Strategies for Managing Supply Chain Challenges

The last few years have caused chaos in supply chains everywhere. Some common concerns:

  • Longer lead times from vendors
  • Longer production times
  • Unavailable parts

No ERP system can "fix" supply issues, but there are some things you can do to make sure the system is giving you the best information possible.

Keep Lead Times Accurate

If it used to take 12-weeks to receive a purchased component and it now takes 24-weeks, planning needs to know this so it can accurately advise when purchase parts are required. The same is true of your own production time. If your labor force or machines or processes have changed, lead times for manufactured goods should also be reviewed.

While you don’t want to make changes for one-time anomalies, if longer lead times are “the new normal” you’ll need update them in PowerShift.

Vendor Lead Times (specified in VMM)

If you use VMM (Vendor Price Maintenance), keeping the vendor lead time accurate will help you make decisions about where and when to purchase raw materials. Vendor Item Price Inquiry (VIPQ) is a great tool to compare lead times (and prices) from different suppliers.

Item Lead Times (specified in IMB)

There are five lead times in IMB:

  • Accum LT: accumulated lead time is the total amount of time required to produce an item (more below)
  • Mfg LT: manufacturing lead time is the time it takes to make an item
  • Order prep LT: order preparation lead time is the time it takes to prepare an order
  • Intransit LT: in-transit lead time is the time between placing an order with a vendor and receiving the goods
  • Put-away LT: put-away lead time is how long it takes to move an item from the receiving dock to putting it into stock

MRP considers lead times as follows:

  • If the item is a make item: MRP sums the Order prep and Manufacturing lead times
  • If the item is a buy item: MRP sums the Order prep, Intransit and Put-away lead times

MFP considers accumulated lead time:

  • Accum LT can be entered manually or it can be updated by the Manufacturing Lead Time Update (MLT) program
    • MLT computes an item's accumulated lead time of items by ‘walking’ its bill of material (using the current ECL) and summing appropriate lead times based on whether the item is made or bought (per MRP logic, as noted above).
  • The lead time update (LT update) flag in IMB provides further control of how MLT calculates lead time, as follows:
    • If N: the accumulated lead time is not computed
    • If E: the accumulated lead time is computed excluding move time and queue time per the current routing
    • If I: the accumulated lead time is computed including move and queue time per the current routing
  • If Accum LT = 0, MFP uses the sum of the Order prep + Mfg lead times

Review Safety Stock

Setting up safety stock for your most critical parts can help smooth out the impact of changes in lead times. Planning includes safety stock in demand requirements and will create supply orders to help ensure the safety stock level is maintained.

The Inventory Safety Margin Report (ISMR) is a useful tool for watching safety stock levels.

Set up Substitute Items

You may be able to substitute different items for those that are unavailable. Item Substitution Maintenance (ISM) sets up replacements for out-of-stock items at the item level; Bill of Material Maintenance (MPS) can provide further control for substitutions on goods you build. In MPS, you can identify substitutes for specific components and part designators and also indicate where substitutions are prohibited.

After a manufacturing order is released, Material Usage Maintenance (MUA) maintains the components for the order. If a substitution is required, MUA lists the acceptable substitutes and lets you select which item to use.

Other Inputs to Planning

Other planning inputs should periodically be reviewed for accuracy and to improve production efficiencies. The Min order qty, Lot size, and Max plan period fields (specified in IMB) determine the size of planned orders. Planning logic determines the net requirement.

  • Max plan period is the number of shop days that you want an order to cover. For example, if you have a net requirement of 5 for March 6th, 7th, 8th, 9th & 10th and a Max plan period of 5 days, the planning program will create one planned order with a due date of March 6th for a quantity of 25 rather than 5 planned orders each for a quantity of 5 with due dates of March 6th, 7th, etc.
  • Lot size is the standard quantity in which this item is ordered or produced. Using the above example, if the Lot size is 10 and the Max plan period is 5, the planned order would be created for a quantity of 30 due on March 6th.
  • Min order qty is a factor of economy of scale. Again, using the above example, if the Lot size is 10 and the Max plan period is 5 and the Min order qty is 50, the planned order would be created for a quantity of 50 due on March 6th.

Routings provide additional control of planned order size. For Make items, the Max order qty (specified in the routing header with RTM) is the maximum quantity allowed on a single manufacturing order. This can be very useful, especially if you need to maintain or reset a machine after a certain quantity is run. For example, if the planned order requirement is 500 and the maximum order quantity is 100, the system will create five planned orders of 100 each.


If you have questions about these or other concepts, contact Helpdesk.