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Manufacturing
Resource Planning (MRP- II)
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It is high time that MRP II is
introduced in business and industry.
By Prof. Dr. Khawaja Amjad Saeed
Aug 07 - 13, 2000
Change is taking place with a rapid pace. Events are moving much faster
than the pen which records these for cold print. Every decade has seen the use and
application of a new management tool. Focusing on material management, "Q" model
was innovated by mathematicians. Through this, most economic order quantity was determined
for placing an order. The 1970s was dominated by MRP (Material Requirement Planning).
Abroad MRP II (Manufacturing Resource Planning) dominated the 1980s. This is now beginning
to get introduced in developing countries. This article looks at the following aspects:
A. MRP - a brief review.
B. MRP- II:
• Concept.
• Classes of MRP II users.
• Four areas with major components.
C. Conclusion.
A. MRP - a brief review
MRP (Material Requirement Planning) dominated the world during 1970s
and followed linear planning approach. MRP system has the following three major inputs:
1. Bill of Material
(BOM)
This must be kept up-to-date with any product specification.
2. Stock Status Information
This will relate to all items. This should be updated with all relevant
stock transactions as they occur.
3. Master of Production Schedule (MPS)
Requirements of all level of items be ascertained covering period
— by period over the planning horizon. This MPS will be made up of both firm orders
and forecasts further into future for each time period and items rather than simply single
requirements. Since all procurement, manufacturing and assembly plans are based on this,
it is important that the best possible estimate of requirements are ascertained. Many
computer packages are available for MRP. These offer the users the ability to re-run the
analysis of circumstances e.g. requirements, manufacturing capacity and time.
B. MRP II
Concept
MRP II (Manufacturing Resource Planning) dominated the world during
1980s. This focused attention on closed loop planning. Developing countries are in the
process of implementing the above.
MRP II is essentially a computer system. Innumerable versions can be
purchased from different software and hardware suppliers and consultants. Its
implementation can be classified into a four-point scale from A to D.
Classes of MRP II Users
Table 1 briefly describes these states.
Table
1 |
Four
Classes of MRP II user |
Class |
Features |
D |
• MRP working in data-processing
department only. |
• Poor inventory records. |
• Master schedule mismanaged. |
• Reliance on shortage lists for
progressing. |
C |
• Used for inventory ordering,
not scheduling. |
• Scheduling by shortage lists. |
• Overloaded master schedule. |
B |
• System includes capacity
planning, shop-floor control. |
• Used to plan production, not
manage the business. |
• Help still needed from shortage
lists. |
• Inventory higher than
necessary. |
A |
• Uses closed-look
MRP. |
• Integrates capacity planning,
shop-floor control, vendor scheduling. |
• Used to plan sales,
engineering, purchasing. |
• No shortage lists to over-ride
schedules. |
The difficulty is to ascertain where on the path of the
organization is and what steps are to be taken to effect improvements. To overcome this
difficulty, a scoring system has been suggested in the UK Department of Trade and
Industry's booklet entitled Managing into the 90s: Manufacturing Resource Planning. Twenty
questions are posed covering the four areas namely technical, data integrity, education
and use of the system. Major components of these are now listed here.
Four Areas with maior components:
1 Technical
a) Time period for master production schedule and maters
requirements plan are weeks or smaller.
b) Master production scheduling and material requirements
planning are run weekly or more frequently.
2. Data Integrity
a) Inventory record accuracy 95% or better.
b) Bill of material accuracy 98% or better.
3. Education
a) Initial education of at least 80% of employees.
b) An on-going educational program.
4. Use of System
a) Shop delivery performance is 95% or better.
b) Management really use MRP II to manage.
Table2 |
States
meanings conveyed by each alphabet: Table: 2 |
Status
with Score |
Status |
Score |
A |
23+ |
B |
20+ |
C |
17+ |
D |
Less than 17 |
Route of improvement is found in turning "no"
into "yes".
The following benefits flow from the use of MRP II:
1. Reduced manufacturing lead times.
2. Reduced inventory levels.
3. Achievement of customer delivery case.
Conclusion
It is high time that MRP II is introduced in business and industry.
Staff must be fully trained for proper comprehension of the application aspects.
Commitment for implementation is the pre-requisite for achieving benefits from MRP II.
Developed part of the world, having applied MRP II, is now implementing ERP (Enterprise
Resource Planning) to achieve productive results with beefed up bottom line.
* Dean: Executive Programs, Punjab College of Business
Administration, Lahore
* Member Governing Council, IFAC (1997-2000).
* Chairman: Seminars & Conferences Committee,
ICMAP.
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