Collectively the authors would like to thank the members of the Demand Driven Institute Global Affiliate Network for a great partnership in bringing demand driven concepts to the mainstream throughout the world. These businesses include:
• Advanced Operations Management School
• Advanced Value Chain Institute (AVCI)
• Agilea
• A.L.T. Limited
• Ardent Solutions
• Australasian Supply Chain Institute (ASCI)
• Axoma Consultants
• B2Wise
• Bevolta
• Camelot Consulting Group
• Catena Strategies
• Centro Ecuatoriano para la Excelencia Operacional (CEEO)
• Citwell
• CMG Consultores
• Constraints Management Group (CMG)
• Demand Driven Mexico
• Demand Driven Technologies
• École Centrale de Lyon
• EPCS
• Festo Italy
• Flowing Consultoria
• High Impact Coaching and Strategies
• International Supply Chain Solutions (ISCS)
• K-2 Solutions
• Kent Outsourcing Services
• Knowerx
• MGCM
• Olivehorse
• Orchestr8
• Production Management Institute
• San Martín & Asociados
• SAPICS
• SmartChain
• Steam
• TOC Vision
• Transitive Management
• VAPICS
• Venture International
Additionally, the authors would like to thank various members of the APICS community for their amazing input and support in trying to restore the promise and effectiveness of planning and information systems. Those people include Keith Launchbury, Roberta McPhail, John Melbye, Ken Titmuss, Olivia Reary, and Abe Eshkenazi.
The authors would like to point out particular individuals who have made a lasting contribution to the demand driven body of knowledge and awareness. These people include Greg Cass, Debra Smith, Erik Bush, David Poveda, Dick Ling, Paddy Ramaiyengar, Kirk Black, Caroline Mondon, Alfonso Navarro, Dr. Patrick Rigoni, Dr. Steven Melnyk, Christoph Lenhartz, Dr. Romain Miclo, and Alfredo Angrisani.
Chad Smith would like to thank his wife, Sarah, and two daughters, Sophia and Lily, for putting up with the process of writing books and courseware. The support and love of these three people has kept him going. Chad would also like to thank the team at Constraints Management Group, LLC, for an amazing journey for nearly 20 years. Specifically, Chad would like to acknowledge the inspiration and accomplishments of his mother, Debra Smith; her direction-setting vision has been instrumental in articulating the demand driven adaptive enterprise model. Finally, Chad would like to thank his partner and coauthor Carol Ptak for an extremely rewarding and fulfilling partnership.
Carol Ptak would like to thank her husband, Jim, for the understanding and the continued support to keep going through the tough times. Words are so insufficient to acknowledge her parents, Dorothy and Bud, who taught her from the youngest age that she was limited only by her imagination even at a time when the glass ceiling was more like concrete. Their love and encouragement has been the wind under her wings. Carol would especially like to thank Chad Smith for an incredible experience and continued partnership—far beyond any that could ever have been imagined. Chad has opened all our eyes to the deeper truth of a new world of planning. The process of writing three books together has been an incredible journey and truly has been an honor and the highlight of a very long career.
The Current Planning Challenge
The Objective and History of Planning
First, what do we mean by “plan” or the action of “planning,” and who are the people involved? Let’s start with some definitions from the fourteenth edition of the American Production and Inventory Control Society (APICS) Dictionary:
Plan: a predetermined course of action over a specified period of time that represents a projected response to an anticipated environment to accomplish a specific set of adaptive objectives. (p. 126)
Planning: The process of setting goals for the organization and choosing various ways to use the organization’s resources to achieve the goals. (p. 127)
Planner: 1) The person normally responsible for managing inventory levels, schedules, and availability of selected items, either manufactured or purchased. 2) In an MRP system, the person responsible for reviewing and acting on order release, action, and exception messages from the system. (p. 102)
Thus the reason we plan is to orchestrate, coordinate, and synchronize an organization’s assets to a purpose, most often to sell an item or service. What do we make? When do we make it? What do we buy? When do we buy it? What do we deliver? When do we deliver it? What do we move? Where do we move it? The more complex the products, services, and supply chain scenarios, the more apparent the need for effective orchestration, coordination, and synchronization. What then should we use as tools in order to accomplish this objective?
To truly understand the state of planning today, it is necessary to discuss the history behind the conventional approach. Where did it come from? What did it replace?
Today most midrange and large manufacturing enterprises throughout the world use a planning method and tool called material requirements planning (MRP). This method and tool was conceived in the 1950s with the increasing availability, promise, and power of computers. Computers allowed for rapid and complex calculations about what and how much was needed to be bought and made given a specific demand input. The nature of that demand input will be of particular importance later in this book. Industry was plagued with shortages, mismatched inventory, lack of proper priorities, and a need for matched sets of parts. Practitioners were hopeful that the mathematical precision that was now possible with computers would solve these problems.
By 1965 the modern acronym “MRP” was in existence. The year 1972 saw the incorporation of capacity reconciliation into MRP called closed-loop MRP. In 1975, Joe Orlicky wrote the first book on MRP and this started a whole new software industry. Manufacturing