Scheduling production Using the master production schedule, the system determines how much time and labor are required to complete each step of each build and when they need to happen so that the production can occur without delay. The production schedule also identifies what machinery and workstations are needed for each step and generates the appropriate work orders, purchase orders and transfer orders.
If the build requires subassemblies, the system takes into account how much time each subassembly takes and schedules them accordingly. Identifying issues and making recommendations Finally, because the MRP links raw materials to work orders and customer orders, it can automatically alert your team when items are delayed and make recommendations for existing orders: automatically moving production in or out, performing what-if analyses, and generating exception plans to complete the required builds.
How well your MRP system works depends on the quality of the data you provide it. For an MRP system to work efficiently, each input must be accurate and updated.
Here are some of the inputs an MRP depends on:. Using the provided inputs, the MRP calculates what materials are needed, how much is needed to complete the build and when in the build process they are needed.
With this information defined, businesses are able to execute on just-in-time JIT production, scheduling production based on material availability. This minimizes inventory levels and carrying costs, as inventory is not stored in the warehouse for future production but arrives as needed.
By scheduling materials to arrive and production to begin soon after, businesses can move materials through the workflow process without delay. Using a master production plan and taking into account subassembly build times minimizes materials sitting on shelves and bottlenecks in the build process.
MRP systems allow you to plan and schedule production efficiently, making sure materials move through the work order quickly and helping businesses fulfill customer orders on time. An MRP system that is integrated across an organization eliminates manual processes, such as pulling historical sales and existing inventory. You spend less time building Gantt charts and production flows to understand when and where you need product available, which frees up time and removes a layer of complexity.
Its key control variables are the avoidance of stockouts at distribution centers, the smoothness of production rates, and the maintenance of a supply of purchased components for the assembly lines to avoid shutdowns. If MRP is to be used effectively in this kind of manufacturing environment, it must interface well with distribution.
The master schedule is important since it links the current stock position at distribution centers with the assembly schedules. Moreover, the master schedule in this case incorporates the intermediate-term production plan by which the manager can smooth peaks and valleys in production levels. By exploding as well as time-phasing components requirements from this master schedule, an MRP system can give purchasing the information it needs to control its acquisitions.
MRP can then maintain priorities as schedules change, stockouts threaten, and deliveries slip. But here its focus is on distribution, production smoothing, and purchasing as the key tasks and control variables of the system. This focus in turn requires, of course, that the organization have a well-developed and rapid distribution and purchasing communications system.
Its important control variables are likely to be the percentage of deliveries made on time, the level of in-process inventories, the length of time between customer orders and delivery time, and the utilization of machines and manpower.
Consequently, a reporting and scheduling system must be available in the shop so that production can proceed in accordance with the priorities obtained from the MRP system. Keeping priorities straight here means making maximum use of available capacity. The MRP and shop floor control systems must be carefully coordinated and integrated to be useful. In this kind of environment an MRP system can also perform two other important functions.
First, by offsetting lead times for material requirements, it can help determine realistic due dates for customers. There is little payoff in promising the delivery of a part in 10 weeks if it takes 15 weeks to acquire the necessary materials.
Second, it can help control the acquisition of this material. By updating the receipts of materials and other new information, purchasing personnel can quickly focus on the priorities of these items and expedite and de-expedite materials accordingly.
Moreover, with such a system it becomes immediately apparent when materials will arrive too late to meet a due date, and management can notify customers early or make other arrangements. The previous examples illustrate the important role the MRP concept can play in many types of companies. From a historical perspective, this is easy to understand. These inventories have served two purposes: to segregate the management of the two kinds of manufacturing for organizational and technical reasons, and to ensure enough of the many parts required to keep assembly operations supplied and to process orders in time.
But these buffer inventories were usually controlled by classical reorder point methods that assumed that the demands for individual components were independent of one another and of the demand for assembled items; and they never have been. The result has been large inventories and a great deal of intraorganizational struggle anyway, because the assembly department has constantly interfered with fabrication activities to get all the parts it needed to complete an assembly.
For many such companies, a computer-based MRP system has become the answer. In other words, it must simultaneously be responsive to stockouts and customer due dates, keep assembly operations supplied, and maintain priorities and schedule equipment in the fabrication area. To accomplish this, MRP must serve as the link between fabrication and assembly, as well as between assembly and distribution. The master schedule serves, as before, to link assembly and distribution, but a fabrication shop floor control system is the link between fabrication and assembly.
The shop floor control system accomplishes this by translating the master schedule, via MRP, into priorities that can be used to determine which parts will be worked on at a particular work center.
This is a technique that can project fabrication shop loads from the master schedule and can also help determine labor requirements, subcontracting needs, or equipment needs. In fabrication assembly operations, MRP and associated systems allow a company to maintain the separation between two different types of processes, but they also allow such a company to substitute current and timely information from a centralized source for large intraorganizational inventories.
Unfortunately, determining the value of MRP is not easy, because the answer depends on your starting point. For one thing, the benefits of the system depend on how well your current production control system is working. The costs depend on the stage of development of your current manufacturing control system as well as on the skills and attitudes of the people in your organization.
Is the point that smaller companies or smaller manufacturing departments can use MRP more effectively and efficiently than larger ones? We think not. More likely, the anomaly stems from the differences between the level of skills, the adequacy of related systems, and the organizational support available in the two companies.
The first company had two skilled and dedicated people to design and implement the system; the second did not and had to hire them from outside and develop them from within. The first company had a reasonably good, though informal, shop floor control and reporting system; the second had to develop such a system from scratch.
The first company benefited from good relationships among foremen, workers, engineers, and marketing personnel; the second did not consult these people in their original design of the system, experienced organizational problems in implementing it, and had to restart with an extensive training and selling program. The first company had accurate bills of material and the organizational commitment and mechanisms to keep them up to date; the second had to develop the bills and convince people that accurate record keeping was an important part of their job.
Clearly, these companies started with different sets of skills, support systems, and levels of organizational commitment. And just as clearly, what was essentially a routine job for one was a major long-term effort for the other. Their experiences show the necessity of beginning with a realistic set of expectations about what it will take and how long it will take to implement such a system.
What results can you expect? But this company had some serious problems to begin with. On the other hand, if industry and internal standards indicate that your performance is good, the results of an MRP system may not be as dramatic. But a lack of dramatic results can itself be deceiving. For instance, one large company adopted MRP during a period of explosive sales growth that resulted in pressures on its capacity. Even though its inventories did not go down they actually increased , its turnover remained at about the same level.
The interest generated by the MRP concept is indicative of the promise this type of control system offers. The realization of its potential for your organization, however, depends upon an analysis of the way it must be focused. Moreover, since implementing such a system can include problems that belie the simplicity of its underlying logic, it is essential that management formulate realistic expectations about its associated costs and benefits.
You have 1 free article s left this month. Materials requirement planning MRP is one such system. MRP uses a master schedule to ensure that the materials, labor, and equipment needed for production are at the right places in the right amounts at the right times. It says exactly what will be manufactured during the next few weeks or months and when the work will take place. Sophisticated computer programs coordinate all the elements of MRP.
The computer comes up with materials requirements by comparing production needs to the materials the company already has on hand. Orders are placed so items will be on hand when they are needed for production, while maintaining the lowest possible amount of materials and product to remain in house.
MRP helps ensure a smooth flow of finished products. ERP systems provides an integrated and continuously updated view of core business processes using shared databases maintained by a database management system. ERP systems track business resources—cash, raw materials, production capacity—and the status of business commitments—orders, purchase orders, and payroll.
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