The planned lead time offset in the bill of material (or item master) dictates how far in advance a planned order is released relative to its need date. If it is set incorrectly (e.g., to a standard lead time that is too short), the system will release orders too late, causing the exact misalignment described. Adjusting this parameter ensures planned orders are released with enough time to meet the actual requirement date.

Utilization measures how much a resource is used (busy time vs. available time). Efficiency measures how well it performs during that busy time (actual output vs. standard output). High utilization with low efficiency means the machine or labor is constantly occupied (busy) but is not producing at the expected rate—perhaps due to aging equipment, untrained operators, or frequent minor stoppages. This is a classic bottleneck symptom where the resource is the constraint but is not operating optimally.

The reorder point (ROP) is calculated as (Average Demand during Lead Time) + Safety Stock. Safety stock is primarily needed to cover uncertainty in demand and supply lead time. By negotiating a shorter and more reliable (less variable) lead time, the ‘Average Demand during Lead Time’ component decreases, and the required safety stock to cover lead time variability can also be reduced. This allows the planner to lower the ROP and thus the average inventory level, while potentially maintaining or even improving service levels.

The core purpose of the S&OP process is to achieve consensus on a single, integrated, and realistic operating plan that aligns all business functions. When a mismatch between demand and supply is identified, the team must collaborate to develop alternatives (e.g., phased capacity increase, demand shaping, prioritization) and agree on a plan that best meets the company’s strategic and financial objectives. The goal is not for one function to dictate to another, but to create a synchronized plan.

The heijunka box is a tool for production leveling (heijunka), a foundational lean concept. It is used to schedule small, consistent quantities of various product types throughout the day, rather than producing in large batches. This smoothes the demand on upstream processes and the supply chain, reduces inventory, improves flexibility, and makes problems more visible. It directly addresses the waste of overproduction and unevenness (mura).

Total Cost of Ownership (TCO) aims to capture all costs associated with acquiring, using, and maintaining an item from a particular supplier. While price is important, costs of poor quality (e.g., inspection, rework, scrap, returns, warranty claims, and the business impact of field failures) are often hidden but significantly impact the total cost. A supplier with a lower unit price but high defect rates can be far more expensive than a slightly higher-priced, reliable supplier.

A core TOC principle is that the throughput of the entire system is determined by the bottleneck. Therefore, the primary scheduling rule is to subordinate all other resources to the bottleneck. The bottleneck schedule is the drumbeat for the plant. You protect it from starvation with buffer inventory *before* it (not after), and you ensure its output is not blocked. Non-bottlenecks should not be run at 100% if it creates excess inventory that the bottleneck cannot process; their utilization is secondary to supporting the bottleneck’s flow.

MRP is a netting and time-phased logic. When net requirements are calculated (Gross Requirements – Projected Available Balance), and a shortage is identified, the system’s first response is to generate a planned order release in the appropriate time period to cover the net requirement. Expediting, deferring, or canceling existing scheduled receipts are manual or automated control actions a planner might take *after* seeing the planned orders, but the initial system-generated solution is the creation of a new planned order.

Supplier development is a collaborative, long-term strategy where the buying organization actively invests in helping a key supplier improve. This can involve sharing expertise, providing training, co-investing in technology, or conducting joint process improvement projects. The goal is to build a stronger, more capable, and more reliable supply partner, rather than simply switching suppliers or imposing punitive terms. It’s characteristic of a strategic partnership rather than an adversarial relationship.

The planned lead time offset in the bill of material (or item master) dictates how far in advance a planned order is released relative to its need date. If it is set incorrectly (e.g., to a standard lead time that is too short), the system will release orders too late, causing the exact misalignment described. Adjusting this parameter ensures planned orders are released with enough time to meet the actual requirement date.0