Material reports, demand forecast, release reports, it does not matter the name. At the end of the day, they all have important information. I would say extremely important information. Material requirements reports provide visibility along the supply chain. This kind of report answers two massive questions (among other ones of course), but basically:
- How much (material) you want?
- When do you want it?
The continuous review of the information included in a material release report is a must do action every single week. If the demand goes up, the material planner has to ask to the supplier:
- Are you able to meet these requirements?
- Do you have the amount of people for production plan?
- How many shifts are you going to work per day?
- Among other ones.
If the demand goes down, the material planner has to ask (or explain) to the supplier:
- Explain the reason of the drop down of the demand.
- Provide an updated plan to consume the finished goods forecasted previously.
- Make a plan to warehouse that material.
- Among other ones.
As you see, information is a valuable commodity that helps us to make decisions. In supply chain management there are always risks in the decision making process that cannot be banned, due to always is going to exist a level of confidence. That is why, it is very important to check out every single week how the material requirements demand fluctuate either up or down.
How we have to take care of two massive concepts: Visibility and Control.
- Visibility. This one describes that due to the length of supply chain systems there is no detailed knowledge of what goes on in other parts of the chain, as finished goods inventory, material inventory, work-in-process, etc. The solution here, is to share information among the members of the supply chain, this is because shared information reduces uncertainty and thus reduces the need for safety stock.
- Control. It describes the situation that even if information is shared and a manager knows the scope of the process, sometimes it is hard to control the different operators related to the supply chain, due to these operators are out of his/her hands like suppliers, weather, nonflexible production lines or production schedule changes are not feasible.
Once again, thanks a lot for your attention. We are working together and hope all this information helps to understand better how SCM works.
All right. See you next time. In the meantime, take care and keep walking on my friend.
j.maldonado.gtz@gmail.com
Jorge Maldonado. Egresado de la Universidad Autónoma de Nuevo León como Ingeniero Administrador de Sistemas. Cuenta con una Maestría en International Logistics and Supply Chain Management en la Universidad de Glamorgan South Wales en Reino Unido. Profesionalmente se ha desarrollado en empresas de manufactura y tecnologías de información.
