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10 Tips for Getting the Most Out of SuiteWorld 2013

With a new location, a new slate of sessions and a wealth of new NetSuite partners and customers, SuiteWorld 2013 promises to be the best one yet.

The NetSuite conference is moving from San Francisco to the San Jose Convention Center this year to accommodate the roughly 5,000 attendees expected to be at the show May 13-16. And a show with that kind of turnout with more than 180 breakout sessions requires a little preparation. Here are 10 ways SuiteWorld attendees can ensure they get the most out of the conference.

1. Research.  SuiteWorld offers a wealth of information for getting the most out of your NetSuite deployment with sessions that cover every facet of the suite. Factor in some free time, but be sure to spend the time up front figuring out your business needs and the schedule that makes the most sense for you. Then you’ll be better positioned to come home with actionable information.
2. Go Early. SuiteWorld’s preconference in-depth training workshops offer a deep dive into all areas of the solution for intermediate to advanced NetSuite users, spanning reporting, OneWorld, workflows and more.
3. Take Note of the Keynotes. NetSuite leadership (CEO Zach Nelson, CTO and founder Evan Goldberg, and COO Jim McGeever) will open each day with a keynote session providing entertaining, informative insight into NetSuite’s progress, product roadmap and vision for the future of the cloud.
4. Learn at Lunch. SuiteWorld has three ways to make your lunch more than just a break from the show to scarf down some food.  Tuesday offers a chance to sit down with show sponsors to get answers to your questions about the cloud, integration or simply network. Wednesday offers the chance to meet with the user group community and share best practices across multiple roles. Wednesday also presents the chance to have lunch with SuiteWorld bloggers and NetSuite product experts. Just sit down at the table with the topic you’re interested in.
5. Brainstorm. If the excitement of the show and the energy of progressive companies executing on their vision has you inspired, wander over to the SUITEideas area to whiteboard your ideas and get insight from NetSuite product experts on how to execute on your own vision.
6. Network. There’s perhaps no better way to learn and grow at SuiteWorld than by talking and sharing with fellow customers and partners. In the session rooms, the hallways, the coffee area, it’s a chance not only to learn how to get the most out of your NetSuite implementation, but potentially find the right partner or business opportunity. Better yet, chill out in the SuiteLife lounge where you can rest, recharge and network in comfort.
7. Meet the SuiteGuru. Sit down with our technical experts and get your specific questions about CRM, Ecommerce, ERP, OneWorld, OpenAir, the SuiteCloud platform or Web design answered in 30-minute meetings. But be sure to schedule them, pre-registration is required and seating is limited.
8. Tour the Floor. Wander the show floor, pick up some schwag and find the solution your business needs to accomplish its vision. It’s all on display. When you’re done, wander over to the SuiteStore to pick up your official SuiteWorld gift from customers such as Incipio (iPhone 4 or 5 case), Nakajima (Hello Kitty swag), Philz Coffee (lb of coffee), Liberty Water Bottle (official SW water bottle) or School of Rock (t-shirt). 
9. Get Out. You’ve traveled to San Jose, now take some time to get outside. Take a walk, go out to eat at one of the area’s signature restaurants, soak up Silicon Valley.
10. Get Down.  After all the contacts are made, the questions answered and your mission accomplished, be sure to grab a cold drink and have a suite time at Wednesday night’s SuiteCelebration Gala.

We look forward to seeing you. Be sure to follow @NetSuite and #NSW13 on Twitter to keep up to date on the show. If you’re looking for more inspiration, check out the scene
from last year:

 

For more information on SuiteWorld 2013, please visit: http://www.netsuite.com/portal/press/events/nsw2013/main.shtml

Global Trends are Transforming the Manufacturing Industry

Manufacturing is once again going through a transformation, but this its time focused not on costs, but innovation.

A recent Harvard Business School (HBS) survey found manufacturing companies were the businesses most active in undertaking programs and initiatives to boost U.S. competitiveness.

