Reality-based Priority Management (RPM) is the latest improvement in manufacturing information management that works with your existing MRP/ERP system to:

• Provide unprecedented access to the information you need to make decisions, execute the plan and deliver on-time

• Uncover vital information that's buried inside your system's files

• Help you anticipate delays that could affect customer shipments

• Execute your plan despite delays, disruptions or changes

• And the best news is RPM doesn't replace or change your current system; it works with it to give you the information you need. RPM extracts information about customer orders, planned and released manufacturing orders and purchases, and then presents it to you in a way that makes it easy for you to relate each activity to your overall objective - having product ready to ship when the customer wants it.

RPM builds a work file containing all the aforementioned order information and documents all the relationships between activities and customer demands. As a result, it becomes obvious where everything is going and what activities lead to which products and shipments. With this information in hand, plant management can readily see which orders are more important, which expected receipts (at any level) are most critical to meeting shipment objects, and which "expedite" recommendations are simply to replenish stock - a worthy objective but not one that should take precedence over activities that complete customer-bound product.

MRP and ERP have proven themselves over many years and tens of thousands of successful implementations. But it's not always easy to find the information (although it undeniably exists within MRP/ERP) that plant and purchasing management needs to avoid unpleasant surprises and insure on-time completion of scheduled work.

RPM is the one enhancement to MRP/ERP that unlocks the benefits - without modifying the existing code or interfering with the normal operation of the system in any way.

Some history

Manufacturers today are under constant pressure to reduce delivery lead-times. The pace of business is accelerating and time has become the critical issue! For too many manufacturers the result has been too much expediting and production disruption.

Materials management systems utilizing MRP planning logic were supposed to be the tool to reduce lead-times, eliminate expediting, and bring order to the chaos that ruled the factory floor. For a time, it was surprisingly successful and was certainly a great improvement over order point and other manual methods of managing procurement and order launching. But these gains proved to be fleeting. Before long, chaos and expediting once again ruled the factory floor.

So, what happened?

Let's look at an equipment manufacturer that had a 12-week delivery lead-time, similar to their competitors, who's on-time delivery performance was extremely high. In the early-mid 90s they embarked on an internal improvement process (JIT, cellular manufacturing, vendor partnering) and reduced their delivery lead-time to 4 weeks. Significant materials shortages resulted, which they initially blamed their planning system, but what if it wasn't a planning problem?

First, planning systems use a critical path approach that depends on feedback from both internal and external suppliers to confirm due dates will be met. Second, information systems are really just a mechanism to facilitate communication throughout an enterprise. The system was designed around a departmental organizational structure where, as tasks were completed, the system was updated and responsibility was passed to another department. Planners could react to any "past due" conditions and maintain the schedule by expediting because sufficient slack time existed to allow catch-up.

This all worked very well when lead-times were long, however, the communication mechanism began to breakdown when lead-times shortened.

Suppliers had to react faster but, they lacked the time needed to provide valid feedback.

This resulted in more "past due" conditions with insufficient time left to catch-up.

Information wasn't crossing organizational boundaries quickly enough to reflect current "real-time" priorities.

Reduced delivery times changed the nature of the problem.

Recently, more emphasis has been placed on customer order promising. While customer order promises are certainly important, they don't answer the "real question" management needs to know! Will all orders ship on time and, if not, why not? The fact is a "single" priority order can potentially invalidate some or all previous promises. The problem is further complicated by the fact planning is item-based - it provides no visibility by complete customer order.

Shortened lead-times, priority orders and changes to orders result in the customer order "deck" being frequently reshuffled and the ripple effect of even a minor change can result in substantial lower level disruptions. The real challenge facing materials management personnel isn't promising a single order at some fixed point in the future but attempting to quickly understand what the entire customer order deck looks like "now" so resources can be correctly deployed to meet current commitments.

Users spend far too much time digging information out of the system with far too little time left for analysis. When change occurs there's the real possibility the plant is working on the wrong things while the materials group is "working the data" to realign dependent priorities. It's really a matter of velocity! If the changes come at people faster than their ability to understand, absorb and analyze the impact of those changes, there'll be more disruption at the plant and purchasing levels. In short, the longer the realignment period, the more delivery dates are jeopardized. This leaves users frustrated - drowning in data but starved for information!

This is a new reality and new tools are needed to respond to it. Planning is more important than ever but planning by itself simply isn't sufficient to meet shortened delivery lead-times. The real problem, as it's always been, is visibility of priorities where there's competition for limited resources. The difference is time itself is now one of those limited resources so we can no longer afford to hesitate. We must react quickly and correctly.

One general manager recently asked: "Does our ERP system tell us what we need to be doing now in order to prevent problems in a few days?" MRP/ERP could and should but, unfortunately, it doesn't. With OTTO RPM software, it can!

          
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