In the world of Distribution Requirements Planning (DRP) and Sales and Operations
Planning (S&OP), there are many potential strategies for success. Most times though, these
two solutions can be in conflict.
In an ideal world, a pull system would be the best mechanism for replenishing inventory in
distribution centers. But those unplanned and often unexpected pulls can cause chaos in
the supply chain.
Glovia DRP
With the new GLOVIA G2 module, Distribution Requirements Planning, a user can have the
best of both worlds, a Kanban or pull system for replenishment purposes, backed up with
planning for the likely supplies needed.
From the Distribution Center (DC) perspective, whether there are multiple remote locations
or simply a location at the plant, a Pull mechanism is the most efficient for replenishment.
There may be space constraints that limit the amount of inventory that can be carried and
excess inventory may cause problems. Putting to one side the additional carrying costs of that
inventory, GLOVIA G2’s DRP module allows companies to plan the correct levels of inventory
at those locations and automate the replenishment process, thus reducing costs and creating
efficiencies at the distribution level.
The inputs to this calculation start with a forecast as to the likely consumption of an item
over time. Forecasts tend to be relatively ‘flat’, so along with the forecast GLOVIA G2 looks
at shipment history to calculate the likely standard deviation, and therefore coefficient of
variation, and apply that to the likely demand. Other factors taken into account are the
transport lead time from the supply source to the DC, the manufacturing lead time and the
manufacturing cycle. The manufacturing cycle tells the system how often a particular item
should run. It may be possible to manufacture a batch every day, but efficiencies dictate that a
particular item will be manufactured only once every week.
Of critical importance is the service level a company wants to provide, which is an additional
input that needs to be factored into the planning process. Based on all the inputs, the system
will calculate a time-phased plan for each DC where re-order point and re-order quantity
(ROP & ROQ) vary over time. Time periods are user defined and are typically weeks, months
or quarters, depending on market volatility.
The longer a time period, the more likely it is that the quantity difference between any two
periods may be significant and the supply chain may be challenged to supply the difference,
or it may be hard to slow down supplies quickly at the end of a period. Recognizing this, the
GLOVIA G2 DRP system allows a user to define ‘ramp’ duration at each end of a period where
quantities may be ramped up or down to reach the period levels more efficiently.