Basic concepts (MRP, MRP II and ERP).

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CONTENTS

  1. Basic Concepts                                                                        2
  1. MRP
  2. MRP II
  3. ERP
  1. Typical features found in some commercial MRP/MRP II systems        4
  2. Some of the commercially available MRP/MRP II systems                5
  1. Pc/MRP
  2. Finesse MRP
  3. Vormittag Associates Inc.
  1. Difference between a MRP II and an ERP System                                9
  2. MICROSS EXERCISE PRINT OFF                                                10
  3. MICROSS vs 4th Shift ERP Package                                                11
  4. General Procedures to select a suitable MRP/MRP II

System for a medium sized manufacturing company                        12

  1. Conclusion                                                                                          14
  2. References                                                                                15                        

BASIC CONCEPTS (MRP, MRP II and ERP):

MRP

MRP stands for Material Requirements Planning. MRP is widely recognised as one of the most valuable management tools. MRP strives to improve manufacturing efficiency by managing the production schedule, reducing inventory, increasing cash flow, and delivering products in a timely manner.

MRP is a tool used in the inventory management of depended components in manufacturing operations. It is a set of techniques that uses bills of material, inventory data, and the master production schedule to calculate requirements for materials [6]. In short, it aims at planning and controlling purchasing and manufacturing operations in response to a certain manufacturing process.

MRP II

MRP, which started out as a better way to order material, has evolved into MRP II. MRP II is a total company-wide system. It is a way to get all the people in the company working to the same game plan; to the same set of numbers [18]. A Company can now plan material, capacity, finance, marketing strategy, etc. all with the same system. In addition, all these things can be simulated to provide the management of the company with real planning capability. MRP II has proven to be an effective management weapon.

The definition of MRP II as defined by the 9th edition of the APICS [9] dictionary is: A method for the effective planning of all resources of a manufacturing company. Ideally, it addresses operational planning, financial planning, and has a simulation capability to answer "what if" questions. It is made up of a variety of functions, each linked together: business planning, sales and operations planning, production planning, master production scheduling, material requirements planning, capacity requirements planning, and the execution support systems for capacity and material. Output from these systems is integrated with financial reports such as the business plan, purchase commitment report, shipping budget, and inventory projection in dollars. Manufacturing resource planning is a direct outgrowth and extension of closed loop MRP.

ERP

Enterprise Resource Planning (ERP) has evolved from MRP and MRP II systems [8]. ERP is an extension to MRP II. It is a complete organisation wide software solution. The ERP system consists of software support modules such as: marketing and sales, field service, product design and development, production and inventory control, procurement, distribution, industrial facilities management, process design and development, manufacturing, quality, human resources, finance and accounting, and information services. ERP helps to integrate the different processes necessary in a business into a centralised pool that facilitates data sharing and eliminates redundancy [3].


Typical features found in some commercial MRP/MRP II systems:

MRP:

  • Bill of Materials – A bill of materials (BOM) defines the product’s structure in terms of materials and provides an optional connection to plant resources such as machinery, tooling, and labour defined by a bill of routing. It is similar to parts list but also shows the product structure. It is structured to reflect the sequence of steps necessary to produce the product. The Bill of Materials application provides a solid base for production activity to be defined, tracked and reviewed.

  • Inventory Management – It helps to track every aspect of Inventory. It gives accurate information about what is in stock, how much is it worth and where is it located. The primary purpose of inventory management is to maintain proper inventory levels and ensure on-time delivery of an exact quantity of materials, and to minimise the overall costs associated with inventory. Thus, effective inventory management aims to maintain proper inventory levels at the lowest possible costs.
  • Work Order Management
  • Shop Floor Schedule – It helps the worker on the shop floor to monitor progress and completion of manufacturing operations to achieve the production targets.
  • Production Activity Control
  • Material Shortage Management
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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 ...

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