Stategic Inventory Positioning

• MRP demand can reduce your inventory investment. It will enable you to plan your inventory based on where the product is coming from. When calculating inventory levels, MRP demand takes the following factors into consideration: customer tolerance time, meaning how long a customer is willing to wait for the product; lead time, or how much time is required for the product to be delivered; potential for changes in demand, meaning the likelihood that the product will not be delivered on time; and inventory flexibility, where a buffer is needed to reduce disruption in production.
  
  

Buffer Profile

• The buffer profile is calculated to determine how many of a particular item should be in inventory at all times. The profile is divided into zones: out, expedite, order, okay and too many. Which zone your inventory quantity falls into will determine what action needs to take place. You may need to expedite an order for faster delivery, order a part or liquidate a surplus of inventory. The following factors are taken into consideration when determining the buffer zone for each item: whether the part is purchased, manufactured or distributed, the variability of demand, lead time and minimum order quantity.
  
  

Dynamic Buffers

• Dynamic buffers are assigned to items and parts to account for changes in lead times, changes in production requirements and economic changes. With dynamic buffers in place, the system will change the recommended quantity of inventory on hand based on various factors such as seasonal items, new products and the phase out of old products.
  
  

Demand-driven MRP Advantages

• Using the MRP demand-driven system will provide advantages to your production schedule. You will reduce inventory, increase customer satisfaction, increase stability, experience less nervousness regarding the arrival of parts and increase productivity with fewer disruptions. Demand-driven MRP also has the ability to account for order spikes and adjust your inventory levels accordingly. Demand-driven MRP will also allow you to check on the status of critical stocked and non-stocked parts before they become an issue.