According to the survey, among manufacturers:

• 86% are engaged in internal training
• 59% are undertaking regional initiatives
• 40% are offering apprenticeships
• 47% have community college or other external training partnerships
• 54% are sourcing locally for supplies
• 45% are supplier mentoring.

The survey also showed that manufacturers rank near the top in participation in collaborative research initiatives, with 63% involved in this activity.

That’s great progress by U.S. manufacturers in embracing innovation and change in their pursuit of growth and profits. But this is not about national pride or an “us versus them” article – this is all about how modern manufacturing companies in the U.S., Europe or Asia can not only survive but thrive.

The storyline of the past few years has frequently defaulted to the idea that manufacturers around the world were pursuing lower costs at the expense of everything else.  That’s no way to drive growth.

A mid-summer 2012 opinion piece in Forbes summed this up perfectly:

“Product companies and original equipment manufacturers (OEM’s) are expected to protect and grow their market share in addition to making profits for their shareholders. They get rewarded by producing great products and consistently producing solid business fundamentals. They are not rewarded for patriotism.” 

A Seeking Alpha article on the state of manufacturing by Joseph Garson summed up what’s required to move beyond cost cutting:

“We expect U.S. manufacturers to increase their share of GDP, from a low of 13% in the past decade, to about 20% within 10 years. For this to happen, manufacturers must continue to invest in new products and innovative technology. In January, non-defense capital goods orders -- a proxy for manufacturing investment -- surged by 6.3%. This is a good sign that U.S. manufacturers know what needs to be done to stay ahead in a tough global marketplace.”

Craig Barner, writing for Merger Markets in Forbes also noted this push for innovation, with the Reshoring Initiative, a project, based in Kildeer, Illinois, that aims to bring manufacturing jobs back to the U.S.:

“A key element is to assist companies in assessing their total cost of offshoring and ‘shift collective thinking from ‘offshoring is cheaper’ to ‘local reduces the total cost of ownership,’ according to the RI’s mission statement.”

About 60 percent of manufacturers apply a ‘rudimentary’ model to assess the total cost of manufacturing products abroad, according to Harry Moser, the Initiative’s president and an engineer who trained at the Massachusetts Institute of Technology. Those organizations ignore 20 percent or more of the total cost for offshoring.

Business Insider taking a slightly different view, highlighted something similar:

“Companies see the synergies of keeping their R&D operations close to their production facilities. U.S. entities own more than one third of all global patents. Most people don't
realize that intellectual property-intensive industries account for nearly $6 trillion, or 40% of U.S. gross domestic product and directly or indirectly support 40 million, or 30%, or all U.S. jobs. And that number continues to grow. Today, 16 of the world's top 20 universities are in the U.S. and 70% of all Nobel Prize winners are employed here. ”

Let’s examine the key points – innovate through process and core R&D, evaluate TCO including where and how you allocate CapEx and OpEx, focus on total business value not just lowest cost production, collaborate and empower the dynamic supplier network and thereby change the face of modern manufacturing. Manufacturing is not a “fire and forget” business – at least not for the best in class manufacturers. It’s about a full product life cycle from concept, to production, to sales and customer intimacy, to product upgrades, upsells, and of course service (whether through warranty, MRO, or value-add services).  There are amazing opportunities for global manufacturing companies who
focus on these values. Just look at what innovative start-ups like MakerBot or Leap
Motion have accomplished!  And it’s not just small, innovative companies that are transforming themselves, it is great big companies such as Siemens as well.

As Reuters noted:

“The major reason why U.S. manufacturing is so well positioned for a renaissance is software that can bring the real and virtual worlds together in a way that erases all boundaries between the two. It connects everyone involved in product design and execution to the same network, sharing the same sets of data, to improve collaboration
and decision-making.This is nothing less than a paradigm shift in industry: The real manufacturing world is converging with the digital manufacturing world so that organizations can digitally plan and project the life cycles of products and production facilities.” 

