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Subject: Re: POs considered harmful for dependent demands


I'm not sure if there is a real difference. Whether it is a PO or a
dependent demand, one is satisfying a need with a service or a good.  No
matter what you call it it is a request for item, quantity and price
(information) coupled with a linked payment stream.  A distinction can be
drawn between push and pull mechanism but ultimately it is the user with
the need who initiates the process.

Andrew Macpherson

> From: Bob Haugen <linkage@interaccess.com>
> To: ebxml-bp@lists.oasis-open.org; ebxml-core@lists.oasis-open.org
> Subject: POs considered harmful for dependent demands
> Date: Tuesday, 15 February 2000 3:51
> 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

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