Demand-driven manufacturing gets software tools to make it real

That’s the bold claim by simulation and modelling software specialist Ilog for its latest planning and scheduling solution, which now features what’s believed to be industry-first support for dynamic safety stocks. The company makes a good case for this being a seriously good answer to reducing inventories and improving service, and, most important, moving towards achieving demand-driven manufacturing. Why? Because it can plan for optimised production, taking into account service level targets and demand variability. It also provides new plant design and process design capabilities, aimed at enabling industrial engineers and production planners to collaborate better. Ilog suggests, with some accuracy, that, to date, safety stock targets have been set at the plant level, using guess-work, formulae or algorithms that make assumptions on production lead times. You know the kind of thing: based on the safety stock targets, planners build a production plan that may be far from the initial assumptions, thus invalidating the stock targets. Hence higher inventory levels than necessary or stock-outs. The point about PPO 3.1 is that it apparently provides a holistic view, spanning from demand (and taking into account variability) to safety stock targets to the production plan – meaning that old best practices can go out of the window, and safety stocks can finally perfectly covers production and demand variability – saving money, headaches and service.