mrp as a planning tool in qad - explore.qad.com · 4 three objectives for mrp mrp as a planning...

MRP as a Planning Tool in QADDon Lindsey, CFPIM, CIRM

Business Analyst

GenMark Diagnostics Inc.

May 10, 2018

1

2

Don Lindsey, CFPIM, CIRM

Business Analyst

GenMark Diagnostics Inc.

Introduction

MRP as a Planning Tool in QAD

3

The role of MRP in ERP

Basic methods for calculating time-phased material

requirements

The location of data elements within the QAD menu structure

How to optimize MRP data planning elements

By the End of this Session, You Should Understand


4

Three Objectives for MRP


The goal of MRP

is to plan delivery of the right item, in the right

quantity, at the right time

Ensure materials are available for production and products

are available for delivery to customers

Maintain the lowest possible material and product levels in

inventory

Plan manufacturing activities, delivery schedules and

purchasing activities

5

The Principle of Exception


Only manage that which goes

Wrong, not that which goes Right

The Role of MRP in ERP

6


The Head

The Heart

The Hands

Top

Management

Planning

Operations

Management

Planning

Operations

Management

Execution

Business Planning

Sales Planning

Production Planning

Master Scheduling

Material Requirements Planning

Capacity Requirements Planning

Purchasing

Shop Floor Control

Performance Management

7

Product oriented

- Based on BOM relationships

- Versus item by item

orientation

Forward looking

- Based on MPS

- Versus historical usage

orientation

- Versus "launch and forget"

Characteristics of MRP


Time phased

- Based on shop calendar and

planning periods

- Versus next order orientation of order

point

Flexible

- Continually re-plans priorities based

on changing requirements

- Versus "launch and expedite"

8

Demand data- MPS

- Independent demand (optional)

Forecast

Customer orders

Bill of material- Quantity per

- Scrap factors

Shop order data- Shop calendar

- Due Date

- Open material requirements (allocations)

Inventory records- On hand, on order

Purchase and assembly

order data- Allocations

- Order policy, lot size, safety stock

quantity, etc.

- Lead time

- Due date

- Open line items

Computer

MRP Prerequisites


9

Independent demand

- Depends on external factors

- Must be forecast

Dependent demand

- Depends on demand for another item

- Should be calculated

Dependent vs. Independent Demand


Some items may have both independent

and dependent demand

10

MRP Information Flow


MPS

Dependent Demand

Customer Orders

Forecast

Independent Demand

BOM

Shop Calendar

Inventory Status

Open Shop Orders

Open PO’s

Action NoticesPlanned Shop

Orders

Planned

Purchase Orders

MRP

Existential phenomenology

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

PERIODS

FINAL

ASSY

SUBASSY A

SUB B

PURCH A

PURCH B

SUBASSY D

SUBASSY C

PURCH C

PURCH D

SUBASSY E

PURCH E

PURCH F

PURCH G

PURCH H Due

Date

Start

Date

Due

Date

Start

Date

Offset

CMLT - Cumulative Manufacturing Lead Time

Bill of

Material

turned 90

degrees

MRP System Basis


11

MRP Basic Processing Steps

12


Determine Gross

Requirements

By low level code

By item

By time period

Determine Available

Inventory

Calculate Net

Requirements

Calculate Planned

Order Receipts

Offset by

Lead Time

Write

Action Messages

Dependent demand,

independent demand,

allocations

On hand, projected on hand,

scheduled receipts

Net rqmts = gross

requirements - available

inventory

Based on:Order policyLot size rulesEtc.

E.g.,Launch orderReschedule open orderCancel open order

100

60 20 80 50 35 35 90 90

20

100

100

(-10)

25

X Y

1 2 1 3

LEAD TIME = 4 LEAD TIME = 6 MASTER SCHEUDLE

PLANNED ORDERS FOR "X" PLANNED ORDERS FOR "Y" FOR "1"

PERIODS 5 6 7 8 9 10 11 8 9 10 11 12 13 1 2 3

PART "1"