Global manufacturing industry is going through a transformation phase to emerge more innovative, more dynamic, more value-focused, it’s going to be awesome!

-Roman Bukary - AVP of Manufacturing and Wholesale & Distribution

Manufacturing in the Cloud: “Do You Know the Way to San Jose?”

Avid readers of my blog posts will no doubt have picked up on my musical taste as leaning towards rock / alternative. But if you were to hit random play on my iPad you might be surprised at the spattering of all genres including rap, R&B, folk, pop and jazz.

My parents were keen ballroom dancers back in the day (like many of that generation—that’s where they met…) and regularly attended competitions with yours truly in tow. I have vivid memories of sitting at the table and drinking Coca-Cola (big treat) while my parents danced or watched. The highlight would be scouring the floor and crawling under tables looking for all the red, blue and silver jewels (OK, they were sequins – but come on, I was probably 4 at the time!) that had fallen off the dancers’ dresses and organizing them on the table.

Dionne Warwick’s classic song, “Do You Know the Way to San Jose,” was released in 1968—the year I was born—and so it’s entirely possible that song was played at one of the competitions, but I know for sure that my dad owned a copy of the 45.

I must admit that before NetSuite I didn’t know the way to San Jose, but I’ve visited a few times since and I’m super excited about the upcoming NetSuite SuiteWorld 2013 user and partner conference, which is relocating to the San Jose Convention Center this year, having outgrown our original venue in San Francisco. With almost 5,000 attendees expected, the May 13–16 conference is gearing up to be a pretty darn cool event. A jewel, not a sequin, amongst user conferences—especially for those of us interested in cloud manufacturing!

So what can you expect from the SuiteWorld 2013 extravaganza? The NetSuite manufacturing software team has been working hard to put together an action-packed session list featuring a variety of presenters from many areas in NetSuite including pre-sales, product management, technical services and professional services. We’ll also have cloud manufacturing experts as guest speakers and presentations from leading manufacturing customers and partners.

Here is the list of sessions we have planned:

• What Trends Are Manufacturing Companies Paying Attention to?
• Material Planning with NetSuite
• Product Design, Prototyping and Engineering Design with NetSuite
• Manufacturing Roadmap & Vision
• Production Routings – Setup
• Production Scheduling
• How to Run a Global Manufacturing Operation
• Managing a Manufacturing Business with NetSuite: Modes of
  Manufacture
• Extending NetSuite Using the Platform
• Warranty and After-Sales Service
• Manufacturing a Quality Product with NetSuite
• Costing in NetSuite

Over the next few weeks we will look at some of these in more detail and at how SuiteWorld offers a great opportunity to learn how to make the most of NetSuite manufacturing software, as well as highlight some sessions from other tracks that you may be interested in.

Stay tuned!

Follow SuiteWorld 2013 on Twitter! #NSW13

- Gavin Davidson - Vertical Market Expert, Manufacturing

Could Your Snow Sports Business Run Better in the Cloud?

A number of businesses in the highly-competitive market for snow sports gear and apparel are finding that running their business in the cloud is helping them keep pace with larger competitors.

Far too often, smaller organizations are forced to dedicate crucial personnel to managing IT applications instead of driving the business. Cloud computing can change the equation for snow sports specialty brands and enable business success. Cloud computing solutions allow snow sports brands to rapidly scale by eliminating many of the growing pains associated with fast-track businesses and significantly improving efficiency.

For example, Hestra USA, the U.S. wholesale distributor of snow sport, biking, mountaineering, work and fashion gloves manufactured by its parent company, Hestra of Sweden, has grown its revenue 50 percent annually since implementing NetSuite wholesale software to replace an on-premise Everest Software system.

More importantly, “going to the cloud” frees companies from the overhead and distractions of creating costly and complicated IT departments and manually managing order management and inventory management software, supply chain, financial, ecommerce, CRM and more in spreadsheets and point solutions. With a cloud solution that unifies core processes, personnel can focus on delivering superior products, value and customer experiences.

