MRP II:
- Financial Modules
- Business Plan – It gives the overall business strategy over a long period.
- Sales Plan – It helps to establish sales plan for items, item groups, customers, and time period for effective measurement of sales performance to the forecast. It translates the business plans into sales by product line
- Production Planning – It helps in translating sales planning into forecasts. By effectively utilising resources such as equipment and labour, production planning determines the time and quantity schedule of production. Overall production planning differs whether products are manufactured based on customer orders or based on sales forecasts.
- EDI and Customer Orders: EDI allows to inquire into the current stock levels (of course, at discretion), and to get immediate and up-to-date information about the orders without labour costs and also automatically.
- Master Production Schedule (MPS) – MPS determines the production period and production level for each product. In general, MPS is made on weekly basis, and they become the basis for determining the MRP – the required quantity of parts and raw materials necessary for manufacturing the production scheduled products. MPS is made taking accounts of the sales forecast and the current inventory level of the finished goods.
- Capacity Planning – It determines the capacity constraints on individual machines.
- Product Costing – It provides a budgeted Job costing system for managing and controlling the cost of ongoing standard or custom jobs. Its primary purpose is to track labour, material and non-material resources that go into the job and the quantity of finish product produced.
- Engineering Change Management
- Material Requirements Planning (MRP) – MRP refers to the process of determining the type, quantity, and order time of parts and raw materials necessary for the scheduled production. First, the quantity of scheduled products is transformed into required quantities of parts or raw materials for each production period. Second, the required quantity of materials is sent for purchasing orders by checking with acquired ordering-lead time and the current inventory level to receive the materials on time and to keep appropriate level of inventory. In short, balancing future supply and demand.
Some of the commercially available MRP/MRP II systems:
1. pc/MRP
PC/MRP is a basic MRP package that supports inventory management, a work order system, bill of materials (BOM), purchasing, receiving, stockroom control, accounting and invoicing. It comes with ten integrated modules: Inventory, BOM, Purchasing, Sales, Address, Accounting, Stock Room, Receiving, Work Orders, and Invoicing. All these modules can run as stand-alone modules or as one integrated package.
It also comes with a Configuration Utilities Module that allows the user to configure the pc/mrp to best suit the needs of the organisation. pc/MRP can be configured to support manufacturing, distribution or retail operations. pc/MRP's multi-user version allows multiple people to enter purchase orders, invoices etc at the same time on PCs networked with any of the multi-user networks such as Windows 95, Windows NT, Workgroups for Windows, Novell, etc. pc/MRP's Large Business and Multi-user Versions can track up to 1 billion part numbers.
The extraordinary low cost of the feature-rich package makes it very attractive for a small business application. This software would be most advantageous for a small to mid-sized business that wanted to run its entire operation from a single software package It would be hard to find a package that will bring more bang for the buck. Among the program's best features are its wide selection of report generators, automatic pick label generation, cycle counting, serial number and lot traceability, direct to supplier P.O. faxing, theoretical and actual job costing, and sales tracking options.
However there are certain shortcomings. The data is not presented in a traditional bucket format. The information you are looking for is not always in an obvious place. The internal part number verus model number takes some getting used to. Exception reporting by part number/model number is not presented in a one-shot approach like other traditional MRP systems. Reports are not always formatted to meet business needs.
Although there are shortcomings to pc/MRP, these minor inconveniences are far outweighed by what it offers in total. pc/MRP presents a simple to use system for running a small to medium-sized manufacturing business, and is priced well below its competitors.
2. Finesse MRP
Finesse MRP provides powerful tools for managing production requirements by comparing material needs with the available inventory and work in progress. It plans and manages material and production using the defined requirements. MRP accepts independent demands created directly through the projects, contracts and job module, Master Scheduling or via sales orders in order entry. Also there's no limit to its planning horizon; non-nettable and expired inventory is automatically excluded and scrap or yield is also considered. Finesse MRP works seamlessly across plant-site boundaries to accommodate multiple inventory locations and aggregate inventory.
General Features:
- Multi-company, plant and warehouse planning
- Multi-project capabilities
- Gross and actual requirements
- Open, firm, planned and scheduled orders
- Job scheduling
- User-defined period date ranges
- Handle detail, scroll and summary inquiries
- Bucketless processing
- On hand, safety stock and lot analysis
- Projected on hand and net requirements
- Planning bill of materials
- Planning product families
- Economic order quantity planning
- Report writer provides all standard reports in multiple formats
3. Vormittag Associates, Inc.
The MRP system is tightly integrated with the Customer Orders, Inventory, Sales Analysis (Forecasting), Purchasing, and the Manufacturing modules of System 2000, and is sensitive to company and location (plant) specific criteria.
