When MRP started in the late 60's it was known as material requirements planning. Throughout the years it has evolved to what is now called Manufacturing Resource Planning (MRP II).

The MRP logic answer four basic questions:

• What are we going to make?
• What does it take to make it?
• What do we have?
• What do we have to acquire?

The first question is answered by the Master Production Schedule (MPS), the second is answered by the Bills of Material (BOM), and the third is answered by the Inven­tory Record File. Using this information, the logic calcu­lates the amounts and timeliness of what you need to acquire in order to satisfy the requirements of the MPS.

Once these requirements are known you can calculate, through the use of the capacity requirements planning module, the plant capacity required by work center; and using the shop floor control module, you can have a dis­patch list by work center with the required sequence by operation due date. Using the purchasing module, you can have a sequential listing by due date by supplier of all your requirements through out the planning horizon.
Later on in the late 70's the top of the chart was added, Business Planning, Sales and Operations Planning, De­mand Management, and Rough Cut Capacity Planning and it was called MRP II.

One of the beauties of MRP II is having one set of numbers that was developed in dollars at the Business Plan, con­verted into families of products at the sales and operations planning process where it is analyzed in dollars and units.

Taken to the MPS level at the SKU level, exploted through the BOM and compared to the inventory file to come up with the net requirements for raw material and compo­nents. All these data can be dollarized in order for finance to use the numbers coming out of MRP to create financial projections.
MRP II will give you a total integrated system for your operation.
Implemented properly, the benefits are substantial

Now that you have seen what MRP II is, the question in your mind is, how do I implement this system? Let's review the proven path that many companies have used to achieve class A status. The proven path has also evolved over the years incorporating what successful companies have used to implement MRP II. It begins with an Assessment of the company to ascertain where you are relative to the require­ments of MRP II. Next, is to have the top management of your company attend a top management class to help them ascertain whether MRP II is the tool that your company needs. Next, conies a Vision Statement. This vision should be developed by leaders and shared with all the employees of the company. The vision should determine the direction where they want the company to go.

It is very important to do a Cost/Benefit analysis to give the right priority to the project and to determine if it makes sense to undertake this endeavor. If it is determined that the project is worthwhile to do, then you need to discuss the project organization and set the performance goals that you have as a result of this implementation.

At this stage you are at what we call point zero on the project. A series of steps need to be taken to make it happen. I said at the beginning that people were what would make the difference in the implementation; if they are going to make an impact they need to be educated and trained. Every employee in the company needs to have some education. The amount and the type will depend on what they do in the company. You have an initial education step and an ongoing education step. This is very important because as your personnel change you need to educate the new people joining the company.

Here you begin a process of Re-engineering all your plan­ning and control processes, inventory record accuracy, bills of material accuracy, routing accuracy, manufacturing process improvements, and software selection.
Once you are ready to go to the new system, the next step is to pilot the new system before cutting over from the old one. Measure your performance and compare to the goals established prior to implementation to see if you accom­plished what you set out to accomplish; and finally do an assessment to see how you are doing once the implementa­tion has been completed and what new areas of opportunity you wish to do next.

A company with a clear sense of its mission, with a vision for the future and with a solid strategic game plan will be much more competitive.

The ability to implement MRP II successfully could mean the difference between success and failure of the company.

One of the most difficult things for a human being is to change. If you do not change you cannot progress. In a manufacturing company changes are always taking place. If you are not capable of changing and you can not admin­ister the changes effectively, you could lose.

In a changing environment like the one in Latin America, a manufacturing company needs a robust tool like MRP II to survive, grow, optimize the resources and be able to remain competitive and win.