An MRP system is intended to simultaneously meet 3 objectives:
* Ensure materials and products are available for production and
delivery to customers.
* Maintain the lowest possible level of inventory.
* Plan manufacturing activities, delivery schedules and purchasing
activities.
Contents
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* 1 The scope of MRP in manufacturing
* 2 Problems with MRP systems
* 3 References
* 4 See also
[edit] The scope of MRP in manufacturing
All manufacturing organizations, whatever it is they produce, face the
same daily practical problem - that customers want products to be
available in a shorter time than it takes to make them. This means
that some level of planning is required.
Companies need to control the types and quantities of materials they
purchase, plan which products are to be produced and in what
quantities and ensure that they are able to meet current and future
customer demand, all at the lowest possible cost. Making a bad
decision in any of these areas will lose the company money. A few
examples are given below:
* If a company purchases insufficient quantities of an item used
in manufacturing, or the wrong item, they may be unable to meet
contracts to supply products by the agreed date.
* If a company purchases excessive quantities of an item, money is
being wasted - the excess quantity ties up cash while it remains as
stock and may never even be used at all. This is a particularly severe
problem for food manufacturers and companies with very short product
life cycles. However, some purchased items will have a minimum
quantity that must be met, therefore, purchasing excess is necessary.
* Beginning production of an order at the wrong time can mean
customer deadlines being missed.
MRP is used by many organisations as a tool to deal with these
problems. The questions it provides answers for are: WHAT items are
required, HOW MANY are required and WHEN are they required by. This
applies to items that are bought in and to sub-assemblies that go into
more complex items.
The END ITEM(s) being created (a.k.a. Independent Demand, Level "O" on
BOM)
How much is required at a time
When the quantity(s) are required to meet demand
Inventory status records. Records of NET materials AVAILABLE for use
already in stock (on hand) and materials on order from suppliers.
* Bills of materials. Details of the materials, components and
subassemblies required to make each product.
* Planning Data. This includes all the restraints and directions
to produce the end items. This includes such items as: Routings, Labor
and Machine Standards, Pull/Work Cell and Push commands, Lot sizing
technique(s) (i.e. Fixed Lot Size, Lot-For-Lot, Economic Order
Quantity), Scrap Percentages, and other inputs.
Outputs
There are only two (2) outputs and a variety of messages/reports
* Output 1 is the "Recommended Production Schedule" which lays out
a detailed schedule of the required minimum start and completion
dates, with quantities, for each step of the Routing and Bill Of
Material required to satisfy the demand from the MPS
* Output 2 is the "Recommended Purchasing Schedule". This lays out
the dates that the purchased items should be both received into the
facility AND the date(s) the Purchase orders, or Blanket Order Release
should occur to match the production schedules.
Messages and Reports:
* Purchase orders. An order to a supplier to provide materials.
* Reschedule notices. These RECOMMEND cancel, increase, delay or
speed up existing orders.
Note that the OUTPUTS are RECOMMENDED. Due to a variety of changing
conditions in companies, since the last MRP / ERP system Re-
Generation, the recommended outputs need to be reviewed by TRAINED
people to group orders for benefits in set-up or freight savings.
These actions are beyond the linear calculations of the MRP computer
software.
MRP/ERP Systems were first introduced by George Plossl and Joseph
Orlicky in the late 1960s. Olive Wight contributed the evolution to
MRP II, to include more than the factory production and material
needs. ERP evolved with the change in hardware / software capability
and "Interface" interpretations between software.
[edit] Problems with MRP systems
The major problem with MRP systems is the integrity of the data. If
there are errors in the inventory data, the bill of material (commonly
referred to as 'BOM') data or the master production schedule then the
output will also be incorrect. Most vendors of this type of system
recommend at least 98% data integrity for the system to give useful
results.
Another major problem with MRP systems is the requirement that the
user specify how long it will take a factory to make a product from
its component parts (assuming they are all available). Additionally,
the system design also assumes that this "lead time" in manufacturing
will be the same each time the item is made, without regard to
quantity being made, or other items being made simultaneously in the
factory.
A manufacturer may have factories in different cities or even
countries. It is no good for an MRP system to say that we do not need
to order some material because we have plenty thousands of miles away.
The overall ERP system needs to be able to organize inventory and
needs by individual factory, and intercommunicate needs so that each
factory can redistribute components to serve the overall enterprise.
This means that other systems in the enterprise need to work properly
both before implementing an MRP system, and into the future. For
example systems like variety reduction and engineering which makes
sure that product comes out right first time(Without defects) must be
in place.
Production may be in progress for some part, whose design gets
changed, with customer orders in the system for both the old design,
and the new one, concurrently. The overall ERP system needs to have a
system of coding parts such that the MRP will correctly calculate
needs and tracking for both versions. Parts must be booked into and
out of stores more regularly than the MRP calculations take place.
Note, these other systems can well be manual systems, but must
interface to the MRP. For example, a 'walk around' stocktake done just
prior to the MRP calculations can be a practical solution for a small
inventory. (especially if it is an "open store".)
The other major drawback of MRP is that takes no account of capacity
in its calculations. This means it will give results that are
impossible to implement due to manpower or machine or suppler capacity
constraints. However this is largely dealt with by MRP II.
Generally, MRP II refers to a system with integrated financials. An
MRP II system can include finite / infinite capacity planning. But, to
be considered a true MRP II system must also include financials.
In the MRP II (or MRP2) concept, fluctuations in forecast data are
taken into account by including simulation of the master production
schedule, thus creating a long-term control[2]. A more general feature
of MRP2 is its extension to purchasing, to marketing and to finance
(integration of all the function of the company), ERP has been the
next step.
[edit] References