Proven Alternative to MRPII for Optimizing Supply Chain Performance

Citation

Walley, P. (1999), "Proven Alternative to MRPII for Optimizing Supply Chain Performance", International Journal of Operations & Production Management, Vol. 19 No. 10, pp. 1-2. https://doi.org/10.1108/ijopm.1999.19.10.1.1

The authors of this book all work for Lucent Technologies in Spain and the USA, where they have been involved in the development and implementation of the “3C” inventory management methodology. This book is intended to serve as an explanation of 3C, based on their experiences of implementation. Their key message is that 3C can match or outperform MRP systems in most supply situations.

The book is divided into three main sections, with ten main chapters. The first two chapters carefully critique the performance of MRP and MRPII inventory systems. The authors quote from surveys that point to a failure to recoup the investment in MRP. The reasons quoted in much of the management literature for the failure of MRP systems such as lack of management commitment, lack of user training, inaccurate data etc. are dismissed as distractions. The authors assert that “The real reason for MRP′s failure is that it is based on a flawed model”. In short, the negative characteristics of MRP include the push system, the use of sales forecasts, the complexity, the focus on one small part of the supply chain and a design for a “seller′s market”.

The second section starts to explain the alternative to MRP. The 3Cs actually are capacity, commonality and consumption. Chapter 3 explains the principles using a number of simple illustrations of the concepts. A 3C system contains an analysis of the capacity of a business or network. Maximum sales rates for individual products and total units sold must be defined, together with intended service levels, known as TOPs (Table of Pulls). 3C tries to exploit the potential benefits of commonality, whereby products sharing the same components can be identified and a total consumption rate jointly defined. This stock within the system is also measured using figures such as time between purchases and lead time. Chapter 4 finishes with a worked example of a stock control situation which compares the performance of MRPII, synchronised MRP and 3C. You will not be too surprised when you are told that 3C performs better than the others in terms of total sales, stock turns and delivery performance.

Chapter 6 tries to establish whether or not 3C is always better than MRP. The intentions here are entirely honourable, with an attempt to analyse the sensitivity of 3C to changes in forecasting accuracy, commonality of components and sales density. However, the scale of the mathematical analysis is too great, with too many over‐complicated and poorly reproduced graphs to make the chapter properly readable. This analysis is continued in the following two chapters, with the authors maintaining their critique of MRP. In chapter 9, there is also a strong critique of ERP systems, which the authors believe may prove to be too inflexible.

The final chapter contains a lot of the mathematical detail of how 3C works. It is intended as a more technical view of the concept, which is far more concerned with the mechanics of the system rather than why it should be adopted.

Overall, I found this book to be a well‐intentioned introduction to a new concept. The authors have tried their best to promote their ideas with reinforcement of the messages by careful analysis and modelling. This makes a welcome change from other texts which promote new ideas without an awareness of the need for evidence to support the assertions. The book does rely too much on the simple worked examples and would be strengthened by a more careful explanation of the Lucent Technologies 3C implementation. If other organisations adopted these principles, the book would benefit from these examples as well.