Sources and Impacts of Uncertainty on MRP Systems

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Sources and Impacts of Uncertainty on MRP SystemsMaterials Requirements Planning (MRP) is used as a inventory control system in which a material plan for production may be generated, along with process cycle times and production lead times. MRP has the ability to plan work orders and purchase requisition, and to reschedule tasks as changes come apparent.

MRP reduces operator time by reducing the tedious jobs such as checking stock levels and re-ordering materials and components by calculating these on a computer. Limitations of the current working environment may also be taken into consideration by the MRP system, so constraints to the business are not ignored.

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A MRP system can be so versatile as to forecast material dates by which they would be required; take into account supplier delivery capabilities, optimum ordering quantities, carrying costs and shop floor scheduling; and control materials orders, monitor work-in-progress.

A basic MRP system incorporates a just in time strategy, in which the system orders materials in automatically. Though industry considers just-in-time to be the optimum way to work, safety stock and lead times have to be used in order to prevent a material shortages, thus preventing a line stop. MRP systems can calculate the necessary leads time and re-order automatically.MRP systems started out as a simple analytical tool for manufacturing processes and production schedules, combined with a bill of material and resources. MRP enabled the user to predict what the requirements would be for various components and manufacturing processes in order to meet a given schedule. MRP applies component and process lead times to these requirements, along with various other tools such as economic order quantities, safety stock, and shrink factors. These tools allow MRP to calculate and generate recommended build schedules for scheduled assemblies, and recommended purchasing orders for its components. MRP systems perform an analysis on existing conditions of the business, and then reports back to user what the requirements of a task are, and its recommendations on changes to existing purchase and production schedules to meet the requirements of that schedule.Once a MRP system has been properly implemented into a business, it should meet the needs of most users that have consistent production schedules, adequate resources for the critical paths in the manufacturing process, and adequate delivery performance by vendors for the various component parts. But in reality, the MRP system doesnt always work plan because either the component deliveries are consistently not on time, or the master schedule is constantly being changed, resulting in wildly fluctuating parameters. To make up for such conditions, safety stock limits have to be increased until the warehouses are full of just in case inventory. As MRP systems developed, the use of feed back loops were introduced to help the user in tracking some of the problems associated with inventory control. Feed back loops were used not only to automatically re-schedule certain items, and avoid excessive manual effort in controlling the process, but also to detect and report on performance such as vendor performance reports and track-on-time delivery performance that was not correct up to the required need. With automatic rescheduling capabilities for work orders and repetitive build schedules, and reschedule action reports for purchase orders and outside contracting, the amount of actual analysis has been reduced significantly. Other information, such as vender performance reports and process utilization reports, also help to measure the performance to plan capability of the manufacturing plant.Though a MRP system provides great advantages to a business, it cannot foresee or calculate the hidden costs of a manufacturing process. These hidden costs are extremely hard to track. Some of these Hidden Costs can be caused by · excessive P.O. rescheduling or excessive crash buy programs· excess and/or obsolete inventory· planning problems· in-correctly stocked finished goods (too much of one, not enough of the other) that result in shortages· frequent line stops related to a limiting process (such as a wave solder machine or component inserter)· material shortages of common components· long customer order lead times· poor on-time customer delivery performanceAs such, none of these problems are tracked nor reported by any standard M.R.P. or M.R.P. II system. To help solve these problems, and improve the companys competitiveness and profitability, beyond existing capabilities, the M.R.P. system must go beyond the standard definition of M.R.P. II, into what we at S.F.T. Inc. refer to as M.R.P. IIIConclusionThere is no need to cloak MRP in a shroud of mystery. Over the years MRP has acquired an aura about it that scares many companies from ever trying it. Or, some people mistakenly think MRP doesn't fit job shops. If you think of MRP as a materials ordering and scheduling system, it brings it down to earth for what it really is. MRP simply puts in a computer program the very same processes that have to be performed in any manufacturing system.

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