Mrp Process and Inventory Management

Topics: Supply chain management, Manufacturing resource planning, Material requirements planning Pages: 16 (3602 words) Published: April 16, 2013
12 Mar 13

MRP Notes

What is MRP
Material Requirements Planning (MRP) is a software-based (production) planning and inventory control system used to manage manufacturing processes.

MRP is a technique that uses the bill of material, inventory data and a master schedule to calculate requirements for material.

MRP time phases material requirements based on setbacks defined by a combination of the bill of material structure and assembly lead times. The result of an MRP plan is a material plan for each item found in the bill of material structure which indicates the amount of new material required, the date on which it is required -the new schedule dates for material that is currently on order.

The user can create any number of simultaneous MRP ‘plans’ using any number of master schedules for simulation purposes. In addition to demands from the master schedule, or in lieu of a master schedule, the MRP system can use time phased reorder points to generate demand over a user specified period of time.

The MRP can be run for any number entities (which could be physically separated inventories) and can include distributor inventories, if the system has access to this type of information (although this might now be refined to be called Enterprise Resource Planning (ERP) where the data flow and decision making extends beyond the boundary of the company).

The planning process will take account of engineering changes and exhaust types of revision change and if multiple distributor inventories are being managed, the MRP / DRP process will try to balance their inventories based on a series of parameters specified by the user.

The implementation of the MRP plan can be done by an automatic reschedule for the work in process jobs and repetitive processes and an automatic creation of purchasing requisitions to implement the purchasing plan. The reschedule of existing purchasing orders is managed through a series of reports and queries but will not be done in an automatic manner.

Why do we need MRP? - Variability

4 Types of variability faced by organizations to make production a challenge! 1. Demand Variability. Uncertainty of future orders, usually to a higher order OEM when in manufacturing industry. 2. Supply Variability. Disruptions in the supply network. 3. Normal/Random Variations. ‘Murphy’s Law’. Perfection is impossible! 4. Self Imposed Variability. Human element, a result of decisions.

Enterprise resource planning (ERP) systems integrate internal and external management of information across an entire organization—embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software application. The purpose of ERP is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. ERP systems can run on a variety of computer hardware and network configurations, typically employing a database as a repository for information.

Forecasts are always in error
The more detailed the forecast, the higher the rate of inaccuracy The further ahead the forecast, the greater the error

Types of Operation

There are essentially two main types of manufacture systems where flow and structure can be considered. The BOM for a typical manufactured item is type ‘A’ where multiple components are finally assembled into a single item. The alternative is known as the ‘V’ plant, where a basic raw material is brought into the plant an numerous finished items are produced. The ‘V’ plant is typically a process industry application. This industrial sector has always been a challenge for the application of MRP. Start stops are incredibly expensive, and therefore more focus is placed on the wider ERP solution, managing product sequencing and optimization (to achieve return on...
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