Effective Material Requirement Planning Strategies

Material Requirement Planning(MRP1)

What is MRP? Computerized Inventory Control Production PlanningSystem Management InformationSystem Manufacturing Control System

What is MRP? (cont) This is the most comprehensive approach to manufacturing inventory and other dependents which demand an efficient inventory management system.

What is MRP do ? The MRP system determines item-by-item, what is to be processed and when, as well as what is to be manufactured when. This is based on order priorities and available capacities.

When to use MRP Job ShopProduction ComplexProducts Assemble-to-OrderEnvironments Discrete and Dependent Demand Items

What can MRP do? Reduce InventoryLevels Reduce ComponentShortages Improve Shipping Performance Improve Customer Service ImproveProductivity Simplified and Accurate Scheduling Reduce PurchasingCost Improve ProductionSchedules Reduce ManufacturingCost Reduce Lead Times Less Scrap and Rework Higher ProductionQuality

What can MRP do?(contd) Improve Communication Improve Plant Efficiency Reduce Freight Cost Reduction in Excess Inventory Reduce Overtime Improve Supply Schedules Improve Calculation of Material Requirements Improve Competitive Position

Three Basic Steps of MRP IdentifyingRequirements Running MRP Creating theSuggestions Firming theSuggestions

Step 1: Identifying the Requirements Quantity onHand Quantity on Open PurchaseOrder Quantity in/or Planned forManufacturing Quantity Committed to ExistingOrders QuantityForecasted

Step 1: Important Information MRP is .. Company Sensitive Location Sensitive Date Sensitive

Step 2: Running MRP Creating the Suggestions CriticalItems ExpediteItems Delay Items

Step 3: Firming the Suggestions ManufacturingOrders PurchasingOrders VariousReports

Overview of the MRP System Product Structure File Master Production Schedule Inventory MasterFile Material Requirements Planning Manufacturin g Orders Purchase Orders Various Reports

MRP Inputs Product Structure File Master ProductionSchedule Inventory MasterFile

Product Structure File Bill of Materials: It is a materials list that provides information useful to reconstruct the manufacturing process. It is the master product definition that contains as designed information.

Bill-of-Material Product Structure Tree Bicycle(1) P/N 1000 FrameAssembly (1) P/N 1002 Handle Bars (1) P/N 1001 Wheels (2) P/N 1003 Frame (1) P/N 1004

Master Production Schedule Schedule of FinishedProducts Represents Production, notDemand Combination of Customer Orders and Demand Forecasts What Needs to beProduced

Inventory Master File On-Hand Quantities On-Order Quantities LotSizes Safety Stock LeadTime Past-Usage Figures

MRP Process Item: Low-Level Code: Lot Size: LeadTime Gross requirement Scheduled receipts Projectedon hand Net requirements Plannedorder receipts Plannedorder releases PD 1 2 3 4 5

Terms Defined Item name or number for the item beingscheduled Low-Level Code the lowest level of the item on the product structure file Lot Size order multiples ofquantity Lead Time the time from when an order is placed to when it is received PD Past Due Time Bucket, orders behindschedule

Terms Defined Gross Requirements demand for an item by timeperiod Scheduled Receipts material alreadyordered Projected on Hand expected ending inventory Net Requirements number of items to be provided andwhen Planned Order Receipts net requirements adjusted for lotsize Planned Order Releases planned order receipts offset for lead times

Example of the MRP Process PD 1 Gross requirement 10 Item: 2 15 3 25 4 25 5 30 Scheduled receipts Projected on hand Net requiremen t s Planned order receipt s Planned order releases 25 20

Example of the MRP Process Item PD 1 10 2 15 3 25 4 25 5 30 Gross requiremen t Scheduled receipts Projected on hand Net requireme n ts Planned order receipts Planned order release s 25 20 10 20 20 20 15 5 5 10 25 25 25 25 25 25 30 25

Inputs to the Production Plan Marketing Customer Demand Production Capacity Inventory Finance Cash Flow Aggregate Production Plan Human Resources Manpower Planning Procurement Supplier Performance Management Return on Investment Capital Engineering Design Completion

ThePlanning Process MasterProduction Schedule Production Plan Material Requirements Plan Capacity Requirements Plan No Realistic?? Yes Execute Capacity Plans Execute Material Plans

MRPOutputs Manufacturing Orders Purchasing Orders Various Reports

Hubbell LightingCase Before MRP Implementation Less than 75% of orders completed on time After MRP Implementation 97% of orders completed on time 2% of orders completed with 1 to 2 days after due date

Summaryof MRP MRP is a .. Computerized Inventory Control Production Planning System that .. Schedules Component Items as Needed which will .. Track Inventory and .. Help you in many other aspects of business