ON HAD 95

ALLOCATED 20

SAFETY STOCK 10

LEADT IME 3 PERIODS

LOTSIZE 100

1 2 3 4 5 6 7 8 PERIODS

GROSS REQUIEMENTS

SCHEUDLED RECEIPTS

PROJECTED ON HAND

NET REQUIREMENTS

PLANNED ORDER RECEIPTS

PLANNED ORDER RELEASES

40

15

15

15

40

40

30

30 15

45

30

15

15

The MRP Process


13

=100

100

2

25

27

73

5

25

30

43

3

0

3

40

100

0

100

0

REQUIRED

GROSS REQUIREMENT

LEVEL

0 E FINAL GROSS REQUIREMENTS

PARENT ON HAND

+ SCHEDULED RECEIPTS

= TOTAL AVAILABLE

NET REQUIREMENTS

COMPONENT

1 A(1) ASSEMBLY GROSS REQUIREMENTS

PARENT ON HAND


= TOTAL AVAILABLE

NET REQUIREMENTS

COMPONENT

2 B(1) SUB ASSEMBLY GROSS REQUIREMENTS

PARENT ON HAND


= TOTAL AVAILABLE

NET REQUIREMENT

COMPONENT

3 C(1) PART GROSS REQUIREMENTS

PARENT ON HAND


= TOTAL AVAILABLE

NET REQUIREMENT

COMPONENT

4 R(.X) RAW MATERIAL

100

73

40

43

MRP Explosion & Netting

14

15

You're going to do what it says

You told it the truth

It is easier to expedite an order than to place a new order

If told that it would take XXX Days to complete a work order or

place a purchase order, then it will be accomplished in that

time

If MRP tells you to expedite or delay scheduled receipts, it

assumes you were successful

MRP Assumes


16

Discrete (lot for lot)

- Order quantity = exact net requirement for period

Fixed order quantity

- Order quantity = fixed lot size

- Lot size varies by item

Period order quantity

- Order quantity = exact net requirements for “n”

periods

- Number of periods varies by item

Order quantity modifiers

- Sometimes specified with fixed order policy or

period order quantity

- Order minimum quantity

- Order maximum quantity

- Order multiple quantity

Order Policies and Modifiers


MRP Exercise: Order Policies and Modifiers

ARM ASSEMBLY 1 2 3 4 5 6 7 8 9 10

Gross Requirements

Scheduled Receipts 50

Proj. On-Hand (50)

Net Requirements

Planned Order Receipts

Planned Order ReleasesPlanned Order Releases

ITEM: CHAIR 1 2 3 4 5 6 7 8 9 10

MPS Orders 20 30 10 20 5 10 25

ARM REST 1 2 3 4 5 6 7 8 9 10

Gross Requirements

Scheduled Receipts

Proj. On-Hand (10)

Net Requirements



40 60 20 40 10 20 50

10 10 0 -2020

25

25

5 -3535

50

50

15 5 -1515

25

25

10 10 -4040

50

50

10 10

25 50 25 50

10 10 -15

15

9090

75 25 25 0 0 -50

50

6060

1010 10

Arm Assy (2)

Chair

Arm Rest (1)

Arm Assy Arm Rest

Order Policy: Fixed Order Qty Period Order Qty

Lead Time: 1 week 1 week

Safety Stock: 0 0

On hand: 50 10

Lot size 25 0

# Periods for POQ 0 4

Order minimum 25 60

Order multiple 25 0

17

18

"Uncashed requisitions"

The shop order or

customer order is

released, but the

material is not yet issued

MRP handles allocations

as additional gross

requirements for the

allocated item

Allocations


19

Safety stock at the sub-assembly

level in MRP can- Cause the system to carry dead inventory

- Call for material to be received earlier than

needed

- Cause loss of MRP credibility

Recommendation- Carry safety stock at MPS level

- MRP will then explode material requirements

for finished goods safety stock accordingly

- Carry safety stock on purchased items where

supply or lead time is erratic

Safety Stock

MRP as a Planning Tool in QAD MRP handles safety stock as an additional net

requirement in any period where projected

on-hand crosses below the safety stock level

20

The ratio of usable output from a process

relative to its input

Applies to the parent

Increases the planned order quantity for

the parent

E.g., during manufacture of the arm

assembly, 5% are defective

- Manufacturer of arm assemblies has a 95% yield

- To produce 200 arm assemblies, we must start

building 211

- 200 arms / 95% = 210.52, rounded up to 211

Recorded at item level

Yield


21

Percent of a component that is wasted

during assembly of a specific parent

Increases the gross requirement of the

component when exploding planned

order for the parent

E.g., during assembly of chairs, 10% of

the arms are wasted

- To produce 100 chairs, must issue 223 arms

- 100 chairs * 2 arms = 200 arms

- 200 arms / 90% = 222.22 rounded up to 223

Recorded at BOM level

Scrap


22

Example: Scrap Factor


ARM ASSEMBLY 1 2 3 4 5 6 7 8 9 10

Gross Requirements

Scheduled Receipts

Proj. On-Hand (100)

Net Requirements



ITEM: CHAIR 1 2 3 4 5 6 7 8 9 10

MPS Orders 50 50 50

Order Policy = Lot for Lot Lead Time = 1 week Safety Stock = 0 On-Hand = 100

Scrap Factor = 10% (whenever chairs are assembled, 10% of the arms are scrapped)

Arm Assy (2)

Chair

112 112 112

100 -12

12

12

12

0 0 0 -112

112

112

112

0 0 0 -112

112

112

112

0 0 0

Answer

23


Example:

Yield

Factor

ARM ASSEMBLY 1 2 3 4 5 6 7 8 9 10

Gross Requirements

Scheduled Receipts

Proj. On-Hand (100)

