MRP/ERP

Manufacturing Resource Planning (MRP-II)
by Sal Ganino

So you have MRP but it’s not helping you manage and control inventory, it’s not doing a good job of production scheduling, you have inventory all over the place, and your promise dates are constantly moving out, and deliveries to customers has never been worse. Don’t blame the software; remember the old adage, garbage in-garbage out.

You probably have one to five employees working feverishly trying to scheduling production, plan purchases, control inventory levels, and satisfy customer demand. To help them out you have established some company or corporate objective: purchasing must reduce the cost of materials by X%, manufacturing’s goal is to improve labor utilization by Y%, and finally on-time delivery performance must improve by Q%.

All very good objectives. Two however, are counter productive and work against each other, thus making the third impossible to obtain. In-order for purchasing to attain its goal it must take advantage of volume discounts and to fine lower priced material. The problem here is that purchasing at volume discounts creates higher inventory levels, lower prices usually are accompanied by lower quality and purer deliveries.

To reach its goal of improved labor effectiveness, manufacturing will want to run longer production runs. This in turn increases inventory levels, consumes inventory needed for other products causing an emergency purchase of more material, and consume much needed capacity resulting in overtime and subcontracting...

Many companies facing these same situations are beginning to realize that untrained employees can not do their jobs effectively. These companies are sending their employee to training programs (or holding in-house training) covering such subjects as supply chain management, master scheduling of production, detailing scheduling and planning of the production operations, executing and controlling production operations, and the strategic management of company resources. This education and training helps yours employees use the MRP software more effectively, provides the understanding of the maladies of long production runs, having excess inventory, and the understanding of how these company objectives and goals are impacting and effecting the efficient running of the operation.

MRP is a very powerful tool, and one that is indispensable in both a Make-To-Order (job shop) environment and a Make-To-Stock environment. But not knowing or understanding how it works and how to control it can lead to the problem listed above and many more. The impact of MRP good or bad is far reaching within an organization, touching just about every department. It has a very direct impact on; production planning, scheduling, inventory management, purchasing, production, sales and customer service. Because of its impact, direct and indirect, on every department in the organization it is very important that member of all department directly effected receive the correct education and training to allow them to use MRP the way it was designed to be use; as a most powerful tool for the planning, prioritizing scheduling executing and controlling of manufacturing operations.