Implement Effective Material Requirements Planning Activities, Essay Example

The role of inventory and manufacturing management has been a critical component in the efforts to make sure business success and the optimization of product generation. The introduction of material requirements planning, therefore, is considered a useful contribution toward better business performance, given that it is a system that has enabled the integration of data from inventory to production. The three primary roles of the MRP system include the fact that its design is driven at ascertaining that the materials necessary for production along with the products for the clients are available. It also helps organizations see that production quantities are enough to make sure the demands of the customers are met. Secondly, the system helps in the reduction of waste through the maintenance of the minimum level of supplies and the materials required for effective production and the minimization of the number of products available in the stock (Shafi et al., 2019). Lastly, MRP helps in the coordination of the delivery schedules, the functions of manufacturing, and purchasing. Through the performance of these functions, the system enhances the profitability of the organization, its productivity, and ensures that lead times and cash flow are reduced. Similarly, it helps in the improvement of inventory management (Velasco, Mascle & Baptiste, 2019). Despite the noted elements associated with the MRP, organizations must understand when to implement new systems, as an improper exploration of its use can result in significant failures and heavy losses for the organization.

The Operating Characteristics in Business that Align Best with MRP

As noted, the main aim of the use of MRP is to optimize inventory investment. This implies that the use of the system is most effective in the case of organizations that conducts the manufacturing of goods in large quantities (Shafi et al., 2019). Examples of such businesses include automobile manufacturing organizations, large companies with numerous lines of production, and computer manufacturing companies. Given the operational processes that are run within such companies, companies must focus on three critical factors in their implementation of the MRP system (Petroni, 2002). These factors include;

1. The warehousing of all the materials that are necessary for the process of manufacturing and ensure that they are ready for use when needed.
2. Proper monitoring of the inventory levels to make sure that they stay low but effectively allow the meeting of demand and production supply needs.
3. Timely planning of all the aspects is necessary for manufacturing and their approval by the management.

The Operating Characteristics in Business that make MRP Undesirable or Ineffective

It is notable that through the implementation of MRP, many organizations have been able to maximize their productivity successfully. However, its effectiveness is not guaranteed in all types of businesses (Velasco, Mascle & Baptiste, 2019). For instance, it is notable that service-based organizations such as financial enterprises and institutions which offer their clients products that are made-to-order and manage low volumes of productions may find the system to be undesirable or highly ineffective. The fact that such organizations often run based on small inventories implies that the benefits that would be introduced through the use of MRP would be negligible (Shafi et al., 2019). For mid-market organizations, the deployment of MRP would also turn out to be highly expensive. The cost, on average, of a license for mid-user, is noted to be about $2,452 for each user for the 25-user (Velasco, Mascle & Baptiste, 2019). Along with this, organizations have to give the implementation fee, which is double the software’s cost. It is notable that not only does the implementation of an MRP system translate to significant capital, time, and effort, but also implies disruption in the productivity as the employees learn how to adjust to the change in the system that has been introduced (Hasanati et al., 2019).

The Benefits of the Improvement or Implementation of MRP

MRP is scheduling integrated, cost and inventory management application which uses a bill of material, sales orders, raw goods, cost factors, work in progress, finished goods, and the requests for open purchase to generate a balance of the material resources in accordance to sizes. It is notable that the benefits if the use of MRP is evidence-based, which is one of the factors that justify the use of the system (Petroni, 2002).  Some of the benefits of its use include;

1. Enhanced schedules for production
2. Reduction of the lead times
3. Higher quality of production
4. Reduction of excess inventory
5. Improved customer service
6. Better competitive position
7. Improved productivity
8. Reduction of component shortages
9. Improved supply schedules
10. Enhanced management of supply chain
11. Higher quality of production
12. Better material requirements calculation that amounts to less rework and scrap
13. Bettered customer service
14. Bettered employee morale and reduction of overtime
15. Reduced cost of freight, purchasing, and manufacturing cost

Five Improvements and the means Through Which ERP and MRP Companion Systems Can Operate Together

Part of the roles of the ERP systems includes aiding with the implementation of manufacturing resource planning. This is through ensuring that it is easier to implement. The implementation ease is because of the typical structure for the ERP, the pulling of various data elements within the organization that are not from the database of the MRP. ERP, therefore, incorporates resource planning to the planning of materials (Velasco, Mascle & Baptiste, 2019). Through operating together, the system enables the realization of a better external and internal communication. Communication, in this case, is improved through a standard method of data collection that works through the incorporation of inputs from the various disparate system. It also provides employees and managers with a site picture that is common to both groups. Through the common site, better teamwork is fostered within the organization to ensure that the various employees operate in better coordination (Shafi et al., 2019).