Hestra USA was also able to eliminate costly upgrades, maintenance and support costs associated with the Everest implementation.

As the leading provider of cloud-based wholesale distribution and manufacturing software, NetSuite has a unique perspective on helping snow sports companies like Hestra USA, as well as GoPro, and Scarpa move to the cloud and drive success.

Hestra USA selected NetSuite over 30 competing solutions for its broad functionality, cost-effectiveness and proven ability to help power growth. It supports Hestra USA’s financials, inventory management, case management and incentive compensation for its sales staff, while providing the parent company’s CFO in Sweden with real-time financials on subsidiary performance.

Additionally, the Golden, Colo.-based company has markedly improved its shipping accuracy to more than 99 percent, while delivering more than 120,000 gloves a year with NetSuite wholesale software and the OzLINK shipping solution from NetSuite partner Oz Development and order entry enhancement from Celigo

NetSuite’s anywhere, anytime data access has also helped Hestra USA expand its number of dealer accounts from 200 to 500 since going live, with an EDI solution from NetSuite partner SPS Commerce streamlining transactions with major dealers such as Dick’s Sporting Goods and The Sports Authority. Meanwhile, the company is saving $6,000 a month previously spent with an IT services firm for maintenance and upgrades to a server and the Everest software.

“NetSuite is the core backbone of our company and has supported our dramatic growth since we went live three years ago,” said Dino Dardano, Hestra USA President. “NetSuite is a perfect solution for Hestra USA that allows us to do everything in a single cloud solution, with none of the limitations we had with Everest.”

As a sponsor of the upcoming SnowSports Industry Association Snow Show in Denver,
Colo., NetSuite welcomes the opportunity to meet you at the event. We’ll be presenting on Saturday, February 2 at 3 p.m., showcasing how NetSuite wholesale software can help your snow sports business move to the cloud. You can also learn more at www.netsuite.com/sia.

-Ranga Bodla - Director, Industry Marketing, Wholesale Distribution and Manufacturing

Readers React

The NetSuite Blog gets its fair share of reader comments. Periodically, we like to share some of the more interesting and useful feedback we get on the blog. Below are some recent comments we received, ranging from DDMRP to cloud security.

Ross Leahy said:

Gavin, I absolutely agree with you. Having spent the 80's and 90's watching MRP morph into MRPII and then ERP, I get the sense that it has lost its way. The objective was to manage inventory in a [way] that optimized working capital while satisfying customer demand for short delivery times; surely still the objective today. The problem is, in part, that the objective became lost in the methodology so it became all about performing the right steps regardless of the outcome. The operation was a success but the patient died! I have completed a full run up of the NS demand planning module and am really impressed with the functionality and the ease with which it can be understood.

On Manufacturing the Cloud: DDMRP and the Death of a TLA, Part 1

Ben Benjabutr said:

Your points are taken. I totally agree that data integrity (accurate and timely data) are much more important than fancy algorithm. Moreover, software buyers rarely pay attention / fully understand how algorithm works.

On Manufacturing the Cloud: The Scheduling Myth

Brian Hodgson said:

The success and growth of NetSuite wholesale distributors is impressive. Another customer who outgrew QuickBooks to expand with NetSuite and OzLINK is Poly Performance

On Wholesale Distribution Companies Find Success in the Cloud

Aaron Tuomala said:

#1 Answered one of the biggest questions I've been asking everyone and seems to be the top concern. How exactly does centralizing the system on cloud give it more security? Doesn't it leave it open to more attacks because more people can view it? Informative article, thank you.

On Cloud Computing: Debunking the Myths

Wholesale Distribution Companies Find Success in the Cloud

Every week, we hear from more and more wholesale distributors interested in what cloud business management can do for their companies. That’s in line with results from our recent survey, “The Outlook for Wholesale Distribution in 2012,” which found that 42 percent of wholesale distributors would be sizing up cloud technologies in the near term as a way to increase efficiency.

