Manufacturing Requirements Planning 



"Reengineering the Corporation," a phrase made popular by Hammer and Champy in their book by the same title, is a new buzz word. However, it is much more than just a buzz word or fad; it is what American manufacturing companies are going to have to do if they are to be World Class competitors. A major point made in the book is that reengineering teams can stimulate their own creativity. This is done by harnessing the disruptive power of informa­tion technology, not by making the old processes work better. What is needed is a way to enable organizations to break the old rules and create new processes that provide breakthrough improvements. Unfortunately, when in­stalling MRP systems, most companies focus on the power of the computer, not on using the power of the computer to enable the new processes. This paper will address the real power of MRP II, which is to discard "traditional" method­ologies and unsuccessful ways of doing business and em­brace a new way to run the company with breakthrough results.

A fundamental error most companies make when install­ing MRP II is to use it to automate the existing processes. What follows is generally a frustrating and unrewarding experience. It has long been recommended that companies starting an MRP II implementation should use techniques that have been proven effective in other companies to achieve breakthrough results. This approach is supported by Hammer and Champy. The challenge is to get people to accept radical change. This paper will explain some of the proven techniques and discuss the change process required to get people to implement them.

In order to understand what role reengineering plays, we need to understand what MRP II is. The easiest way to explain MRP II is to reference the flow diagram in Figure 1. The process starts with business planning. This is the strategic plan of the company for the next five years minimum. This plan is then converted into dollars for near term planning. Once the strategic plan is in place, an operations plan must be put in place for the next 18 months. Simply stated this plan balances the demand (both actual and forecasted) with the capacity of the company at a family level. It must be noted that capacity is not just in manufacturing but in all aspects of the company. This process is called Sales and Operations Planning. The next step is to break down the families into end items or options. This is the master schedule. Like Sales and Operations Planning, the master schedule is checked for capacity using rough cut capacity planning. Detail material plan­ning (MRP) then breaks the entire product into all the components using the bill of material and netting the on hand and on order inventory. The routing file is then accessed to develop a detail capacity plan. Once this is done, priorities can be sent to the plant and to the suppli­ers. Simple when one thinks about it, but unfortunately

not so simple when companies try to implement MRP II because a radical change in the way people operate is required throughout the company to support the data's accuracy and properly manage the information. Imple­menting software is simple compared to achieving the behavior change required throughout the company.

To be Continued


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