MRP analyses the existing on-hand position of an item, open purchase orders, open manufacturing orders (including planned, stock, and custom orders), open commitments (open customer orders, future orders), the sales forecast, and then produces a balance. This analysis can be viewed on-line daily, weekly, or monthly by selecting the appropriate option. Complete pegging is supported allowing the user to view critical data such as when purchase orders are due, when manufacturing orders are due to be completed, and the actual customer orders making up the commitments of an item.
An MRP run will generate suggestions based on parameters such as minimum balance, lead time, etc. These suggestions can then be analysed through the inquiry function, and then modified or converted into manufacturing orders and purchase orders.
Features:
- Dynamic daily, weekly, monthly options
- User selectable options for item ranges to include
- Company or branch consolidation
- Integration with forecasting and alternate forecast schedules
- BOM
- On screen analysis of production schedule
- Display of open orders
- Analysis of make vs. buy decision
- Expedite, Critical, Push Out reporting
- Ability to run MRP on-line
- Detailed reporting of MRP results
- Ability to over-ride MRP suggestions
- Easy integration to purchase orders and manufacturing orders
- Minimum size runs
- Integrated work flow
- Automated reporting
DIFFERENCE BETWEEN A MRP II AND AN ERP SYSTEM
MRP II is a management concept while ERP is its technical subset [4]. ERP is a basic MRP II with a better-built integration and some new functionality. ERP is a mere subset of MRP II [3], which is a company-wide management system designed to support and automate business processes such as financial management; human resources; production, logistics, and operations; and strategic planning and market forecasting. In short, there is very little difference between MRP II and ERP.
ERP systems are an outgrowth of MRP II systems. Manufacturing Resource planning (MRP-II) was further extended to include areas like Finance, Human Resource, Engineering, Project Management etc. This gave birth to ERP (Enterprise Resource Planning) which covered the cross-functional co-ordination and integration in support of the production process. Enterprise Resource Planning (ERP) was sold as the solution to the problems with MRPII but in practice ERP is just Manufacturing Resource Planning (MRPII) with some additional features. The additional features vary from system to system; typically they will include human resource management and salaries, document control and, sometimes, maintenance.
An ERP system also differs from the typical MRP II system in technical features such as the use of relational databases, use of object-oriented programming language, the addition of some CAD/CAE tools, client/server-distributed architecture, Graphical user interfaces (GUIs) and open system portability [8].
MICROSS EXERCISE PRINT OFF:
SCS210 * V7.802 Stock Enquiry 31/10/2003
Stock No : PT101 2 DRAWER CABINET
────────────────────────────────────────────────
PRODUCT GROUP CODE ..... FURN
BIN NUMBER ............. PT101 UNIT OF MEASURE ........ EA
SALEABLE ITEM .......... Y
Quantities Costing: Max dec.places = 2
────────────────────────────────────────────────
STOCK-ON-HAND 0 SELLING PRICE .......... 0
STOCK-ON-ORDER 0 STANDARD COST .......... 16.03
ALLOCATED STOCK 0 AVERAGE COST ........... 16.03
SHORTAGES 0 MATERIAL COST .......... 8.88
FREE PHYSICAL STOCK 0 LABOUR COST ............ 2.86
THEORETICAL FREE STOCK 0 OVERHEAD COST .......... 4.29
LATEST COST 0
LATEST COST DATE
EXPENSE COST 0
----------------------------------------------------------------------------------------------------------------
SCS210 * V7.802 Stock Enquiry 31/10/2003
Stock No : PT100 3 DRAWER CABINET
─────────────────────────────────────────────────
PRODUCT GROUP CODE ..... FURN
BIN NUMBER ............. PT100 UNIT OF MEASURE ........ EA
SALEABLE ITEM .......... Y
Quantities Costing: Max dec.places = 2
─────────────────────────────────────────────────
STOCK-ON-HAND 0 SELLING PRICE .......... 0
STOCK-ON-ORDER 0 STANDARD COST .......... 21.83
ALLOCATED STOCK 0 AVERAGE COST .......... 21.83
SHORTAGES 0 MATERIAL COST .......... 12.45
FREE PHYSICAL STOCK 0 LABOUR COST .......... 3.75
THEORETICAL FREE STOCK 0 OVERHEAD COST .......... 5.63
LATEST COST 0
LATEST COST DATE
EXPENSE COST 0
PgDn=Next P=Print Hard Copy End=Done Esc=Exit Stock Page 1
Cost Roll-up:
Cost Roll-up basically is to accumulate all material costs, labour costs, and overhead costs from bottom level to the product level.
