An Executive Overview of Actively Synchronized Replenishment

This Executive Overview is intended to provide to-the-point answers to the questions:

1. What is Actively Synchronized Replenishment (ASR) ?
2. Who can use ASR?
3. What are the benefits from using ASR?
4. What are the costs of using ASR?
5. What is the shape of a typical implementation?
6. Where is the best place to start?

1.  What is Actively Synchronized Replenishment (ASR) ?

ASR is a solution to a major and common problem, and an opportunity for a distinct competitive advantage, aimed at manufacturing businesses that use ERP software in challenging and complex environments … including those attempting to implement “Pull” systems such as Lean Manufacturing or Theory of Constraints.

The nature of the problem solving and the opportunity for competitive advantage are:

a) To solve some serious problems that afflict many ERP users; the most common problem being chronic shortages of materials, parts and components that interfere with the execution of production schedules, whether traditional  schedules or Lean or TOC “Pull” based schedules.

b) To offer the opportunity to gain a competitive advantage through either a reduction of lead times in a market sensitive to lead times, or an increase in service levels (fill rate, or on time delivery).

Other problems solved include:

• Relief of expediting expenses associated with emergency sourcing and shipments and overtime.
• Stabilization of production schedules.
• A reduction in reliance on forecasts.
• High visibility priority management available internally and to suppliers.
• True priorities even for make-to-stock items.
• The elimination of “personal workarounds” that emerge in many companies in the form of personal Excel spreadsheets and Access database, considered necessary to fulfill daily tasks.
• Commonly … serious reductions in overall inventory.

2. Who  can use (best use) ASR?

Even “straightforward” ERP users faced with managing Finished Goods (in plant or in downstream supply chains) and Purchased parts and materials inventories are likely to gain an advantage from ASR and are candidates for the technology.

However, companies that will MOST benefit from ASR — where there is really no other solution, and the problems are major — are those with a complex or challenging manufacturing environment that leads to many needed materials, parts and components being unavailable when needed; and that leads to a common complaint of “too much of the inventory we don’t want, too little of what we do want.”

Such a company might be a “simple” ERP system user; or, it might actively be attempting to implement a “demand-pull” system such as Lean Manufacturing or Theory of Constraints, and experiencing a high degree of frustration through constant poor availability of needed materials, parts, components and finished goods. Especially with Lean attempts, a common symptom can be conflict between the ERP and Lean protagonists, even leading to demands to turn-off the MRP element of the ERP system (which may be disastrous).

An example of a complex or challenging environment is where a company has a very deep Bill of Materials (our most extreme example is a 28-level deep BOM), or where many materials and components have multiple used-on situations, or where many parts are sourced from Asia with long lead times and significant variability in the reliability delivery, or where complex Routings in the plant contribute to weeks-long production lead times.

However, companies with service level problems with made-to-stock goods can also take advantage even if their environment isn’t “challenging” according to the above guidelines; similarly, companies wanting to shrink their lead times in order to respond to marketplace demands may be candidates for ASR.

3. What are the benefits of ASR?

• Order fill rates boosted to the 98% level and above
• High material, purchased parts and manufactured component availability even where there is variability in demand and supply.
• Weeks stripped out of lead times in some long-lead-time environments.
• Inventories reduced … often greatly reduced.
• Whole-plant productivity boosted.
• Expenses reduced in terms of less overtime, less premium freight (incoming and outgoing), and fewer incidences of premium pricing when expediting materials in.
• Elimination or at least a major reduction of the number of “personal workarounds” that people feel compelled to develop because they don’t believe they can perform their job effectively within the ERP system.
• ERP systems start to generate the type of results that were always hoped for but had never materialized.
• Stalled Lean implementations find a basis for genuine demand-pull flow through the resources.

4. What are the costs associated with Actively Synchronized Replenishment (ASR) ?

The actual costs vary greatly depending on the nature of the client’s environment, and include costs associated with an initial modeling of the client environment and examination of opportunities for lead time reduction and inventory reduction, the service fees including consulting, education, and implementation support; costs may include license fees for software support of ASR and if so,also for training and implementation.

The total investment in ASR is typically negligible in relation to the banked benefits, even with the most  conservative calculations.

5. What is the “shape” of a typical implementation?

Again this varies greatly depending on the specific client environment.

Beyond the early exploration of the concept via public or company-dedicated webinars, there is typically an initial on-site session to examine a client’s data, “model” the environment, and assess the potential for improvements in availability, reductions in lead time and reductions in inventory.

In the implementation,

a) Strategic inventory locations are selected.

b) The profiles of the Dynamic Stock Buffers are defined.

c)  The Pull-based demand generation system is “turned on,” following appropriate training and education.

d) The focus turns to effective execution, using the ASR tools.

ASR implementations can be surprisingly short in duration, but this cannot be generalized for all environments.

6. Where is the best place to start?

We recommend that managers start with the following sequence:

1. Download our free White Paper, if you haven’t already.
2. Browse the site, starting with “ASR – Actively Synchronized Replenishment” or the FAQ.
3. Join our Webinar list … you’ll see if we have any Webinars scheduled, and we’ll give you a heads-up every time we schedule a Webinar, and also let you know of any recordings of previous Webinars so you can stay on top of things.
4. Consider buying Chapter 12 of the brand new (2010) Theory of Constraints Handbook, it’s a 32-page digital download that expands on all elements of Actively Synchronized Replenishment.

If you want to ramp-up your interest, consider:

• A customized, company-dedicated Webinar.
• Most powerful of all … an in-house session to model the client environment and identify opportunities for lead time reduction and inventory reduction. At this stage exactly what benefits are likely from an implementation for the client are clear and data-supported.

If you want to short-cut all the above and talk directly to someone who can answer questions … call me (Steve Jackson) at 604-668-3253 or email me using this contact form. If I can’t answer a question, I’ll connect you quickly to someone who can, or get back to you promptly.