master distribution scheduling are implementing such techniques now, and are suc­ceeding in obsoleting traditional distribution resource planning. Their experience is summarized in Table 1, which compares the capabilities of DRP systems with those of master distribution scheduling.

The intense difficulty of designing and implementing operational innovations like master distribution scheduling makes seasoned managers refer to it as the "bleeding edge." The joke can seem almost literally true when information technology totally reengineers the way in which a process is performed, and change reverberates through organizations, job responsibilities, and pol­icies and procedures.

The leaders who are implementing master distribution scheduling now are managing change intelligently, and using the capability to empower their workforce—not replace it. By automating many of the deployment and distribution scheduling details, the new systems allow distribution decision-makers to do more of what they do best—higher level planning and management. The com­pany sees an improvement in white-collar productivity, and its managers find their work more engaging and satisfying.

At the same time, the benefits these companies are realizing are offsetting many times over the investment in implementation. In every case, higher and more consistent customer service levels have been attained, at the same time that operating costs have been cut dramatically. The bottom line is that, compared to their competition, these companies do more with less. They achieve

sophisticated customer response with lean inventories and mini­mal expenditures for transportation, storage, and handling.

Finally, these companies are probably not in danger of having a "fleeting edge"; the advantage they hold should be sustainable for more than the short term. Predictably, their competitors are learning about the capability and can be expected to follow suit. But the complexity of the problems involved and the sophistication of the information technology required will constitute a major stumbling block for most.

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