2. The demand signal (planning)

Purchasing materials based solely on static, optimistic sales forecasts can lead to two difficult outcomes: significant line-down shortages or excessive capital tied up in unused inventory. In modern electronics manufacturing, the supply chain must be driven by structured, validated Demand Signals rather than intuition.

This chapter outlines the mechanics of Material Requirements Planning (MRP) and Master Production Scheduling (MPS). By aligning customer forecasts, committed firm orders, and historical consumption data, we provide the procurement team with deterministic instructions: exactly what to buy, exactly when to buy it, and when to delay or cancel an order. We procure materials because the system data dictates it, avoiding “just in case” purchasing.