MRP II: Inventory Management

While MRP I primarily address the inbound flow of inventory (materials watchfulness), MRP II adds separate interfaces such as finance, marketing, and integrated logistics. Like MRP I, MRP II is a push inventory model which pushes product through manufacturing and distribution processes in order to assemble forecast demand. However, it adds further dimensions to the basic model. MRP II not only considers the inbound flow of material, but also how much material can actually be handle within the plant.Furtherto a greater extent, it actually handles production scheduling, outwear needs, inventory budgets, and personnel needs. But the most important feature is the addition of the finance interface. This module provides the cogency of transforming the operating production plans into financial terms, consequently the data can be used for financial planning and control purposes of a more general management nature.Another significant addition is the simulation module. This simulation ca pability enables management to perform a more comprehensive alternative planing lap in ontogeny the marketing and business plans. Operating variable could be regulated to examine the formationwide response to the proposed operating change.Besides MRP II includes the entire set of activities involved in the planning and control of production operations. It consists of a variety of functions of modules and includes production planing, resource requirement planning, master production scheduling, materials requirements planning (MRP I), shop floor control, and purchasing. footprint 1 Market Demand the process begins with an aggregation demand from all sources. Examples of sources ar firms orders, forecasts, and safety stock requirements.Step 2- Production Plan with inputs from manufacturing, finance, and marketing, the production plan would be derived.Step 3- Rough-cut capacity planning it involves short-term capacity considerations that ar affected by irregularities in demand. I t formulates benchmarks for the proper use of personnel, machines, and shifts. Bills of capacity and bills of labour resources are the primary inputs to determine rough-cut capacity. In the event of incapability in producing the require output (due to limitation of capacity), adjustment to the production plan would be made.Step 4- Master production agenda formulation of the master production schedules provides a realistic, detailed, statement of what the firm expects. It is more detail than the aggregate plan, it translates the aggregate plan into specialized numbers of specific products to be produced in a specific period of time.Step 5- Material requirements planning (MRP) MRP is the heart of the entire process (MRP II). When MRP comes into play, material and schedule requirements would be generated.Step 6- Capacity requirements planning at this stage, the capacity requirement planning determine whether the firm has enough capacity (e.g. worker, space, money) to meet the schedule s. Again, if schedules could not be met, some adjustment in the master production schedule would be required else requirements would be scheduled. Improved consistency in one-time customer delivery diminution in purchasing cost due to fewer expedited shipments Inventory reduction of one-fourth to one-third (cost reduced) Improve responsiveness to demand changes Allowing more planning flexibility Minimization of workforce overtimeProblems in Implementation of MRP IIImplementation an MRP II system is a monumental effort. The system requires a tremendous totality of information, which essential be accurate if the system is to be successful. The MRP II systems is capable of affecting all function within Forgess marketing, production, purchasing, accounting, finance and logistic. All personnel who have any interaction with the MRP II system require training. Further, Forges must(prenominal) be committed to make the MRP II system work. The problems that occur in implementing MRP are frequently organizational and behavioral rather than technical.Existing Systems and the Informal SystemIf an MRP II system is replacing an existing production and inventory control system, Forges whitethorn see significant resistance to change, even if the existing system has been unsatisfactory. People generally resist to change, and they prefer the familiar to the unfamiliar. Also, when a system performs poorly, an informal system develops to deal with problems.For MRP II to operate strongly, the company must have a large amount of timely and accurate data. Besides, bill of material must be developed for all items. Furthermore, all the bill of material (BOM) must be reviewed, updated, and structured that provide the data needed by MRP II. This would not be a simple task. Frequency product changes and modification can make the process of developing a BOM challenging. To maintain the integrity of the BOM, the company must practice effective configuration control, that is, the compa ny must control and coordinate changes to its products to ensure a smooth changeover to new product designs.After a system is installed, watchful attention and discipline must be exercised to ensure at all data used by the system is accurate. For example, if a clerk is supposed to discharge a code 3, indicating that the item is purchase in thousands, but instead enters code 1, indicating that it is purchase in dozens, serious error and material shortages are liable(predicate) to occur. If a system gives erroneous data at times, people may develop other way to get the data they need and may no longer bother to update the system, since they no longer use it. The system could then become even less reliable and be a preventive rather then a benefit.All MRP II data must be accurate to ensure system integrity, but the inventory data are the most difficult to maintain because they change frequency. The MRP II inventory data must be compared periodically with the actual physical inventor y to maintain accuracy. semiweekly counting involves more than just counting parts. Forges must maintain proper housekeeping so that parts are properly located, accessible and identified. When implementing MRP II for the outgrowth time, getting inventory under control can be a formidable task.Top-level managers and managers are in all parts of the organization that will be affected by MRP must clearly recognize all the efforts needed to achieve this new way of managing their activities. These mangers must fully support all the changes and must remain supportive of the new system.The participation of users of the system in its development will make the people more familiar with the system. Besides, they would also be more committed as they play a part in the systems development.For the system to work, the entire user would have to be properly trained. Users must understand the system in order to used it effectively.A well-designed MRP system could help to improve a companys operati on greatly, however a poorly designed can lead a company into deep trouble.Wallaces Proven Path for MRP ImplementationAccording to Thomas Wallace, an MRP II expert, the instruction execution could be completed in 18 months. 12 months for implementing MRP, 3 months to close the circle, and three more months to implement MRP II. Figure above is a graphic bureau of the implementation timetable.The process starts with first-cut education follows by developing a consensus that the company should implement MRP. Next, the education and training phase will begin and it is an ongoing act even after implementation. By the second month, inventory accuracy and bill of material accuracy and structure will begin, they are the most time and labour consuming step. In the mid of the third month, production planning and MPS policies together with the system and software participation would start. By the eighth month, the first pilot program would commence. Subsequently the cutover phase would st art. By the end of the twelveth month, the implementing of the basic MRP would be completed.The next three-month is for closing the MRP loop which encompass shop-floor control, capacity requirement planning and purchasing. Routings, work centers and system preparation will commence simultaneously. Once finished, another pilot program will commence follows by the cutover program. By the end of the fifteenth month, the MRP loop would be closed.