When we talk about supply chain excellence, we often highlight high-level strategy, technology, and KPIs—but real transformation happens in the details. One such detail is S2.1: Establish Order Signal, a deceptively simple process within the SCOR model that sits inside short-term planning and determines how we trigger replenishment from suppliers.
I once had a boss when I worked in Kerry group who used to say, “You either need to buy it, or you don’t.” While he wasn’t wrong, that mindset skips over the nuance that makes this process either smooth and reliable—or problematic and inefficient. Because when it comes to establishing the order signal, there’s more than one way to do it. And choosing the wrong one can have ripple effects throughout your supply chain.
What Is the S2.1 Process?
In SCOR terms, S2.1: Establish Order Signal is about defining the trigger for sending an order to the supplier. It’s part of short-term planning (typically inside the 1–30 day frozen horizon), and it can take many forms:
- A traditional Purchase Order (PO)
- Kanban signals or Min-Max triggers
- MRP-generated order proposals
- Supplier-managed replenishment
- Call-off orders from blanket agreements
- Pre-arranged delivery schedules
Each of these is valid—if it fits the context.
One Size Doesn’t Fit All
Think of the difference between these three product types:
- A cheap, fast-moving consumable: Think boxes of gloves, fasteners, or labels. A Kanban system or Min-Max trigger might be ideal—easy to manage, no complex forecasting required.
- A slow-moving, high-value part: Perhaps a motor or spare part for a critical machine. Here, a tightly controlled MRP signal, with carefully calculated safety stock and lead time buffers, is more appropriate.
- A product under vendor-managed inventory (VMI): In this case, the supplier establishes the signal using agreed parameters, often via EDI or through a shared dashboard.
Picking the right signal is about aligning the process with item characteristics, variability, value, and business model. It’s also about reducing friction—if the order signal is inappropriate or misunderstood, it will lead to workarounds, delays, and firefighting.
DDMRP & DDDRP: Triggering Based on Flow
Modern planning methods like Demand Driven MRP (DDMRP) and Demand Driven Distribution Requirements Planning (DDDRP) offer even more dynamic and adaptive ways to trigger replenishment.
These methods center on flow—protecting the supply chain from variability using buffers, and triggering supply only when actual demand or buffer levels require it. The key principle is: don’t plan everything based on a forecast; instead, plan some things based on real, meaningful signals from the system.
In DDMRP:
- The buffer position is strategic.
- The trigger comes from buffer consumption.
- Replenishment is pull-based, but informed by real planning data and variability.
This brings agility and stability—two things traditional MRP often struggles to balance.
Why It Matters
It might seem like a small decision—how to trigger a replenishment signal—but in practice, it affects:
- Inventory levels and working capital
- Supplier performance
- Planner workload
- Service levels and response times
- Trust in the process
When the signal is wrong, planners override the system. When it’s right, things flow effortlessly.
What You Can Do
- Map your current order signal types across categories of inventory.
- Segment your items using ABC, velocity, criticality, and lead time.
- Match signal types to item characteristics.
- Train your team on when and why different signals are used.
- Explore newer methods like DDMRP or CPFR (Collaborative Planning, Forecasting & Replenishment) if your current approach isn’t working.
Remember: Establishing the right trigger is not just a planning function—it’s a business enabler.
At Supply Chain Planning.ie, we help clients dig into this kind of detail—where the real value is unlocked. If you’re not sure if your order signals are serving you well, let’s talk.