Net Requirements



ITEM: CHAIR 1 2 3 4 5 6 7 8 9 10

MPS Orders 50 50 50

Order Policy = Lot for Lot Lead Time = 1 week Safety Stock = 0 On-Hand = 100

Arm Assy (2)

ChairYield Factor = 95% (i.e., Whenever arms are assembled,

5% of the arms are unusable )

Scrap Factor = 10%

Arm Rest (1)

ARM REST 1 2 3 4 5 6 7 8 9 10

Gross Requirements

112 112 112

100 -12

12

1313

11 1 -111

111

117117

7 7 7 -105

105

111111

6 6 6

13 117 111

24

Planned orders

- MRP automatically changes quantities and dates

Firm planned orders (FPO)

- MRP will not change

- Planner has control

Released orders (or, open orders)

- Paperwork generated

- Material allocated

Closed orders

- All transactions posted

Purged orders

- All transactions deleted from computer

MRP Order Status


Planned

Firm

Planned

Released

Closed

Purged

25

MRP a tool for both material planning and

priority planning

- MRP continually compares due dates of all

open orders with current need date

MRP recommends rescheduling open

orders whenever due date is not equal need date

- Reschedule in (expedite)

- Reschedule out (de-expedite)

- Cancel order

Dampeners reduce MRP "nervousness"

- E.g. “Do not reschedule out less than ‘n’

periods”

- E.g. “Do not reschedule in (expedite) only

to cover safety stock requirements”

Rescheduling Open Orders


26

Exercise: Rescheduling


ARM ASSEMBLY 1 2 3 4 5 6 7 8 9 10

Gross Requirements

Scheduled Receipts 200 50 50

Proj. On-Hand (50)

Net Requirements



ITEM: CHAIR 1 2 3 4 5 6 7 8 9 10

MPS Orders 50 50 50

Order Policy = Discrete Lead Time = 1 week

Safety Stock = 0 On-Hand = 50Arm (2)

Chair

100 100 100

100 -50 150 50 50 100 0 0 0150 5050 0

Rules for misalignment

• An open order

scheduled for a

period following

the period in

which the on

hand balance

goes negative

(period 2)

• An open order

scheduled for a

period in which

the gross

requirement is

equal to or less

than the

projected on

hand quantity

(period 6)

27

Release order

Firm up order

Lead time

violation

Reschedule

in/out/cancel

Past due

Typical Action Messages


50 action message

types in QAD

CodeMessage

1003De-expedite

1004Expedite

1005Cancel

1006Release due for

1007Release past due for

1010Past due

1013Shipment past due for

28

Regeneration

- MRP is totally exploded through all bills of material

- New requirements and planned orders are

completely regenerated

Net change

- MRP is kept in the computer

- Partial explosion is made only for parts affected by

change to requirements, open orders, inventory

status, changes to planning parameters (e.g. order

policy), or BOM quantity changes

Selective materials plan

- Explodes only the part number indicated

In What Sequence Will MRP Process?


29

Horizontal Display


Horizontal vs. Vertical Display

30


MRP Summary Report

Vertical

[pegging]

Horizontal vs. Vertical Display

31

Bill of material- Component identification

- Quantity per

- Scrap factors

Inventory records- On hand quantity

- Allocations

- Timely entry of all transactions

Open shop orders and purchase orders- Due dates

- Quantities

- Timely closure of completed orders

Accuracy Requirements for MRP


Effective use of MRP

demands high degree of

knowledge, accuracy

and discipline

32

1.4.7- 1.4.17 – Item-Site Planning Maintenance


33

13.5 – Product Structure Maintenance

How to Automate Your MRP Planning Data

15.5 - Formula Maintenance

34

3.21.2 - Transactions by Item Browse


Value Description

ADD-SO Sales Order Maintenance

ADD-WO Work Order Maintenance

CYC-RCNT Cycle Count (Recount)

ISS-SO Sales Order Shipments

ISS-UNP Unplanned Issue

ISS-WO WO Issue or Backflush

RCT-PO Purchase Order Receipt

RCT-UNP Unplanned Receipt

RCT-WO WO Receipt or Backflush

Transactions that will effect MRP

35

23.24 - MRP Control


36

MRP Equals the Future


PFEP – Plan for Every Part

Data Dictionary/WIKI

MDS - Master Data Steward

SME - Subject Matter Experts

An average is a forecast and a forecast is an average

Define each element

Make someone ultimately responsible

Use the knowledge of those who use the system every day

Requires consistent and disciplined measurement

37

Reduced inventory levels

Fewer component shortages

Lower manufacturing costs

Improved scheduling accuracy

Enhanced productivity

Higher customer satisfaction

MRP Benefits and Summary


38

Don Lindsey, CFPIM, CIRM

- [email protected]

- 909-993-2057

Questions and Answers


mailto:[email protected]

mrp as a planning tool in qad - explore.qad.com · 4 three objectives for mrp mrp as a planning...

Documents