Hi Paul, how's your view on make to Demand then (which tries to do both)? For the factories it works pretty much like make to stock, for you target to keep a specific WIP and stock level in your logistic chain, while the demand planning and sales side of the business incorporate make to order ideas by changing the min-max stock limits depending on seasonality and mid/long term forecasts. It's used in different industries, but I think that in 'my' cheese business there is good reason not to really make to order - the lead times are seriously impacted by cheese ripening times (4 week minimum, but several months for mature categories). But we also know that there are predictable fluctuations in market demand. We indeed don't stop producing a product just because there were not orders in yet, orders are just one of the factors in sales demand forecasting. But I do think this is more involved than checking "pattern changes."
Hi Tom - Sounds like make to stock, the stock level calculation is based on demand so I'd say it's the same or similar. I would need the understand the logic better, but the changes in max/min levels should be very rare once a year perhaps, if you constantly fiddle, you'll create a disaster (SPC rules). The food industry often has seasonal patterns though that are very predictable that could be used to modify stock levels. However, I don't think a min/max system needs modifying even for that. I once ran a simunlation with client (using real historical data). the demand for the product had tripled! So we decided this would be good data set to test the robustness of min/max. It never stocked out! Even when demand tripled. Your supply chain works on flow not stock, as long as the flow works the stock does not necessarily need to change...
I just rewatched this great video! What if my company does mainly sell assemblies. Can we make the subassemblies to stock and the assemblies to order, calculating the lead time "only" for assembling or would you still insist on either M.T.S or M.T.O with the whole lead time? I also see the parallels between the M.T.O and SPC, hands off!
Sascha - what you suggest is perfectly ok. If Sub Assy A and B are make to stock they are always make to stock. If final assembly C is make to order it is always make to order. When you sometimes make to stock and sometimes make to order....it's a disaster!!
Question:should I produce to order or to stock? Answer:build to leveled demand. Why? Because this reduces variation in the upstream process, and variation causes waste.
Hi Paul, how's your view on make to Demand then (which tries to do both)? For the factories it works pretty much like make to stock, for you target to keep a specific WIP and stock level in your logistic chain, while the demand planning and sales side of the business incorporate make to order ideas by changing the min-max stock limits depending on seasonality and mid/long term forecasts.
It's used in different industries, but I think that in 'my' cheese business there is good reason not to really make to order - the lead times are seriously impacted by cheese ripening times (4 week minimum, but several months for mature categories). But we also know that there are predictable fluctuations in market demand. We indeed don't stop producing a product just because there were not orders in yet, orders are just one of the factors in sales demand forecasting. But I do think this is more involved than checking "pattern changes."
Hi Tom - Sounds like make to stock, the stock level calculation is based on demand so I'd say it's the same or similar. I would need the understand the logic better, but the changes in max/min levels should be very rare once a year perhaps, if you constantly fiddle, you'll create a disaster (SPC rules). The food industry often has seasonal patterns though that are very predictable that could be used to modify stock levels. However, I don't think a min/max system needs modifying even for that. I once ran a simunlation with client (using real historical data). the demand for the product had tripled! So we decided this would be good data set to test the robustness of min/max. It never stocked out! Even when demand tripled. Your supply chain works on flow not stock, as long as the flow works the stock does not necessarily need to change...
I just rewatched this great video! What if my company does mainly sell assemblies. Can we make the subassemblies to stock and the assemblies to order, calculating the lead time "only" for assembling or would you still insist on either M.T.S or M.T.O with the whole lead time?
I also see the parallels between the M.T.O and SPC, hands off!
Sascha - what you suggest is perfectly ok. If Sub Assy A and B are make to stock they are always make to stock. If final assembly C is make to order it is always make to order. When you sometimes make to stock and sometimes make to order....it's a disaster!!
Question:should I produce to order or to stock? Answer:build to leveled demand. Why? Because this reduces variation in the upstream process, and variation causes waste.
Steve - I totally agree, this is without doubt the best way to run, in my question I would say that is a make to stock system...