Naturally, some wholesale distributors are apprehensive about transitioning from the on-premise systems they’ve used for years. Typically business and IT managers at these companies recognize that standalone, unintegrated applications limit their productivity and growth potential. What they don’t recognize is just how inefficiently these applications run, how transformative a move to the cloud can be and the resources that it can free up. At a recent Modern Distribution Management webinar, we had the opportunity to hear first-hand from executives at wholesale distribution companies that run NetSuite for core business processes—financials, inventory and order management, warehousing and distribution, demand planning, ecommerce, manufacturing, CRM and sales force automation. What was especially striking was the diversity of benefits realized.

One company is beating the competition by having its field sales force run NetSuite on mobile devices. Another has scaled from two to 25 employees by launching its business on NetSuite, avoiding the need to upgrade when it hit the limits of QuickBooks-caliber systems. A third ensures business continuity and eliminated the risk of reliving a catastrophic server failure that derailed the company in 2009.

Tune in to the on-demand replay to hear executives of Allied Valve, Monterey Lighting and Filter Services outline what cloud business management has done for their business, and in the meantime I’ll offer these snapshots:

Allied Valve

Allied Valve (www.alliedvalve.com) has capitalized on the shale oil boom in North Dakota and eastern Montana, supplying valves and services as pipelines and gasification facilities are built. Despite limitations in Internet access, roads, buildings and other infrastructure in the region, Allied Valve’s on-the-ground sales personnel use NetSuite on Apple iPads during customer meetings and to place orders quickly and efficiently over 3G connectivity. “That’s enabled us to get way ahead of a lot of competitors who are still waiting six months to get building permits and facilities built,” said Jodie Schwirtz, Allied Valve CIO. “We can get to NetSuite anywhere, anytime under any circumstances and that’s a big thing.” 

Monterey Lighting Solutions

Monterey Lighting (www.montereycorp.com), a distributor of energy-efficient lighting solutions in Southern California, has grown from two to 25 employees since deploying NetSuite upon its launch in 2006, largely because its president, Steve Spitzer, had an IT background and was painfully aware of difficulties and expense of trying to integrate disparate applications once a company had reached a certain size. “We didn’t want to have to try to change the engine in the car while it’s running down the track,” Spitzer said. “And as a small company, we’re able to use the same depth of capabilities in NetSuite that larger companies use. We’re very confident we can grow to 300 or 400 employees or more and never have to switch out our IT platform.”

Filter Services Illinois

Filter Services, a distributor of HVAC filters as well as industry filtration products for air, liquid, paint booth, compressor and dust collection systems in the greater Chicago area, turned to NetSuite in February 2009 after a catastrophic server crash and the loss of critical business information. “Ultimately, the biggest benefit is the reliability and not having the fear of the same nightmare we had in 2009,” said Filter Services President Jeff Gradek. “We’ll be successful in business when we can focus on what we’re good at—selling and servicing filtration-related products—not maintaining an IT staff and server room.”

-Ranga Bodla - Director, Industry Marketing, Wholesale Distribution and Manufacturing

Manufacturing the Cloud: DDMRP and the Death of a TLA, Part 4

Demand-driven materials requirements planning (DDMRP) is more than just an idea, it’s an approach delivering real results.

In the preceding posts in this series I’ve discussed why material requirements planning (MRP) needed a bit of a shake-up, the concepts behind DDMRP and the similarities between some of NetSuite’s native tools and the visual messaging concepts required to execute a DDMRP solution.

One of the unique things about DDMRP is that we are being presented with not just a theoretical solution, but also with some pretty remarkable results from companies that have already implemented it.

Take Oregon Freeze Dry, for example. It is the largest freeze-drying company in the US. They’ve been implementing DDMRP in their facilities for the last couple of years with the following highlights:

• Sales increased 20% (based on fill rates improving from 79% to 99.6%)
• 60% reduction in inventory
• 60% reduction in lead time

All this also came with a $2.5 million reduction in raw material costs with NO stock-outs! That’s pretty impressive.

