Preventing waste helps the environment

Such a way of working also fits very well with the current societal developments in the field of environmental sustainability. The motto is to eliminate waste and promote reuse of scarce materials, resources and raw materials, and from an economic point of view, prevent the waste of money.

If the business model is client or demand driven, then such a new kind of MRP mechanism would check first what can be drawn down, because it is possibly already available as usable stock. If out of stock, determine first to make what is required or purchase it, but only if there are Customer Orders against it. That way you ensure that neither too much, nor too little is made and consumed. This prevents waste of materials and raw materials and by definition has a beneficial effect on both the environment, cost of production, and the pricing of products.

Purchasing in large quantities because it would be cheaper, appears in the long run to yield no price and/or cost advantage at all, and it risks creating stock that is either no longer sellable, or needs to be processed into different intermediate and end products, or thrown away.  This is a waste of potentially valuable materials and raw materials and entails costs that by definition erode the company’s margins.