Definition
Material Requirements Planning (MRP) is a material planning methodology developed in the 1970's making use of computer technology. The main features of MRP are the creation of material requirements via exploding the bills of material, and time-phasing of requirements using posted average lead times. MRP II was developed as the second generation of MRP and it features the closed loop system: production planning drives the master schedule which drives the material plan which is the input to the capacity plan. Feedback loops provide input to the upper levels as a reiterative process.
MRP techniques essentially drove the development of manufacturing off-the-shelf software packages, utilizing an integrated data base. These systems evolved into what is now known as Enterprise Resource Planning (ERP) systems.
In
MRPII operation, forecasts
are combined and adjusted for customer orders, and fed to the master
scheduling
module. Once the master schedule is set, the MRP process explodes the
bills
of material, usually overnight or on weekends, and develops the
requirements
for material. The material requirements feed the capacity planning
module
which tests the schedule developed by MRP against current capacity.
This
feed back loop creates two alternatives: increase capacity or adjust
the
master schedule. Netting of on-hand inventory balances and
work-in-process
is included as a regenerative process.
The Issues
Material Requirements Planning of any generation assumes a finely tuned data system, which seldom ever happens. It also works from lead times, a falsity because both external and internal lead times are dynamic and change daily. MRP also assumes infinite capacity which is unrealistic and difficult to manage. The end result is usually an increase of inventory caused by the manufacture of wrong parts, the very thing MRP was designed to resolve.
One reason for the excess generation of inventory is that the data system and accuracy required for MRP to properly run is difficult to maintain, and the MRP review system is notorious for printing tons of unused material review reports. It also requires de-expediting to prevent overstocking, which is seldom accomplished because it is often treated with low priority.
Finally MRP, utilizing time-phased order point methodology, is a push system that assumes demands rather than reacts to a true demand as in Demand Flow Technology. When driven by a forecast, as it is supposed to do, it reacts to the uncertainty of a forecast and produces parts that one hopes one will need.
Pragmatic Applications
Material
Requirements Planning techniques have been proven to be ineffective at
the
micro level. However, if decoupled from the execution systems, provides
a good methodology for forecasting both internal and supplier capacity
requirements. We advocate "cutting the belt" between planning and
execution. That is,
use MRP for forecasting high level requirements, but use demand flow
technology,
finite capacity loading, and true pull systems, as Kanban, for
executing
the daily production needs.
Our Approach: Tools from a Toolchest
Rockford Consulting Group applies concepts and technologies as the situation warrants, that will result in the ultimate benefit to our clients. We treat strategies, technologies, and methodologies as tools in a toolchest, and use them when they offer practical solutions and achievable results. We believe that each client situation is unique, with its own unique set of solutions. (Please see our MRP consulting services MRP Consulting Services )
Why Us?
Rockford Consulting Group, Ltd. can provide long-term assistance to many companies in a variety of industries. The firm has a cadre of the best supply chain consultants in the world today, providing high quality professionalism through the use of experience and innovation.
We subscribe to the Institute of Management Consultants Code of Professional Conduct. All consultants engaged on projects adhere to its principles. Whenever possible we will use consultants certified in their particular specialty area. Certification assures that consultants have substantial prior experience in their specialty, and their competencies have been tested by the IMC, and verified by a number of clients. This assures our clients that we are assigning the highest qualified consultants in the profession.
We provide technical expertise, team facilitation, leadership, and direction in deciding how you will meet the challenge. We refer you to our Qualification Statement for further details on our background, areas of specialization, concepts and technologies applied, staffing, operating policy, approach, companies and industries served, case studies and references. Equally as important, we train our clients to sustain new methods of manufacturing and the consequential benefits over time. Your company will benefit directly from this training.
We have achieved an efficiency in our approach to assignments that allows us to provide high quality technical and managerial advice in a much shorter amount of time than could be accomplished years ago. We are able to do this because of the extensive consulting experience that each of our specialists has.
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