DDMRP is clearly on the radar of NetSuite customers as well. Earlier this year we set about assembling NetSuite’s first ever Manufacturing CAB, or Customer Advisory Board. Essentially we compiled a list of strategic customers that best represent our customer base and direction and invited them to participate for a term of two years.

We recently held a CAB update call to inform the members of what’s new and exciting at NetSuite and as part of that we presented an overview of DDMRP to get their feedback. One of the CAB members has already implemented DDMRP in NetSuite using some simple customizations and they were really excited to learn that we are looking at ways to build it into the core product.

We’re interested in hearing about your experiences or expectations of DDMRP. Please share them below.

-Gavin Davidson - Vertical Market Expert, Manufacturing

Manufacturing the Cloud: DDMRP and the Death of a TLA, Part 3

In the last blog post we discussed the compatibility of NetSuite’s native electronic signaling (reminders, etc.) with some of the basic principles of demand-driven materials requirements planning, aka DDMRP. To take that a step further, DDMRP specifically uses multiple color-codings to signal inventory positions to the planner:

We can accomplish this in NetSuite through a variety of native features, including color highlighting on saved searches:

Traditional MRP solutions typically will result in inventory fluctuating wildly between overstocked and understocked—and that’s exactly the problem that DDMRP is meant to help resolve. But like any system, the key is really how you implement it. One of the things that I really love about the new third edition of Orlicky’s Material Requirements Planning is how co-authors Chad Smith and Carol Ptak explain in detail the calculations and considerations required to implement a DDMRP system.

One of the key points is identifying decoupling points in the system—essentially recommended stages at which to store some semi-finished (WIP) product to help buffer against demand fluctuations. One of the tools used for this is called a Matrix BOM. This utility helps identify sub-assemblies that are common amongst several finished goods products and looks something like this:

This again is presented in NetSuite using our Pivot Report functionality. Seems there’s a
common theme beginning to emerge…

In all there are five sequential components of DDMRP:

1. Strategic inventory positioning
2. Buffer profiles and levels
3. Dynamic adjustments
4. Demand-driven planning
5. Visible and collaborative execution

Steps 1–3 are iterative and should be revisited often to ensure accuracy.

Step 4 is where the planning logic comes into play and Step 5, as discussed previously, is the signaling component to make sure that everyone is on the same page.

So this is all very good, but the proof (as my mother taught me) is in the pudding. How do we know any of this actually works? Tune in to Part 4 of my blog to find out! And yes, I promise that will be the last of the DDMRP blog series—but NOT the last you will hear from me on DDMRP. Until next time…

-Gavin Davidson - Vertical Market Expert, Manufacturing

Manufacturing the Cloud: DDMRP and the Death of a TLA, Part 2

I don’t know about you, but I’m really all about look and feel, so my reluctance to jump on the material requirements planning (MRP) bandwagon --and its resulting pages upon pages of unintelligible outputs -- really isn’t all that surprising.

Let’s go back a few years to when I was interviewing with NetSuite. I’d been keeping an eye on them for a while because I loved the cloud concept, and before I made up my mind whether to join I asked to see a demo. Apparently this is an unusual request that by itself almost resulted in them not hiring me, but in the end they relented and my future manager did a very high-level dashboard demo. I was hooked from the first KPI drill-down!

One of my favorite features in NetSuite is the Reminders. Think of Reminders as a user- and role-specific manage-by-exception list. An example for a purchaser is shown below:

  
In their native form, the reminders are a signaling system to direct the user to the specific things that they have to pay attention to today. In fact, during my demonstrations of NetSuite I rarely go through the menu structure at all — I can run the majority of the demo through my reminders. It’s pretty logical when you think about it:

1. Take an order

2. Item is in stock

a. Reminder to the shipper to fulfill 

3.  Item is not in stock

                 a. Reminder to the purchaser to buy more

                         i.     PO is place

        b. Reminder to the shipper to receive on due date

4.  Ship Product

                a. Reminder to A/R to invoice

5.  If invoice is overdue

        a.  Email the customer with a friendly reminder

6.  If the invoice is over $xxx

        a.  Set a Reminder to follow up by phone

7.  Repeat

To me, that is the essence of what DDMRP, aka demand-driven materials requirements planning, has done to the entire planning cycle: Planning by Exception.

