Most companies in support think that in order to have more safety built into their profile that they need to expand their planning horizon further out in the future.
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.
Calculated replenishment time ensures you have enough time to make or procure the item before you run out of stock
Safety is built into your item settings. DBA dynamically maintains your replenishment time planning periods for your items. The replenishment time ensures that you have enough time to make or procure the item before you run out of stock. The replenishment time also establishes the planning period action windows in MRP to ensure that you are acting only 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.
The Monthly Safety Factor setting covers volatility
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 auto calculated priority in the Work Center schedule will get you back on track
The Supply Days interval provides safety for long lead day purchased items
The Supply Days interval is essential for long lead day purchases. It creates an inbound pipeline of supply to help mitigate any potential shortages.
Follow the Support Golden Rule – Enter the big three MRP Settings for all of your items
Nearly all companies that fear that they do not have enough safety in their plan, have a problem in their 3 core MRP settings: reasonable lead days on your purchased items, reasonable job days on your manufactured items, and a clear cut order policy based on lead day contribution. If those values are correct on all of your items, you will have the time and safety you need to execute your plan.