Supply chain management concepts and practices

Supply Chain Management Overview

The intent of this paper is to analyze how the initial development of MRP systems led to the development of optimization approaches and processes for more effectively managing supply chain, manufacturing, and demand planning strategies in organizations. Included in this analysis is an assessment of how linear programming and PERT/CPM programming have evolved. In addition to these points the challenges of services scheduling and the implications of how expert systems can improve maintenance processes and strategies is also discussed. All of these improvements in supply chain management have been predicated on the contributions MRP systems have making organizations more demand driven and quick to respond to market demand (Byrne, Jackson, 1994).

Functions Affecting an MRP System's Performance

Of the many functions that impact an MRP systems' performance the four major ones are the company's Bill of Materials (BOM), Item Master File and lead times associated with it, Inventory Data Master File and Purchasing Data master file (Byrne, Jackson, 1994). Each of these functions as systems of record for any enterprise and together comprises the Master Production Schedule (Segerstedt, 2006). MRP systems are used primarily for generating Planned Order Reports, Purchase Requirements, Exception Reports MRP planning Calendar Reports and production period Reports. In short, MRP systems are heavily impacted by the functional area of a company that most impact BOM planning, lead times, inventory and purchasing data. The most critical functions impacting the MRP systems at companies are their supply chains, quality of components and subassemblies of products produced, and techniques used for optimizing inventory and production efficiencies (Segerstedt, 2006).

Mathematical Models Use in Aggregate Demand Planning

Initial MRP systems did not have the ability to aggregate large amounts of demand data and analyze it to find the optimal level of inventories to produce or determine the optimal mix of production hours. The initial MRP systems did however bring to light how critical these strategies were for the development of more efficient manufacturing operations. As a result, there continues to be an exceptional level of effort and time invested into applying mathematical models to aggregated demand planning. The initial use of operations research-based techniques that sought to create optimized process workflows through production operations has led to the development of stochastic models that seek to optimize mult9-site manufacturing performance across a firms' entire production systems (Leung, Wu, Lai, 2006). These models have the potential to deliver significant insights that have the potential to revolutionize supply chains, manufacturing and production systems yet are not being adopted due to their complexity and the resistance to change in organizations. The leading cause of companies not attending their strategic plans and objectives, specifically in the area of MRP and production optimization is resistance to change. There is fear in organizations that these techniques will significantly reorder the status and power of the organization. As a result they are often dismissed or completely ignored as a result, leaving companies to experiment with trial-and-error.

PERT/CPM Scheduling Techniques

The value of the Program Evaluation and Review Technique (PERT) and Critical Path Method (CPM) is in optimizing the use of limited resources in the completion of a task. These resources could be both time and materials with the former being the more scare of the resources (D Aquila, 1993). As a result of this focus optimizing performance of systems and processes for constraints, the questions that are best answered with these two techniques include what the progress of the project is towards the completion date, if the project is on schedule or not, within budget and what the status of the critical activities are as well (Omar, 2009). In addition to all of these, there is also the issue of whether the project can be finished early and under budget in effect optimizing the performance of the entire project to constraints (Omar, 2009).

From a supply chain management standpoint, PERT and CPM are critically important for managing inbound logistics, production scheduling and in the case of build-to-order and mass customization, the coordination of specific products and components for the exact needs of a customer. CPM is critically important from a supply chain management standpoint in optimizing inventory positions by location throughout a distribution channel as well (Omar, 2009). All of these factors contribute to the automating of CPM and PERT through organizations who are heavily reliant on their supply chains to gain a competitive advantage. The optimization of inventory workflows using CPM and PERT contribute to that competitive advantage over time. PERT and CPM also can be used to measure the financial impact of these strategies over time as well. That is the future direction of ERP and Web Services in manufacturing specifically.

Services Scheduling

Services scheduling is difficult due to a variety of factors. First, services are by definition a commitment of future value delivered. Completing services may take an exceptionally longer period of time than anticipated and the act of providing a service is not a finite asset; it is rather the attainment of satisfaction with a customer (D Aquila, 1993). Scheduling services as a result is a difficult task. Second, services can vary in terms of their relative value over time, with the service provided for better management of a customer issue requiring escalation depending on the troubleshooting completed. Third, services are often sold with products in Business-to-Business (B2B) markets and as a result they are often bundled into the price of the product. This makes for a blended contribution margin and often a difficulty in separating each (D Aquila, 1993). When companies schedule services they often over-schedule them assuming customers will cancel their appointment. This is typically the case yet when an external event forces the need for service then customer responsiveness suffers.

How Expert Systems Improve Maintenance Systems