material planning and erp) - rjerz.com · master production schedule ... length of time • the mps...
TRANSCRIPT
Learning Objectives
Explain• Material requirements planning• Distribution requirements planning• Enterprise resource planning• How ERP works• Advantages and disadvantages of ERP systems
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MRP Definition
• Material requirements planning (MRP): Computer‐based information system for ordering and scheduling of dependent demand inventories
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Master Production Schedule (MPS)
• Specifies what is to be made and when• Must be in accordance with the aggregate production plan
• Aggregate production plan sets the overall level of output in broad terms
• As the process moves from planning to execution, each step must be tested for feasibility
• The MPS is the result of the production planning process
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Master Production Schedule (MPS)
• MPS is established in terms of specific products
• Schedule must be followed for a reasonable length of time
• The MPS is quite often fixed or frozen in the near term part of the plan
• The MPS is a rolling schedule• The MPS is a statement of what is to be produced, not a forecast of demand
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MRP Inputs MRP Processing MRP Outputs
Masterschedule
Bill ofmaterials
Inventoryrecords
MRP computerprograms
ChangesOrder releases
Planned-orderschedules
Exception reports
Planning reportsPerformance-controlreports
Inventorytransaction
Primaryreports
Secondaryreports
MRP Overview
Requirements of MRP
• Computer and necessary software• Accurate and up‐to‐date
• Master schedules• Bills of materials• Inventory records
• Integrity of data
Dependent Demand
• The demand for one item is related to the demand for another item
• Given a quantity for the end item, the demand for all parts and components can be calculated
• In general, used whenever a schedule can be established for an item
• MRP is the common technique
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Bills of Material
• List of components, ingredients, and materials needed to make product
• Provides product structure• Items above given level are called parents• Items below given level are called children
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Lead Times
• The time required to purchase, produce, or assemble an item• For purchased items – the time between the recognition of a need and the availability of the item for production
• For production – the sum of the order, wait, move, setup, store, and run times
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Time‐Phased Product Structure
|| || || || || || || ||
11 22 33 44 55 66 77 88Time in weeksTime in weeks
|| || || || || || || ||
11 22 33 44 55 66 77 88Time in weeksTime in weeks
FF
2 weeks2 weeks
3 weeks3 weeksFF
2 weeks2 weeks
3 weeks3 weeks
2 weeks2 weeks
3 weeks3 weeks
1 week1 week
AA
1 week1 week
AA
2 weeks2 weeks
1 week1 weekDD
EE2 weeks2 weeks
1 week1 weekDD
EE
2 weeks2 weeks
DD
GG
1 week1 week
2 weeks2 weeks
DD
GG
1 week1 week
1 week1 week
2 weeks to 2 weeks to produceproduce
BB
CC
EE1 week1 week
2 weeks to 2 weeks to produceproduce
BB
CC
EE
Start production of DStart production of DStart production of DStart production of D Must have D and E Must have D and E completed here so completed here so
production can production can begin on Bbegin on B
Must have D and E Must have D and E completed here so completed here so
production can production can begin on Bbegin on B
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Other Considerations
• Safety Stock• Lot sizing
• Lot‐for‐lot ordering• Economic order quantity• Fixed‐period ordering• Part‐period model
MRP Structure
Output ReportsOutput Reports
MRP by period report
MRP by date report
Planned order report
Purchase advice
Exception reports
Order early or late or not needed
Order quantity too small or too large
Output ReportsOutput Reports
MRP by period report
MRP by date report
Planned order report
Purchase advice
Exception reports
Order early or late or not needed
Order quantity too small or too large
Output ReportsOutput Reports
MRP by period report
MRP by period report
MRP by date report
MRP by date report
Planned order report
Planned order report
Purchase advicePurchase advice
Exception reports
Order early or late or not needed
Order quantity too small or too large
Exception reports
Order early or late or not needed
Order quantity too small or too large
Data FilesData Files
Purchasing data
BOM
Lead times
(Item master file)
Inventory data
Data FilesData Files
Purchasing data
BOM
Lead times
(Item master file)
Inventory data
Data FilesData Files
Purchasing data
BOM
Lead times
(Item master file)
Inventory data
Masterproduction schedule
Masterproduction schedule
Masterproduction schedule
Material requirement
planning programs
(computer and software)
Material requirement
planning programs
(computer and software)
Material requirement
planning programs
(computer and software)