Similarly, the morale of the employees is significantly enhanced. The items that include finished pieces, labor, inventory levels, and shipping are made readily available to all the various departments within the organization and help in the reallocation of resources when the need arises. It is also notable that all the different areas effectively gain from the enhanced communication that results from the use of a common site picture (Aydiner et al., 2019).

One example that helps illustrate the influence of the use of the system is the case of Air Force Medical Services, which generated and initiated the use of a global dashboard. The tool helps with the tracking of the performance of its 29 health indices. It also includes the use of a common site picture that integrates performance for the 75 Air Force clinics and hospitals (Hasanati et al., 2019). Through the tool, view of performance is provided with all levels of each of the indices that include major command, Air Force, and the level of individual clinic/hospital. The eased movement from the institution’s highest level to the various facilities allows the leaders to establish the areas that are not effectively meeting their targets and to male policy adjustments in the event of constraints in the delivery of effective healthcare (Petroni, 2002). Along with the provision of the common site picture, the tool also encourages effective communication up, down, and across the chain to ensure the sharing of innovative measures towards the provision of quality care in cost-effective and efficient ways, while making sure that the safety of the patient is given the main priority (Shafi et al., 2019).

Yet another aspect through which the effectiveness of the systems can be demonstrated is through a focus on the production process lead time. Through the systems, the lead time is maximized to ensure that there is less time used for the flow in the management of the production chain (Velasco, Mascle & Baptiste, 2019). Through the linking of MRP and ERP, the sharing of information is enabled, and flow is managed through a centralized database within the organization. This type of process helps in enhancing the real-time communication that occurs between the various systems that are a part of the process of production. It is also notable that the MRP-ERP process makes it possible to coordinate business transactions that include the customers’ invoicing and suppliers’ evaluation, which helps in accelerating the process of delivery (Petroni, 2002). In the system, various customers are also able to make orders of different items that they need through inputting their details into the system. Following the inputting of the item details, the system processes the orders. The material specifications that the customer requested are then delivered in time for the initiation of the process of production and ultimately delivered in tome to the customer (Shafi et al., 2019). It is noteworthy that speed is imperative if the various consumer demands are to be adequately met.

Similarly, cost and time are saved through the effective implementation of operations using the system. An example of an organization that employs the use of the system at this level is the Colorado Transport Department. Through the implementation of the system, the team has been able to reduce costs by about $1.9 million and also enhanced its inventory turnover by about 97% (Hasanati et al., 2019). With better supply schedules realized through the monitoring of the rates of consumptions and the warehoused inventory, it is evident that proper alignment of ERP and MRP systems within the organizations successfully enables performance improvement (Shafi et al., 2019).

Through the analysis, it is also apparent that ERP and MRP can help in increasing the morale of the employees and ensuring that customers feature higher levels of satisfaction through the real-time provision of performance metrics (Aydiner et al., 2019). Through the viewing of the performance metrics, the team is enabled to comprehend the ways they can improve teamwork, inspire pride, and make a positive contribution to the final product. An example of the exploitation of the systems through this means is Southwest Airlines’ use of the MRP and ERP for the optimization of the schedules of the flight attendants and crew (Petroni, 2002). This successfully enabled the boosting of the morale of the employees and contributed to the increase in the levels of consumer satisfaction. Therefore, organizations must take note of the effectiveness of the system in contributing to better performance featured through improved communication among employees, better operational coordination, and increased customer satisfaction. However, poor implementation and failure to consider the nature of the organization’s operation might result in failure or negligible gains that would ultimately amount to an overall loss for the company. Nonetheless, with proper implementation, the tool can be highly useful in boosting employee morale and ensuring that there is better coordination of operations.

References

Aydiner, A. S., Acar, M. F., Zaim, S., & Delen, D. (2019, August). Supply chain orientation, ERP usage and knowledge management in supply chain. In Proceedings of the International Symposium for Production Research 2019 (pp. 580-590). Springer, Cham.

Hasanati, N., Permatasari, E., Nurhasanah, N., & Hidayat, S. (2019, May). Implementation of Material Requirement Planning (MRP) on Raw Material Order Planning System for Garment Industry. In IOP Conference Series: Materials Science and Engineering (Vol. 528, No. 1, p. 012064). IOP Publishing.

Petroni, A. (2002). Critical factors of MRP implementation in small and medium?sized firms. International Journal of Operations & Production Management.

Shafi, K., Ahmad, U. S., Nawab, S., Bhatti, W. K., Shad, S. A., Hameed, Z., … & Shoaib, F. (2019). Measuring Performance Through Enterprise Resource Planning System Implementation. IEEE Access, 7, 6691-6702.

Velasco Acosta, A. P., Mascle, C., & Baptiste, P. (2019). Applicability of Demand-Driven MRP in a complex manufacturing environment. International Journal of Production Research, 1-13.