Manufacturing Requirements Planning 



To understand what we mean by reengineering MRP II, we will take a few of the elements in the MRP II diagram (Figure 1) and show examples of what other companies have done to rethink the process. Hammer and Champy emphasize radical change when doing reengineering. The recommendations made below are radical changes to most companies even though these processes have been known for many years. The question then is should a company pursue a radical change that has been proven to work in other companies or expend significant effort reinventing the wheel? Our experience is that it takes every bit of resource a company has to implement a proven process, let alone invent new ones and implement them. We will take some examples in the MRP II process that require radical change in the way most companies operate first and then we will discuss how to create the environ­ment for change.

Sales and Operations Planning

Let us start reengineering at the top of the MRPII diagram because most companies fail miserably in their attempt to perform this basic process. Often the Business Plan (see Figure 1) is created, but unfortunately nothingis done with it. Sales and Operations Planning monitors the business plan monthly by reviewing the demand plan and the production to assure they are in balance. This is management's handle on the business. Many companies claim they do Sales and Operations Planning, but when reviewed against the industry standard (Class A Checklist) they fail miserably. Once Sales and Operations Planning is operational in the company, everyone on the staff won­ders how they did without it. Is Sales and Operations Planning reengineering? When you observe how most companies run by the seat of their pants with a lot of high level expediting and threatening, Sales and Operations is a major re-thinking of how the company is operated.

Demand Management

In order to do Sales and Operations Planning and Master Scheduling, the company needs a forecast that is as accu­rate as possible. Invariably sales and marketing starts complaining their product can't be forecasted. That is ridiculous. Anyone can forecast, the question is how accurate it will be. If sales and marketing doesn't do the forecasting, manufacturing will end up doing it. That often means someone on the shop floor making the decision based on many things other than customer needs. Sales and marketing clearly don't want the people on the floor making the decisions, but because of their unwillingness to do the forecasting in terms that manufacturing can use, manufacturing people end up doing the forecasting—the rule not the exception. The people nearest the customer must do the forecasting—sales and marketing. The first questions that pop up are how accurate does the forecast have to be and where will they find the time? 

The answer to the first question is as accurate as possible. Each company and product lines inside the company can have different levels of accuracy that they can be expected to achieve. The way to determine where to start is to begin measuring. Future expectations are that the accuracy will go up. The answer to the second question is to create a position of demand planner. This persons sole responsibil­ity is to pull together all the demand and with it create a forecast. Where do you get the money for a demand planner? From all the excess manufacturing people run­ning around like chickens with their heads cut off because of inaccurate forecasts. Holding sales and marketing accountable for accurate forecasts within prescribed toler­ances is a major change within most companies. Reengineering using the demand manager concept is an important element in being successful with MRP II, and only a few companies take advantage of this concept.

To be Continued


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