(MMI-Z2-00) MINMAX SUPPLY CHAIN MODULE

MIN-MAX Logic is intended to expedite ordering of certain low-value "C" parts, which have a short lead time, and ideally are covered by a Blanket Purchase Order. This type of Order-Point Replenishment identifies inventory below the Minimum desired quantity, and alerts the Buyer to request additional parts to stock up to the "Maximum" quantity.

Two methods of denoting shortages are provided:

a). On-Hand below "Minimum" stock is required. Fields are OPTIONAL for ORDER MINIMUM and ORDER MULTIPLE, for added flexibility based on CURRENT INVENTORY

On-Order quantities are NOT included in this calculation, as the shortage is real-time, and the P.O.'s can be scheduled for later delivery. The intent is simply to alert the Vendor for a Blanket P.O. that more stock is required, and to re-supply. Fields are OPTIONAL for ORDER MINIMUM and ORDER MULTIPLE, for added ordering flexibility.

b). On-Hand below "Minimum" based on MRP REQUIREMENTS

The Required Date is based on the FIRST MRP BUCKET where the "available" balance falls below "Minimum". A field is provided for "offset days", to allow the order to arrive on an earlier date than the MRP BUCKET DATE, to allow for dock-to-stock or "preparation" time before the actual time-phased requirement. The intent is simply to alert the Vendor for a Blanket P.O. that additional.

This Custom Module provides seven fields for this type of part:

Minimum On-Hand - similar to Safety Stock, but does not interact with the MRP Process or Part Minimum Order Quantity.

Maximum On-Hand - the maximum physical quantity that can be stored, or that is wanted on-site.

Order Minimum - the Lot Size representing the Minimum amount that a Vendor will provide. This could be limited by pre-packaging, where the Vendor is unwilling to split a box. Shipping and handling charges can also be a factor.

Order Multiple - the Lot Size for ordering over the Minimum. For example, the Vendor may deliver in boxes of 100.

An example of the use of both Minimum and Multiple .......

The part comes on tape-and-reel, in lots of 5,000. The Vendor requests a MINIMUM Order of TWO reels (10,000), and will supply additional MULTIPLES of ONE reel (5,000). The LOWEST Order Quantity is 10,000. The order must be placed in MULTIPLES of 5,000, if in excess of the initial 10,000.

Allow maximum to be temporarily exceeded?

DEFINITION: Enter Temporary Excess Per Lot Sizing. It is possible that the quantity required to bring the inventory level to "maximum" cannot be achieved due to Lot Size requirements (minimum and multiple).

Enter 'Y' to allow the "maximum" to be temporarily exceeded due to Lot Size requirements. Enter 'N' to diminish the replenishment quantity to use Lot Size requirement to NOT exceed available "storage space", or other parameters used to determine the "maximum".

As a simple example, an existing inventory level of 287 pieces, with a maximum of 500, requires replenishment of 213 pieces (287 + 213 = 500). If the Vendor supplies ONLY in lots of 100, the customer could receive 200 (287 + 200 = 487), which would be within the declared maximum, or 300, for a total of 587, which would temporarily exceed the maximum.

Fields are provided for entry of PURCHASE ORDER NUMBER and VENDOR NUMBER for reporting.

This Module was designed to perform the calculation and replenishment of Purchased Parts, using advanced concepts such as Minimum Order Quantity, Order Multiples, or Bulk Packs, and Daily Run Rates. The Module can run as a "PUSH" system per MRP output, or "PULL" using Daily Run Rates, essentially making LEAD TIME a Supplier-driven issue.

My metaphor for the Supply Chain is a river, which ends with the need of the final Customer. When the Supply Chain flows WITH demand, the overall speed and performance is optimized. When the Customer is NOT being supplied on time with the correct quantity and quality, the river runs dry. Ship too soon, and the river will spill over at some point. There are a number of interacting concepts to take into consideration ...

a). Is the river wide and deep enough for the goods in transit, when optimized?

b). Logistics need to be considered - small rocks can be cleared, but boulders must be designed around, in advance, and will always cause ripples. When the real- world requirements of the Customer are taken into account, planning tends towards the optimal solution.

c). Is your Customer like a waterfall, accepting all that you can provide, and asking for more? Or are they like a power plant, wanting to perform at varying output? Is the product mix constant?

d). Do you have consistently high-volume Purchased parts, on which much time is spent re-arranging the Scheduled Receipts, instead of matching the actual daily rate of consumption (Run Rate). Do you know your Run Rates?