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Former Member
Dec 08, 2009 at 02:05 PM

Question on planning for long lead time Consignment Stocks

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Hi,

We're trying to "turn on" MRP here. We have several customers that we currently keep supplied with consignment stocks. These are relatively long lead time items - from 2-6 months to produce. There is a sturdy SD process in place that fits. I am told that MRP does not do properly consider consignment stocks or safety stocks.

As an example, let's say we have 500,000 pieces in inventory. The customer sends us a forecast that says they plan to use roughly 100,000 pieces per week for the next 8 weeks plus about half that for the another 8 weeks and then another build up. Of course in real life the numbers are quite that constant.

We need to maintain 4 weeks of product at the customer's site ahead of their needs. We want to optimize the stock levels there so that we're not running out of stock but also not carrying too much inventory at the customer location.

I have been told by an old hand that MRP does not adequately consider the consignment stocks when it comes to maintaining stock levels, although I've not been able to get a clear picture of why this is. Is this an accurate assessment, or is this a misunderstanding of how MRP works?

Thanks,

Greg