Of course, lean concepts have been around for a long time and the basic principles have been the same: Reduce inventory and WIP to an acceptable service level target, but at some point you always expose the rocks of demand / supply inconsistency.

So how does DDMRP address this differently than the other methods? Essentially it combines some of what we know and love from MRP, DRP, Lean and Theory of Constraints and introduces some innovative new techniques to visually signal inventory positions as follows:

Obviously there is more to this than I can fit into a single blog post, so until Part 3 becomes available, do yourself a favor and check out Chad Smith’s introductory video on YouTube.

 

Chad, a partner at the Demand Driven Institute and co-author of the third edition of Orlicky’s Materials Requirements Planning, provides a great overview of how DDMRP works.

Stay tuned!

-Gavin Davidson - Vertical Market Expert, Manufacturing

Manufacturing the Cloud: DDMRP and the Death of a TLA, Part 1

ERP, MRP, ATP, APS, CTP, SCM, CRM, WMS, TMS…

The software (and business) world is full of Three-Letter Acronyms (TLAs) that we tend to throw around as a way of telling people that we know what we are talking about. Come on, admit it—you’ve done it too, hoping you’re the one who can throw out a TLA that requires explanations such as…

“So in that way the demand plan will then generate your supply plan which is essentially your MPS…” (quicklook around and pause for effect) “…Master Production Schedule.” Classic!

Here at MTC (Manufacturing the Cloud) we ask our prospects or customers to define the details of the requirement when they throw out a TLA as part of a conversation. Just the other day a prospect kept mentioning MRP, so when I asked him for HIS definition I was told: “You know: order entry, purchasing, production, inventory etc.” Glad I asked…

I’d always been somewhat skeptical about MRP and I really wasn’t sure why until we recently attended a Demand Driven MRP (DDMRP) conference in Seattle hosted by the Demand Driven Institute (DDI). Industry analyst Frank Scavo had suggested we check them out and quite honestly it was one of those light-bulb-goes-on / ta-daa! moments in life when pieces of the puzzle start to fit into place.

Let’s back up a bit. MRP was originally designed in the ’50s, codified in the ’60s and commercialized in the ’70s and essentially hasn’t changed a lot since. When Joe Orlicky wrote the original MRP book in 1975, Orlicky’s Material Requirements Planning, it became the bible of material planners and the foundation on which APICS (The Association for Operations Management) was built. But seriously—how many other things from the ’50s do we follow blindly and assume work? Fast forward to 2011 and the launch of the third edition of Orlicky’s MRP book, which was essentially rewritten by Chad Smith and Carol Ptak with the goal of making MRP more nimble than it had been previously.

At the opening session of the conference, Carol Ptak talked a lot about the need for change and dispelled some of the planning myths that are inherent with MRP, but what really grabbed my attention was her statement: “Today’s formal planning systems are fundamentally broken.” OK, now we might be onto something.

And why are they broken? The answer of course is in history and forecasting. When was the last time you saw any kind of forecast that was even remotely accurate? Whether it’s a weather, sales, purchasing or production forecast—they are all fundamentally flawed because they are using HISTORY as a basis for the FUTURE. And seriously, if anyone had figured out how to accurately forecast, we would all be rich from playing the stock market….

That, my dear friends, was the piece I was missing all along. The reason I was skeptical about MRP was entirely because I knew that it was fundamentally flawed. So now we have that out of the way—what is the solution? Stay tuned—Part 2 to follow….

-Gavin Davidson - Vertical Market Expert, Manufacturing