Re: POs considered harmful for dependent demands

["Doug Tozer" <Dougt@digerati.com.au>]

Violent Agreement - move away from yesterday
accomadate tomorrow!!
Doug Tozer
Digerati Pty Ltd
Australia
Telephone 61 3 9859 5800
http://www.digerati.com.au
----- Original Message ----- 
From: "Bob Haugen" <linkage@interaccess.com>
To: <ebxml-bp@lists.oasis-open.org>; <ebxml-core@lists.oasis-open.org>
Sent: Tuesday, February 15, 2000 3:51 AM
Subject: POs considered harmful for dependent demands


> Maybe everybody already knows this, so this is the short version.
> I have included this point in a different message, but wanted to
> make sure it was as clear as I could make it.
> 
> I still see documents going to this list that seem to assume 
> that purchase orders are the way all B2B ecommerce is done.
> 
> PO's are not a good mechanism for dependent demands,
> and if they are set in stone in ebXML in such a way that
> it is difficult to do business without using them, it will
> need to be redone for Internet-mediated commerce.
> 
> Dependent demands are demands that are dependent on some
> other demand, usually called the independent demand.
> This concept comes from MRP, the predecessor (and still
> included in) ERP software.
> 
> Dependent demands include the components of manufactured
> products, retail replenishments, shipping for almost any 
> purchased item, etc.
> 
> Purchase orders are a carryover from paper systems.
> They are usually composed of a collection of line items,
> often aggregating quantities over time periods.  They
> have no knowledge of how the purchases items 
> will be used, nor what processes and components
> are required to fulfill the order.
> 
> Dependent demands, by contrast, are totally dependent
> on whatever independent demand stimulated them in the
> first place.  
> 
> All dependent demands should be linked to their
> relative independent demand so if there are changes
> anywhere in the network of activities, they can be
> rippled out to the affected relatives.
> 
> For example, if a customer order for a finished good 
> changes in quantity or timing or is cancelled - the
> dependent demands should be changed correspondingly.
> 
> The PO is too heavy a mechanism for managing
> dependent demands - something more like an
> electronic Kanban or manufacturing schedule
> or point-of-sale event notification would be 
> better.
> 
> The same goes for invoices, which are unnecessary
> for dependent demands.
> 
> Comments? Violent disagreement or agreement?
> 
> -Bob Haugen
> 
> 
>