Actively Synchronized Replenishment - the Business Case
The benefits of ASR naturally depend on the starting environment.
- In an environment where ERP is the dominant Materials planning & execution and Production planning & execution support tool, the Actively Synchronized Replenishment (ASR) business case revolves around improved competitive edge performance (lead times, on time delivery, order fill rates) allied with increased productivity, reduced expenses, and reduced inventories.
- In an environment where a Pull-based Lean manufacturing implementation is being hog-tied by chronic shortages, the ASR business case still revolves around the effects of improved materials synchronization but the leverage can be even greater – ASR can even be the difference between success and failure of the Lean effort.
To be blunt, the time, energy and expense being directed into a Lean implementation where chronic shortages of materials, purchased parts and manufactured components are blocking the Pull system on a regular basis could almost be considered a form of muda … waste … unless you have a solution.
- In an environment where a complex, multi-level Bill of Materials or even just material supply problems are interfering with a TOC Drum-Buffer-Rope implementation ASR’s leverage is in simply helping to remove those obstacles.
Even a weak DBR implementation is a major step-up over not using DBR, but the level of frustration from shortages can still be very high and the steps to immunize the schedule against these problems can increase lead times beyond what should really be possible. ASR helps a TOC company better Exploit its constraints, and subordinate non-constraints, in complete alignment with the Goal of the company.
Typical results of an Actively Synchronized Replenishment (ASR) in a conventional ERP environment include:
- Order fill rates boosted from 70% to 98%
- High material and component availability for Lean Manufacturing and TOC initiatives
- Weeks stripped out of lead times
- Inventories reduced … often greatly reduced. Although inventory reduction isn’t the prime motivator for ASR, in some environments the impact is major.
- Whole-plant Productivity boosted … literally, more products can be made and shipped with the same resources.
ASR’s results provide benefits on all ends of the economic spectrum.
They help a company capitalize on the good times – for example, when they’re riding a hot market – much more effectively than their competitors can.
And with reduced lead times, lower inventories and superior product availability they position a company to eat their competitors’ lunch when the economy weakens, potentially dampening or even eliminating the effects of a market downturn.
The Range of ASR outcomes
- The flow of work through the plant is protected against supply and demand variability. So, the flow improves substantially.
- So – there are fewer expedites, fewer rushes and panics, fewer resource-sapping recoveries from the fact that reality wasn’t quite as predicted. Better use of capacity. Better use of materials.
- Consequently, whole-plant productivity soars. In effect, costs per unit (in conventional terms) are substantially reduced.
- On-time performance is similarly protected against supply and demand variability; high performance levels are routine, even given the reality of Murphy.
- Inventory is “Right Sized.” Inventories are aligned with real consumption, not forecasts that are often extremely unreliable. You no longer have “too much of what we don’t need, not enough of what we do.”
- Execution is greatly improved. You’ll see early warning of supplier problems, delayed work orders etc – in time to act and preempt the problems from becoming a schedule disruption.
- Shorter lead times give you the opportunity to bid for and win business you might not have stood a chance of winning before ASR. Or to charge a premium price where faster-than-standard delivery carries a real value to the customer.
- With pin-point precision you can see the impact of holding or not holding inventories of materials, purchased parts, manufactured components, and finished products at the plant warehouse and down the supply chain.
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