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Implementation - Material Requirements Planning (MRP)

Lack of Vision : The organization vision is an important factor for the success. Strategic plan should be converted to tactical plan and ... thumbnail 1 summary
Lack of Vision :

The organization vision is an important factor for the success. Strategic plan should be converted to tactical plan and the tactical plan to the operational plan.
There should be a drive to synchronize the major functions of the organization, such as Sales and marketing, Production, Purchasing (Materials Management) and Finance. Clearly the business plan at the strategic level sets the blue print for the organization. Production Plan and the MPS at Tactical plan will convert the business plan into a workable plan. This should be the input for the MRP which is an operational plan. There should be owners for each of these stages. A detailed feedback mechanism for the transactional update to the tactical plan is necessary.

Many organizations make a big mistake of jumping into MRP run with out setting these basic things right. When there is a conflict between the demand and what can be produced (Production Plan), there is no strict process for addressing the same. With the result in the due course, the MRP run gives undesirable recommendations. The tendency is to get back to the manual methods.

Automating MRP Recommendations:

As soon as MRP is on the system, the tendency is to automatically release Purchase orders, Work orders(Manufacturing Orders) and rescheduling the open orders. It is very important to understand that, rescheduling is not just pressing a key on the keyboard. There are practical issues. The responsiveness of the system is the KEY criteria.

For ex: There is an open order for an Item X for a qty of 1000, due by 15th Jun. (1 month later). Now after a few days, the order has been started and work is in progress. The MRP, based on the revised demand recommends that the order be cancelled. How is this cancellation communicated back to the Shop floor? What happens to the WIP? Who will own the WIP?
How soon the machines can be set up once again for the next order which is due? How frequently these changes are taking place? How are the Shop floor resources measured?

Based on the answers for the above questions, one can fairly estimate the responsiveness of the system for any changes?

Similarly the vendors. It is very essential to understand that vendors also have to manufacture and their planning and execution depends on their customers forecast. Vendors are extended facilities of the organization. The same rules apply for them too. The responsiveness here varies depending on the type of the vendor, nature of the product supplied and the availability of the product.

Similarly, expediting has its COST.
It is suggested that before auto releasing orders, rescheduling orders, the responsiveness be built up. Based on the responsiveness, rules may be set for automation.

Lack of confidence in MRP recommendations:

During the initial phase of MRP run, the MRP recommendations may not match the traditional planning recommendations. There could be many reasons for the same. Faulty BOM, in accurate inventory, improper demand, etc..
These errors need to be analyzed. The root cause of the problem needs to be tackled. Tampering with the DATA has to be avoided at any cost.
If these are not addressed at the root level, lack of confidence seeps into the minds of not just the planners, but every one in the system. Hence they tend to go back to the excel sheets.

MRP Nervousness:

There are many reasons for MRP nervousness. Frequent Demand variations, low responsiveness of the shop floor/ vendors, delay in feedback mechanism to the system, frequent runs of MRP and implementation of recommendations and many such things could result in MRP nervousness. Planners and the executive team should analyze and persist with MRP, which is beneficial in the long run.

MRP is a tool. It works the way, we make use of it.