Material Requirements Planning ( Mrp ) And Lean Manufacturing

Production practices have had an important role in satisfying the dynamic market. Many approaches have being developed in order to respond effectively to specific business requirements. In fact, some areas of management have focused its study on the overseeing, designing, and controlling the process of production in an effort to find the best methodology that ensures the business success and performance. However, complexities arise in this field because many variables such as costs, inventory, scheduling, suppliers, etc have to be considered in any business. Lean approach and the traditional approach are two points of view that aim to address this complexities, and those will be examined in this essay.

Planning and Forecasting is a vital function of management especially as it is related to inventory management. Planning has four processes associated with it. They are establishing goals, formulating strategies, implementing the plan and evaluating its success. The planning process of inventory will assist the organization choose the correct inventory system resulting in reduced costs and increased efficiency. For any business, having large amounts of inventory could prove to be expensive. In most company’s the management team will forecast sales on a monthly basis in order to keep enough inventories to fill customer orders in a timely fashion but not have an overflow of stock. There are various types of

The options available for this company involve looking at different inventory models in order to allow this specialist the ability to produce outside high demand windows of opportunity. Initially this company began using the MRP system which enevitably helped to reduce the company’s inventory and at the same time improved their on-time delivery numbers. Currently the process has allowed the Space Age company to maintain a cost of $1.25 per week to store their Gemnini and $1.50 per week to store each of their Saturns that sat in inventory.

Enterprise Resource Planning (ERP) is extended to suppliers, customers, and other business partners to enables both smooth integration of a different company business systems as well as effective and secure communication. ERP would facilitate collaboration in its business processes. Supply chain management (SCM) manages the supply chain end-to-end processes that start with the design of the product and end when it is sold, consumed, or used by the end consumer. SCM is to reduce uncertainty, variability, and risk, and increase control in the supply chain, thereby positively effecting inventory levels, cycle time, business processes and customer service. Collaborative planning, forecasting, and replenishment (CPFR) is a business practice in which suppliers and retailers collaborate in planning and demand forecasting in order to ensure that members of the supply chain will have the right amount of raw materials and finished goods when they need them. Collaborative planning is designed to synchronize production and distribution plans and product flow, optimize resource utilization over an expanded capacity base, increase customer responsiveness, and reduce inventory.

All retailers have a common goal in mind, and that is to make a profit. Companies earn a profit by first connecting customers with products, which can lead to an exchange of product for money. Without the ability to connect customers with products, no money exchange is possible and no profit is earned. It is, therefore, immensely important for retailers to have the right products, in the right quantities, at the right locations, and at the right time. Inventory Management Systems provide companies like L.L.Bean with the necessary information to achieve just that. L.L.Bean’s advanced inventory management system (IMS) connects customers with products, irrespective of the location of the product or the customer (Hoffsess, 2015).

Inventory planning is done through a stream of information, which is shared between vendors and allows independent vendors assess how much inventory is being made and allows everyone to be on the same page. This helps

As noted above, the base of operations is in China. However, both shipping and inventory maintenance are controlled by the Material Requirements Planning (MRP) software platform. This IT strategy allows the company China operations to be controlled from a central location in the U.S. and has historically allowed the company to achieve its desired level of growth. According to the case scenario, Riordan employs "special software developed by the manufacturers in the planning and scheduling tasks of the company. It shows the orientation between the various requirements and the progress in the manufacturing sector, so that more accuracy in the delivery dates." (Riordan Manufacturing, 1) However, the current supply chain difficulties are calling the MRP platform into scrutiny. As Riordan has grown, and the demand for its product has

This caused a change in relationships with suppliers from adversarial to ones promoting trust. In the 1970s, the advent of global competition created vast opportunities for new computer technology to be implemented into resource management. Thus Material Requirements Planning (MRP) came into its own. Many of the previously manual practices employed for manufacture and acquisition of materials were automated.

In terms of purchasing and supply of materials, non-matching materials with ordering purchase, forgetting ordering materials, over or less materials, early or late materials arriving, lack of JIT strategy, lack of training

There are two systems in inventory management: push system and pull system. Push system based on stock, this system forecast the market requirement, it has a large batch size and a very high inventory. This system has a overproduction problem. Pull system depends on customer order. This system has a small batch sizes. In this system, produce depends on needed. This system has few inventories.

PPC will run the MRP, on the basis of stock available schedules will get generated which will be followed by procurement. There is no chances of excess inventory as the production is made on the basis of the orders in hand. Excess stock may be available if orders get cancelled in a particular month. Suppose customer order for 10000 for a particular month and gives 3 months tentative order of same quantity but due to market situation it managed to produce just 5000 so in that case order gets changed and this is quite normal in automobile sector.

A common way of decreasing the amount of inventory a business holds on a daily basis is implementing a just-in-time inventory process. A Just-In-Time inventory system means that the business gets the materials for a product, as they are demanded. “The electronic data

In addition, our production scheduling and General Managers need a way to synchronize product volume and configuration with actual manufacturing capacities, which drives throughput and increases asset utilization while lowering inventory costs. In the

HP’s inventory crisis is caused by the high variability in demand and long lead times for which HP has no effective system in place. An effective demand forecasting system is needed, which not only takes into considerations qualitative factors (such as forecasted consumer behaviour, upcoming special events), but also quantitative factors (such as historical demand patterns, number of backlogs from last period). Along with the forecasting system, a Q inventory model should also be integrated. Using the calculated optimal order quantities and the ROPs from Exhibit 2, the European DC will know exactly when to place a new order. This will smooth out demand variability as the safety stock will ensure that there are minimal product shortages. This implementation will not be successful, however, until all of the departments accept and use the system. For this, HP needs to educate its employees about how the forecasting and Q-inventory system work and value it adds.

Moreover, production planning and control is useful to meet demand in order to obtain the maximum profit. In this task, I lead my team to conduct forecasting of customers demand for one year period and to develop an aggregate planning, master production schedule (MPS), rough cut capacity planning (RCCP), material requirement planning (MRP) and capacity requirement planning (CRP). These activities are part of the effective and integrated manufacturing planning and control processes which is known as MRP II (Manufacturing Resource Planning), the predecessor of enterprise resource planning (ERP). The relationship of these processes can be seen in Figure 1. Our project was related to processes of top management planning and operation management execution in this figure.