Demand “Push” and “Pull” in a Distribution Channel - Source - Apics
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Demand “Push” and “Pull” in a Distribution Channel - Source - Apics
Oct 22, 2012 ... Describe distribution channel dependencies. • Detail “push” system ... Define
distribution requirements planning (DRP). • Work with the Bill of ...
10/22/2012
Demand “Push” and “Pull” in a Distribution Channel David F. Ross, PhD, CFPIM, CSCP APICS Professional Development
Learning Objectives
• • • • • • • •
Describe distribution channel dependencies Detail “push” p system y functions Detail “pull” system functions Decide what to choose: reorder points or DRP? Define distribution requirements planning (DRP) Work with the Bill of Distribution Trace the DRP planning process View a full DRP example
1
10/22/2012
Distribution Channel Dependencies Product Flow
Plant
Decoupling Point
Information Flow Replenishment Point
Central Warehouse Replenishment Point
Decoupling Point
Local Warehouse Replenishment Point
Decoupling Point
Customer
“Push” or “Pull”? Push
Channel Allocation
Plant Central Warehouse Local Warehouse
Pull
Demand Requirement
Customer
2
10/22/2012
“Push” System Functions Aggregate Channel Demand History Central Inventory Planning
Yes
Stock OK?
No
Resupply Order
Review Branch Order Points Inventory Allocation “Fair-Share” Allocation Echelon Shipment
Supplier Shipment Order Receipt
“Push” System Functions (cont.) Warehouses DCs
55% Manufacturing Plant
45%
60%
Forecasting – Aggregate Requirements
40% 65%
Production Lot Size
Allocation
35% Allocation
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10/22/2012
“Push” System Allocation - Example
15,000 , x 12% = 1,800 , units
1,800 x 40% = 720 units
720 x 30% = 216 units nits
“Pull” System Functions Local Facility Stock Status
Customer requirements
Stock OK?
Order point/ DRP
Shipment
Resupply Order
Interbranch shipments DRP
Interbranch resupply order
Distribution Center Plant
Plant Stock
No
No Plant
Resupply Order
Order point
Purchase Receipt
4
10/22/2012
“Pull” System Functions (cont.) Warehouses
DCs
Manufacturing Plant
Master Schedule
OP DRP
Plant MRP
Order Shipment
Planned Orders
Order Shipment
Planned Orders
Two Ordering Systems Reorder Point/Order Quantity
Distribution Requirements Planning (DRP)
• • • • • • • • •
Statistical demand drives replenishment Goal is to always have enough inventory Replenishment quantities balance the costt off ordering d i with ith th the costt off stocking t ki Safety stocks protect against demand variability Items use forecasting to predict demand Goal is to time replenishment to demand Uses a bill of distribution Demand exploded via MRP-type logic Replenishment quantities use order policies
5
10/22/2012
Ordering Techniques – When to Order Order Point System OP = Demand x Lead Time + Safety Stock
The order point calculation consists of enough material to satisfy Demand during the replenishment Lead Time plus Safety Stock to account for unplanned variances in demand and supply.
Order Point – Safety Stock Demand Trigger Point Order Quantity
Order Point
Inventory
Quantity
Safety Stock
Guard Against Stockout
Time Replenishment Lead Time
6
10/22/2012
What to Choose: Order Points or DRP? OP SS
OP SS
Pulled by DC 2
Quantity
Pulled by DC 1
Regional DC In entor Inventory OP
OP SS
X Time
Pulled by DC 3
Impact of an order point (OP) distribution channel pull on a Regional DC from three satellite DCs OP= order point SS=safety stock
Defining Distribution Requirements Planning (DRP) The function of determining the need to replenish inventory at branch warehouses. A time-phased order point i approach h iis used d where h the h planned l d orders d at the branch warehouse level are “exploded” via MRP logic to become gross requirementsplanning on the supplying What is distribution requirements (DRP)? source. In the case of multilevel distribution networks, this explosion process can continue down through the various levels of regional warehouses (master warehouse factory warehouse warehouse, warehouse, etc.) etc ) and become input to the master production schedule. Demand on the supplying sources is recognized as dependent, and standard MRP logic applies.
7
10/22/2012
Introduction to the DRP Grid DRP Rows
Gross Requirements
1
2
3
100
110
125
DRP In Transit Receipts
200
Projected Available Balance
50
140
15
Net Requirements
0
0
0
DRP Planned Order Receipt
0
0
0
DRP Planned Order Release
0
200
200
DRP and the Bill of Distribution ABC Electronics DC 1
ABC Electronics DC 2
ABC Electronics DC 3
Resupply Demand Resupply Delivery
ABC Electronics Manufacturing Plant
8
10/22/2012
DRP Planning Process DRP Generation Determine Gross Requirements
Review Inventory Balance
Net Requirements Calculation
Total Demand OK?
Quantities OK?
Shortages OK?
Plan New Od Orders
Orders OK?
DRP Order Release
DRP Example Lead Time/weeks Order Quantity On Hand Inventory/units
1 600 240
PRODUCT ‐ K200‐10 Gross Requirements DRP In Transit Receipts Projected Available Balance Net Requirements DRP Pl DRP Planned Order Receipt dO d R i t DRP Planned Order Release Lead Time/weeks Order Quantity On Hand Inventory/units
1 225 25
PRODUCT ‐ K200‐10 Gross Requirements DRP In Transit Receipts Projected Available Balance Net Requirements DRP Planned Order Receipt DRP Planned Order Release
Lead Time/weeks Order Quantity On Hand Inventory/units
PRODUCT ‐ K200‐10 Gross Requirements DRP In Transit Receipts Projected Available Balance Net Requirements DRP Planned Order Receipt DRP Planned Order Release
