Throughput #18
Throughput #18
We were recently working with a manufacturer that had been struggling at the start of 2025, running at 70% availability … with warehouses full of stock.
The Operations Manager described the situation bluntly:
- “We have too much of the wrong stuff and not enough of what we need.”
- “We’re firefighting stockouts every day.”
- Engineering is overloaded
- “Inventory is bloated, but we’re still missing key parts.”
- “We’re buying just to keep the lines running.”
Sound familiar?
Like most manufacturers, our client assumed:
- If we just plan better, forecast better, or buy more—we’ll fix availability.
But the reality is:
Traditional ERP/MRP logic wasn’t built for today’s supply chain variability.
ERP/MRPs require:
- Forecasts
- Batch logic
- Static planning assumptions
That worked in stable environments.
But it breaks in today’s modern manufacturing environment where:
- Demand constantly shifts
- Lead times fluctuate
- Product mix is complex
So you get the worst of both worlds:
- Too much inventory overall
- Not enough of what actually matters
Essential shift #1: Right materials at the right time
The fix isn’t more planning. And it doesn’t have to be complicated.
It’s changing the signal that drives your system.
Instead of pushing inventory based on forecasts, high-performing operations use Demand-Driven Replenishment (DDR):
- A pull-based system
- Triggered by actual consumption
- Designed to absorb variability, not ignore it
This ensures you have the right materials available at the right time.
Simple in principle.
Harder in execution.
What actually makes it work
A true DDR system isn’t guesswork—it’s structured.
At its core:
1. Set the right inventory targets
Not blanket safety stock or kanban fixed sizes
You need SKU-level buffers based on:
- Demand and supply frequency
- Lead time
- Variability
2. Create a buffer “wall”
Define inventory targets that protect “maximum” consumption you are willing to absorb
This absorbs maximum normal variability without constant intervention.
3. Replenish what gets used
Not what the forecast says.
Consumption—not prediction—drives action.
4. Continuously adjust based on feedback
As demand and supply conditions change, so do your buffers.
The system learns and adapts.
Important:
You don’t need to rip out your ERP. You just need to stop letting it drive the wrong decisions.
What does have to change
To make this work, most manufacturers need to rethink a few habits:
- Stop relying on forecasts to decide what to buy or make
- Decouple production with strategic inventory buffers
- Use ERP/MRP as a system of record—not the decision engine
Sounds like a no brainer, right?
But in the real world, DDR can be challenging to implement when there are hundreds or thousands of SKUs involved.
Trusting the signal and the system
We created Roadrunner Rx software to handle this complexity by analyzing, monitoring and optimizing inventory at scale, in real time.
Four years ago we went a step further, launching our Roadrunner Rx Fully Managed Service that provides ongoing “what to buy / make” recommendations based on customer demand, supplier reliability, plant performance and other factors.
For the client I mentioned above, making this shift wasn’t initially easy.
At first, it was like they didn’t believe it could work: they kept punching holes in the plan that derailed progress.
But as soon as they decided to trust the signal and the system, results came fast.
Impact to date on availability, sales and lead time
Now they have the right materials on hand when they need them:
- Product availability is 95%+
- Revenue has increased 20%
- Last month, they shipped almost 20% more than they did a year ago
- They’ve also cut their lead time by one-third
And the story doesn’t end there. For this client, inventory management was the first component of a full Flow Management System implementation.
In our next newsletter, we’ll cover the second essential shift they’ve made (in production planning and execution) to further improve results.
If you’d like to explore what that looks like for your operation, please get in touch.
Thanks for reading!
— Jack Warchalowski, Montera CEO
[email protected]
Connect with me on LinkedIn
P.S. Need better plant performance? Start with our free inventory imbalance report as the first step to greater efficiency, higher margins and long-term profitability.
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