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Gross Requirements Schedule
A
BB CC
5 6 7 8 9 10 11
40 50 15
Lead time = 4 for ALead time = 4 for AMaster schedule for AMaster schedule for A
A
BB CC
A
BB CC
5 6 7 8 9 10 11
40 50 15
5 6 7 8 9 10 11
40 50 15
Lead time = 4 for ALead time = 4 for AMaster schedule for AMaster schedule for A
S
BB CC
12 138 9 10 11
20 3040
Lead time = 6 for SLead time = 6 for SMaster schedule for SMaster schedule for S
S
BB CC
S
BB CC
12 138 9 10 11
20 3040
12 138 9 10 11
20 3040
Lead time = 6 for SLead time = 6 for SMaster schedule for SMaster schedule for S
1 2 3
10 10
Master scheduleMaster schedulefor for B
sold directlysold directly
1 2 3
10 10
1 2 3
10 10
Master scheduleMaster schedulefor for B
sold directlysold directly
Master scheduleMaster schedulefor for B
sold directlysold directly
PeriodsPeriodsPeriodsPeriods
Therefore, these Therefore, these are the gross are the gross requirements for Brequirements for B
Therefore, these Therefore, these are the gross are the gross requirements for Brequirements for B
Gross requirements: BGross requirements: B 1010 4040 5050 202040+10 15+30=50 =45
11 22 33 44 55 66 77 88PeriodsPeriods
Gross requirements: BGross requirements: B 1010 4040 5050 202040+10 15+30=50 =45
11 22 33 44 55 66 77 88
Gross requirements: BGross requirements: B 1010 4040 5050 202040+10 15+30=50 =45Gross requirements: BGross requirements: B 1010 4040 5050 202040+10 15+30=50 =45
11 22 33 44 55 66 77 8811 22 33 44 55 66 77 88PeriodsPeriodsPeriodsPeriods
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Net Requirements Plan
The logic of net requirementsThe logic of net requirements
available inventoryavailable inventory
net net requirementsrequirements
on on handhand
scheduled scheduled receiptsreceipts++–– ==
available inventoryavailable inventory
net net requirementsrequirements
on on handhand
scheduled scheduled receiptsreceipts++–– == net net
requirementsrequirementson on
handhandscheduled scheduled receiptsreceipts++–– ==
total requirementstotal requirements
gross gross requirementsrequirements allocationsallocations++
total requirementstotal requirements
gross gross requirementsrequirements allocationsallocations++gross gross requirementsrequirements allocationsallocations++
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MRP Outputs
• Planned orders ‐ schedule indicating the amount and timing of future orders.
• Order releases ‐ Authorization for the execution of planned orders.
• Changes ‐ revisions of due dates or order quantities, or cancellations of orders.
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Importance of Accurate Records
• Accurate inventory records are absolutely required for MRP (or any dependent demand system) to operate correctly
• Generally MRP systems require 99% accuracy• Outstanding purchase orders must accurately reflect quantities and schedule receipts
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Benefits of MRP
• Better response to customer orders• Faster response to market changes• Improved utilization of facilities and labor• Reduced inventory levels
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MRP and JIT
• MRP is a planning system that does not do detailed scheduling
• MRP requires fixed lead times which might actually vary with batch size
• JIT excels at rapidly moving small batches of material through the system
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Material Requirements Planning II
• Once an MRP system is in place, inventory data can be augmented by other useful information• Labor hours• Material costs• Capital costs• Virtually any resource
• System is generally called MRP II or Material Resource Planning
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Enterprise Resource Planning (ERP)
• An extension of the MRP system to tie in customers and suppliers• Allows automation and integration of many business processes
• Shares common data bases and business practices
• Produces information in real time• Coordinates business from supplier evaluation to customer invoicing
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ERP
• ERP modules include• Basic MRP• Finance• Human resources• Supply chain management (SCM)• Customer relationship management (CRM)
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Advantages of ERP Systems
• Provides integration of the supply‐chain, production, and administration
• Creates commonality of databases• Can incorporate improved best processes• Increases communication and collaboration between business units and sites
• Has an off‐the‐shelf software database• May provide a strategic advantage
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Disadvantages of ERP Systems
• Is very expensive to purchase and even more so to customize
• Implementation may require major changes in the company and its processes
• Is so complex that many companies cannot adjust to it
• Involves an ongoing, possibly never ending, process for implementation
• Expertise is limited with ongoing staffing problems
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