Now let's talk about internal information systems and those information systems are ones that are internal to one company. So examples of that would be for example an S&OP system. An S&OP system typically is used to take operational data and sales data, marry them up and create a sales and operations plan and that sales and operations plan of ways to forecast versus the capacity of the organization and tries to create some balance. It's also a result of a bunch of other systems that feed into it, such as maybe you have a forecasting system or you have some capacity management system. A lot of companies today would have an S&OP system, so it's fairly common place. The second type of system that I want to talk about is an MRP system, materials requirements system or materials resource system depending on the level of sophistication and those were actually around for a very long time. There are organizations back in the '60s and '70s that had early versions of MRP systems. Then what an MRP system does is ultimately it creates a production overview. I don't want to call it a production plan yet because that's what the master planning and scheduling system, the MPS system does. But an MRP system will typically tell you whether you have enough resources available to execute a certain demand plan. So that's why sometimes you have the back-and-forth with the S&OP system but typically it looks at all of the labor you have, all the machine capacity, and it sees if you can make a certain demand plan work. A master production schedule lays out in fine increments, sometimes down to the second what each machine in a production facility will work on, for how long, when it will switch over to something else, what the different people who are supposed to run these machines are doing and at all times. So that's the output of mass production schedule. A DRP system stands for distribution requirements planning, that takes all of your finished goods and then spreads them out according to where you think sales will occur in the field, so which warehouses are going to get which inventory, how much of it. Finally once inventory is in a warehouse, it is managed by a warehouse management system that controls the whole flow from receiving items to shipping them out and transportation will be managed by, believe it or not, a transportation management system, so that will have all of the movements of the different vehicles that you deploy to ship out your goods. So those would be what I would see as the most common supply chain system that a company would have internally. So now let me talk in a little bit more detail about the sales and operations planning. So you have forecast coming in, you have financial goals, you have plant capacity, and you have supplier capacity. The main question that you're trying to answer is, what are we making and what are we selling. In a materials requirements planning system, we feed in the forecast, we feed in the inventory, we feed in the bill of material and we also have our master production schedule. There should really be a double-headed arrow coming into the master production schedule but it will tell you what the raw materials to buy and in what quantity. So the master production schedule will use the forecast, the inventory, the bill of material, your machine utilization, your labor availability, and tell you what products to make, when, and what quantity and will layout as I said by minute what activities you'll do exactly. Distribution requirements planning, you're trying to determine what products to stock in each warehouse and in what quantity. So you'll use the forecast, the inventory, the production data. Your available capacity to store and your available capacity to transport and that will then make the determination of where to put all of your inventory in your entire logistics network. Warehouse management system will have a log for all the stock keeping units, the SKUs, the locations where you can put stuff, the orders you're getting in and the replenishments you're getting in. The main task is to determine where are your stocks located within the warehouse but it will also work on optimizing how you bring in orders, optimizing how you ship out orders, so it's both that receiving and that shipping of orders that is managed. So tell every warehouse worker exactly where to walk to, how to pick orders, and in what sequence. Then finally a transportation management system. What shipments do we have, where are they going and in what order are we fulfilling them? So you get information from all, the orders that you have, the locations, both that they originate from and the locations that they have to go to and the resources you have available. So the trucks, the drivers will all feed into this TMS system and then it will put together a plan and here's how we're going to deliver all of these different orders. Sometimes there is the capability to do routing even, although that's not necessarily always the case but they're more sophisticated ones will tell the driver exactly in what order to deliver certain products to customers.
