The Death of DRP

DRP is dying. It is a slow painless death. It is just slipping away into oblivion.

Born in 1973, Distribution Requirements Planning (DRP) was the workhorse of inside-out processes that is now outdated for the demand-driven world. The home of DRP, the DRP table, just no longer has a fit in supply chain planning based on outside-in processes. Consider the changes: 

• Forecast demand for each SKU is being replaced by demand sensing and shaping technologies.
• Current inventory level of the SKU target safety stock is being redefined by multi-tier inventory management pull-based processes.
• Recommended replenishment quantities are being replaced by outside-in backward population of customer requirements based on downstream data.
• Replenishment lead times are still in play, but it is no longer a number in isolation. Instead, it is the reflection of actuals reflecting true supply chain capabilities. 

In life, DRP looked very much like its sister MRP. Both were pushy applications built on the assumption that an order represents true demand and that planning can be improved through rules-based order logic.  In real life, companies found that push is less effective than pull and that rules cannot be configured to represent true--downstream--demand. It's a fact that few realized too late.

A veteran of Year 2000 hysteria and the over-hyped Advanced Planning System (APS) market, DRP was once a workhorse for inside-out applications. As the end grows near and the market moves to outside-in applications, few remember that supply chains need to be designed, that there is a need for both push and pull-based supply chains, and that DRP still has a role in push-based supply chains. The concept of one-way flows of DRP is being replaced by bi-directional flows tightly integrated into logistics based on push-pull decoupling points. DRP will be survived in death by supply chain salesmen (affectionately named arm-twisters), well-intended supply chain consultants, academics, and hangers-on.

There will be no funeral. There will be no returns accepted for DRP software by software vendors. Companies will be asked for contributions to fund new solutions.

What do you think? Do you think that DRP is dead or dying?

Cool Technologies for Food Traceability

I loved David Mackay, President and Chief Executive Officer of Kellogg's demonstrated leadership before the U.S. House of Representatives on March 19. Kellogg was a victim of the recent recall of PCA peanut products. PCA Coporation, the now infamous manufacturer of peanut butter products, provided ingrediants that resulted in a $70 million dollar loss for Kellogg impacting the stock price .12/share. The company had relied on the industry standard of inspection by AIB; and unfortunately, found out that inspection is not adequate. For those of you that have not read it, it is worth a read.

His recommendations of a single food safety organization, risk assessment, and a revisiting of Grocery Manufacturing Practices (GMPs) strike at the heart of the issue, and our research supports his recommendations. He is so right! However, we would like to see one other consideration. We would like to see manufacturers take one more step: direct communication to the customer at the shelf at the point of purchase. 

Let's face it, we don't make it easy for the consumer. For example, take the pet food recall of 2007 that resulted in 42 million in write-offs and 90 lawsuits. I love my dog, and I wanted to buy them <we now have 6> healthy food; but the more that I read the recall notices, the more confused, I became. I had no idea what products were safe. I cringed when I heaved the 50 pound bag of dog food into the cart.

Today, I had briefings from two technology providers—FoodLogicQ and TraceGains—that are attempting to make it easier for the manufacturer to talk directly to the consumer.

Consider the use of QR codes, used frequently in Japan, that will allow consumers to use their picture phone to access updated information.  Where the product was manufactured.  The current state of the product on a recall or validation of a claim (organic, allergan free, range free, etc.).  As they say in Star Trek, "Beam me up Scotty." I love it.

Last week, FoodLogi Q launched a mobile application (mobilemarQit) that is in pilot tests with two customers to interface with the customer at the shelf where it matters most. Mobile device communication with the consumer at the shelf is going to change the buying experience.  It works with either a short code on the label or transmission of the QR code through a picture phone. On-demand access of where a product was made, the recall status, or validation of a claim, very cool.

Not to be outdone, Trace Gains, a provider of traceability technologies, has over been actively engaged with a similar application that tracks back to their e-affidavit that can track 255 attributes in a web-based form. It is fed through their e-affidavit system from the field.

Yes, we are getting closer to technologies that track from field to fork; but more importantly, the technologies are now allowing us to interface with the consumer at the point of purchase. It can be a differentiator at the shelf.

It may also be needed for compliance. Recently, SAM's Club published a letter to produce suppliers outlining compliance standards for fresh produce. Kroger, Food Lion, and Winn Dixie have followed suit. While their standards are not as severe, the industry is moving from case- to unit-level tracking, and ultimately to mobility-enabled technology at the point of purchase. Cool, very cool.

Private label is growing. It has never been higher. Branded food and beverage manufacturers are under attack. In this time of recession, wallets are getting thinner. Grocery lists are getting shorter. However, I know that my certainity of a manufacturer going the extra mile to deliver the brand promise would sway my decision on what to put in my cart. I might even smile when I heave that 50 pound bag of dog food in my cart. What do you think? Would it make a difference for you?