MICROSS vs 4th Shift ERP Package:
MICROSS is a traditional MRP software running on MS DOS operating system. The functionality of MICROSS is limited to functions like Sales order processing, Bills of Material, Stock control, Production control, Purchase order processing etc.
Whereas Fourth Shift is an extended ERP software running on Microsoft Windows platform with broad functionality and extensive capabilities. It facilitates critical business functions including manufacturing, operations, financials and customer and supplier relationship management. It is fully web enable, customisable and flexible software.
General Procedures to select MRP/MRP II system for
medium-sized Manufacturing Company:
When selecting a MRP/MRP II software package for SMEs, there are specific features that must be incorporated into the system to maximise the benefit. Some of the important requirements are listed below:
Handling Information [17]
It should be able to track the movement of components and products through the plant from receiving through production to the warehouse and final shipping. It should also enable to monitor transactions and automatically take action as specified events occur.
Planning and Scheduling [6]
It should be able to take into account the production constraints as well as inventory for manufacturing scheduling, to help increase throughput while optimising the use of the production resources. It should help the SMEs meet demand with increased efficiency, identify and eliminate production bottlenecks, and meet the schedules with less disruption and expediting.
Electronic workflow and Routing
Different departments are often dependent upon the movement of paper documents from one actor to the net, often causing lags between each step. One of the requirements of a MRP/MRP II system would be the provision of electronic work routing and automatic e-mail notifications to users of tasks to be completed.
Flexible Forecasting Tools [13]
The material requirements for some products can oftentimes be huge and unexpected, putting stress on the supply chain to react quickly to the demands. To mitigate the impact of these changes the MRP/MRP II system should have a flexible forecasting system, that will allow the users to analyse various demand scenarios for a proactive planning process.
Inventory and Distribution Controls [17]
It is necessary to maintain an accurate inventory level for an efficient manufacturing process. This involves allowing authorised users to receive, adjust a decrement inventory through a variety of transactions. The MRP/MRP II system should allow users to reserve inventory and to allocate to appropriate work orders.
The distribution function should be available in order to track orders and work in progress to ensure complete traceability of inventory in a single location.
Quality Assurance (QA) Controls [14]
The system should meet standard requirements for quality assurance. Controls should be there in the process to ensure that the right codes are assigned to the right materials and products. Barcode verification of materials during assembly and shipment is crucial in meeting these requirements. The fact that inventory is often packaged and labelled with an individual subject or identifier number, it is required that the system support the ability to control the quality and inventory status.
I would like to suggest two important guidelines that were not discussed above. They are:
Simple and Consistent User Interface
It is possible that company may have users from a large variety of functional areas. It is therefore required that the interface be simple enough for the casual user to operate while displaying the complex information needed to ensure that appropriate operation.
Global Processing
The recent trend in manufacturing has resulted in many SMEs running their operations across multiple sites. In order to integrate all the sites it is necessary to deploy a single MRP/MRP II system that allows information to be shared and executed across different locations. It should be able to provide inventory visibility across all the locations.
CONCLUSION:
Organisations are starting to transform themselves from integrated organisations focused on optimising internal organisational functions to more-agile, core-competency-based entities that strive to position the organisation optimally within the supply chain and the value network. With increasing competition customers have become more demanding. The product life cycles have come down drastically. New technologies are changing the way organisations do business.
A planning & control system like MRP/MRP II is becoming less relevant in today's context. This is because manufacturing is moving towards produce on demand environment. The present is seeing a transition of products from being standardised to being customised. Hence making the business process difficult and complex. Also there is a need for greater integration with the customers and suppliers, which at present the MRP or MRP II system does not provide. No doubt MRP/MRP II has assisted companies in improving the business performance. But it is not totally free of drawbacks, which arise due to the basic design of the system. They help in the planning and control of processes internal to the organisation. But they do not provide means with which the organisation can be integrated with its customers and suppliers.
Organisations the world over have implemented MRP or MRP II software, and are now looking for a way to extend access to scheduling, delivery, inventory, manufacturing, invoicing and planning information to customers and partners. With the ERP systems becoming more and more affordable the focus is now shifting towards implementing ERP rather than MRP or MRP II. My personal opinion says that MRP/MRP II is in its final days.
References
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Wight, O. W. (1981) Manufacturing Resource Planning: MRP II. The Oliver Wight Companies, UK.