Manufacturing is essentially the process of transforming raw materials into finished products through a series of steps. This makes the efficient management of raw materials inventory truly foundational to the overall success of any manufacturer.
Raw materials inventory is typically managed through Material Requirements Planning (MRP), which encompasses the production planning, scheduling, and inventory control systems used to manage manufacturing processes. MRPs usually work backwards (from a finished goods production plan) to develop requirements for components and raw materials.
Traditional Approach & Challenges
Running an MRP traditionally requires multiple sources of input including the Bill of Materials (BoM), inventory data, historical order data, inventory optimization techniques (typically equation-driven) and separately generated forecasts.
A key challenge for any planner frequently running an MRP platform is generating accurate forecasts, which are needed for the system to meet its set intended goals.
Additionally, MRP challenges include:
- Labor intensive processes
- Process complexity increases substantially with extensive multi-level manufacturing processes
- Continuously balancing inventory levels with customer demand, supplier performance, and current events
- Navigating high supply chain velocity while managing material and information flows
- Manual interventions to update inventory parameter settings
- Moving towards demand-driven “Build to Order” production environments to eliminate the need for forecasting
Continuously incorporating customer demand, production plans, BOMs, inventory levels and supplier performances; SCAS autonomously generates replenishment orders & sets inventory levels for all applicable raw materials throughout the supply chain.
In doing so, SCAS replaces the traditional MRP & DRP with integrated Demand/Inventory Planning. This allows planners to maximize the efficiency of raw materials supply chains through an almost labor-free process; minimizing operational costs and significantly improving the bottom line.