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
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
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
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.
For balance of this article, click on the below link:
Lean Manufacturing Articles and go to Series 01
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