Analyzing Implementing and Improving MRP … Case Study
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¶ … Improving MRP
A list of business operating characteristics that are best aligned with MRP (where MRP is most effective)
In delineation, the objective and purpose of material requirements planning (MRP) in a manufacturing system with manifold stages is to make a determination of the amount of all products which are required to produce a projected quantity of end-items within a certain planning perspective and to ascertain the timing of the corresponding production and procurement decisions (Heisig, 2002). For material requirement planning to be effective, there are business operating requirements that make it conceivable. To begin with, all the materials and products have to be in the warehouse and all set standing by for production. Devoid of the proper materials and products in position, production demands cannot be accounted for, which leads to delays in production and dissatisfaction of consumers. Another characteristic is that levels of inventory ought to be monitored in a consistent manner in order to make certain that levels remain low (Orlicky, 1975). According to Baran (2013), whereas companies need to have the capacity to manufacture products as they are required, they do not wish to have surplus in the event that the planned product is not able to account for the sale expectations. By staying in touch with trends in supply and demand, companies will have the ability to sustain low levels of inventory and decrease overhead expenses (Baran, 2013). In addition, all elements of manufacturing procedures ought to be planned out and sanctioned by management. Therefore, it is imperative for the company to devise and work out the manufacturing procedure and plan when production will take place for which particular products, in addition to when they will be shipped out (Baran, 2013). So as to make the most of the money that is generated in, companies have to institute a proper poise and balance between product demand and inventory. This is for the reason that devoid of the fitting poise, companies will suffer needless and redundant expenses. In addition, companies need to make certain that materials are ordered at the proper and suitable time so as to preclude production delays and missing deadlines. In particular, material requirement planning will facilitate manufacturing companies to work out and coordinate the production schedule and ascertain when materials need to be ordered and for which particular products (Baran, 2013).
A list of operating characteristics that render MRP ineffective or undesirable (when should a client not implement MRP)
There are instances when the MRP ought not to be implemented as it will result in shortcomings and also if executed and supported in a poor manner.
1. Lack of commitment by senior management. MRP ought not to be implemented if the executives are not educated enough on utilizing it as a cohesive, strategic planning component. In addition, if the management considers MRP as simply a manufacturing system rather than a business plan, then it ought not to be implemented.
2. When there is inadequate user training and education. Just about all research studies indicate that the lack of training or comprehension is deemed to be a major element for not implementing MRP. This in the end can cause failure of the MRP and also the business (Cheng, 1997).
3. MRP should not be implemented if there is lack of technical expertise. This is because this would fail to offer the leadership necessitated to execute the systems. If the technical specialists are not cognizant with the operational requirements of day-to-day production, the incorporators of the system would also not understand how the computer software system can be built to cope with production requirements (Cheng, 1997).
4. Lack of the high magnitude of accuracy for operation. One of the purposes of the MRP system is to minimize the level of inventory. Therefore, if the accuracy and precision of the recorded levels are not at par, then MRP ought not to be implemented. This is for the reason that once the MRP develops a schedule, it becomes considerably challenging to shift from the schedule if there is a need that comes about (Cheng, 1997).
Benefits of implementing or improving MRP in an organization
MRP systems offer manufacturing companies a number of prospective benefits. The following is a list of key areas that are anticipated to improve and advance through the implementation of MRP (Abdul, 2015).
1. Enhanced customer service
2. Decreased overtime
3. Enhanced direct labor productivity
4. Diminished obsolescence
5. Reduced inventory with less shortages or none at all and related carrying costs (Abdul, 2015)
6. Decreased procurement or purchasing costs
7. Reduced traffic costs
8. Enhanced quality of life
9. Having responsibility and culpability throughout the business operations of the company
10. Having the numbers to operate the business (Daniel, 2011).
11. Ascertaining the most reasonably priced lot sizes for orders
12. Makes it much easier to come up with a fitting production schedule
13. Computing quantities required as safety stock
14. Apportioning production time amidst different products
15. Tracking material requirements
16. Planning for future capacity needs (Reference for Business, 2016)
17. Ascertaining the workforce for the whole process of production (Daniel, 2011).
18. Reduce cash flows and lead times
19. Increase profitability.
Discussion of the selected items of expected improvement
1. Enhanced Customer Service
The functional areas that are constructively influenced by this benefit are sales and marketing and operations functions. There are data elements for ERP that will serve as inputs and outputs of the MRP systems. One of them is complete order history. According to Gillman (2015), after sales history is stored in the ERP system but this record of the manner in which orders are actually completed is integrated to the MRP system. In particular, this is beneficial to sales departments, as it necessitated this information to retail to the similar consumer incessantly (Gillman, 2015). Another data element is available items in the business' stock. More so, there is the data element of item sales history. This encompasses the records of what all consumers are ordering at a particular time (Gillman, 2015).
A good example that can properly delineate how enhanced customer service influenced the functional areas in key scorecard categories is a hotel that offers pizzas as its main meal in the menu. With respect to the consumer service function, this improvement item enhances the quality of service that the consumers obtain. In addition, with improved customer service, there is increased customer satisfaction, which increases the morale of the employees. In addition, the improvement item also influences the operation function. As a result of enhanced customer service, the business will be able to inform the customers the status of their orders, have better deliveries, and enhanced order entry through attaining customer data. In addition, through enhanced customer service, it implies the business will be able to have better management of its orders. These elements will improve the operations functions of the pizza restaurant.
2. Reduced inventory with less shortages or none at all and related carrying costs.
The functional areas that are positively impacted by improved or decreased inventory levels are the manufacturing, sales and marketing and operation functions. There are data elements for ERP that will serve as inputs and outputs of the MRP systems. One of them is inventory level. This delineates both the beginning and closing inventory level. This is beneficial for the manufacturing and production functions as it makes it possible to ascertain what amount of product should be manufactured. In addition, the sales and marketing function gets to know precisely what amount of products have to be sold before they become obsolete. Other data elements are the work in progress and lot size element. In particular, these enable the manufacturing function to know for certain the orders made by the consumers and whether the amount currently being manufactured is sufficient for such orders (Sheldon, 2005).
A good example that can properly delineate how decreased levels of inventory and associated carrying costs influences the functional areas in key scorecard categories is a sausage manufacturing company. Taking into account the manufacturing or production function, this improvement item increases the chances of producing just the right amount of product (Sheldon, 2005). The implication of this is that the manufacturing company will not produce less amount of sausage compared to the consumer's orders and at the same time will produce just the right amount of product amount that does not make the sausages to be obsolete and go past their expiration dates. This decreases the cost incurred in manufacturing the products and the related carrying costs. In addition, this also influences the quality level of the product items being manufactured, in the sense that not obsolete or expired products will be sold to consumers (Sheldon, 2005).
3. Decreased procurement and purchasing costs.
Diminished expenses for procuring and purchasing have a positive impact on the manufacturing function and operating function. Considering this improvement item, there are types of ERP information that can serve as inputs and outputs of both the MRP and ERP systems. These… [END OF PREVIEW]
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