Long term planning and forecast based approaches are seriously flawed
It is reasonable to think that the more you plan out into the future the better you can predict your stocking needs. In reality, the longer you plan out into the future, the more uncertainty and error you introduce into your system. This uncertainty is compounded through each level of production and leads to what is known as the “bull whip” effect, where small errors in forecasts and projections are amplified at multiple levels and the end result is a very inefficient and expensive inventory.
DBA demand driven stocking replaces long term planning, forecasts, BOM explosions, blanket orders, and shortage reports because all of these methods introduce tentative demand and errors that get multiplied through all levels of production. This “bull whip” phenomena is seen in nearly every traditional planning method and is why the industry is learning that demand driven planning is a superior approach for manufacturing.
You need to move from calendar planning to focusing on your Item MRP Settings
Safety is built into your item settings. DBA dynamically maintains your replenishment time planning periods for your items that ensures that are always actioning on firm demand. Eliminating tentative demand, removes the “bull whip” effect, and can dramatically improve the efficiency of your inventory. Your inventory will have purpose and be more directly tied to your actual demand.
Monthly Safety Factor setting covers volatility and ensures you do not run out of stock
Because DBA stocking is triggered by real SO and Job demand it will not miss items or demand. If you have a very critical item that you absolutely cannot run out of stock, you can increase your monthly safety factor value. The safety factor is referred to as a buffer profile in the demand driven literature. As long as your overall settings and order policies are reasonable, the replenishment time of your planned item will give you the time to make or purchase your item to cover most reasonable scenarios. In the event that you do run out of the item, the priority in the Work Center schedule will get you back on track
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