Essay Sample on Material Requirement Planning

The characteristics of the operations in a firm heavily influence the efficiency of the Material Requirement Planning (MRP) system of any given firm. However, most MRPs are applicable to the companies that carry out production or provide services since it involves the movement of commodities from the suppliers to the manufacturers and the end users (Sharma, 2008). Below are some of the characteristics that a company which wants to implement Material Requirement Planning (MRP) system successfully should possess.

Foremost, to avoid any serious errors in taking up the stocks or even during production the transparency of data must be upheld in the course of business activities. Secondly, a supply chain that is well-connected outlines movement of materials or resources from the upstream to downstream. An updated inventory list, material bills and the master schedule that is up to date are important in any company in that: Master schedule identifies when the company requires specific new materials to be purchased, Material bills shows the part of materials required for a particular production. While an inventory that is up to date indicates the full list of the materials that still exist in the firm. Lastly, for MRP system to be effective, a companys management has to be committed to the task where everyone takes part in the system, and the workers are filled in on the Material Requirement Planning (MRP) knowledge available (Sharma, 2008).

Operating Attributes that make MRP ineffective

In case some of the operating strategies are not practiced it may lead to the MRP system to be rendered ineffective. Some of the hitches that are experienced in the MRP comes from the users like feeding incorrect data in the system, mishandling of the inventory records, a poor update of material specification or bills, unproductive process management and insufficient control of quality. These problems lead to MRP system output errors hence resulting in losses in the company and customers disappointment. Therefore companies with poor inventory management, supply chain issues, no mass production assembly chain, non-cooperating employees and undefined line of production are not fit to adapt the MRP system.

Advantages of Improving MRP in an Organization

An inventory framework is the most commonly used strategy by most of the manufacturing companies to arrange the processes connected to making the products they produce and MRP system improves the arrangements of these stock products. However, the system is more applicable to the companies that require a lot of materials to produce their end product. Three main benefits linked to the use of MRP are as follows. First, it ensures that every important item, as well as materials, are in the line of production. For the production of any product to be effective, all the necessary items and materials must be available. Secondly, it can check the various inventory levels and indicate if the stock items are getting low. This makes the manufacturers reach their goal of sufficiently producing products that will satisfy the demand without producing an unnecessary capacity of overstock. Identifying the product being produced as well as when and the target consumers of the product is another benefit of MRP.

If a company fails to purchase the necessary items to quench the demand for their products, puts them at a risk of losing their potential customers. That is why a company with MRP system is given a tool that maintains and keeps a balance between the stock items enabling them to satisfy the demand of their clients. MRP also enables a company to request the necessary stock materials at a desirable time. Automated MRP system enables manufacturers to save a lot of time and maximize on profit compared to when employees carry out the operations manually.

The Lead Time operations require improvement in an organization. With proper MRP, there is a reduction in the time taken to move items from the distributors to the producers and finally to the end users. Also, MRP is expected to improve on Bills of Materials, Purchase order Quantity, Safety Stock Requirements, Lot sizing policies of all the items, Production Schedules, Sales Order Quantities and Due Date and Scrap Rate.

Improved Areas by the use of MRP and ERP

Lead Times

This is the period required for the materials to flow within the manufacturing chain. ERP conjoined with MRP ensures that communication flows from one central record which ensures there is real time communication within the different system during the production process. Coordination of business from the time suppliers have been evaluated to the time customers are issued with invoices is also enhanced hence fastening delivery (Shields, 2001). Various buyers place the orders of the commodities they need by entering their conditions of the products in the system, and once the information has been received, they are queried in the file to make orders from the supplier. Required items are delivered in time for manufacturing and delivery to the customers is made. This made in an adequate speed to satisfy the consumers demand and also add value to the firm (Shields, 2001).

Safety Stock Requirements

ERP is utilized in most organizations to reduce the safety stock levels because it provides planning module which helps a company to come up with highly precise sales predictions. This also ensures that a firm will not produce insufficient inventories. To set specific demands, ERP modules should be well planned. To achieve the accurate stock level reduction, ERP should consider lead time estimation, lead time estimation, demand and service level (Harwood, 2003).

Master Production Schedule

Focus on all the available demands and provide refill of items identified for the process of production and make a transfer on the demands which are available in the line of supply for the manufacturing process. Through MRP and ERP, final goods and raw materials are scheduled on when and where the materials are needed. Inputs that include planning process, schedules, identification of the cost of a product, BOM and inventories which are available are required in MPS. It focuses on fast scheduling need of a production firm.

Bill of Materials (BOM)

To fill distinctive requirements in the product development, BOM administration frameworks are regularly utilized together with ERP frameworks. These two systems complement each other, and neither of it can be used in place of the other. BOM is mainly beneficial in the initial stages of the production cycle while ELP framework is used during the application of the production design.

Toyota uses Just in Time (JIT) approach which is a real world example of MRP in industrial production. To achieve fast service deliveries, General Motors Corporations (GMC) uses a JIT principle. The principle ensures that the quality of production is at a greater level, assurance of the customer safety, employees morale is boosted and low production cost with maximum profit. To make sure that the motor company deliverables of the motor company, Master Production Schedules, lead time and safety stock principle are all incorporated together in ERP. With ERP linked with MRP, uncertainties in supply and demand are brought down, the efficiency of time is advanced, and both producers and customers are satisfied (Shtub, 2002).

Conclusion

The interest level that the use Material Requirement Planning (MRP) in various industries has collected shows that the level of control which has been offered by the technique within the production frame work. Different companies can use the MRP system for different purposes depending on the operation the company undertakes. The Material Requirement Planning (MRP) system enables a company to save a lot of resources like the raw materials and time which makes the system more effective mostly in the production companies. The system also improves the efficiency within a firm while minimizing the number of wasted resources. Through the effective flow of commodities from the supplier to the end user gives a company a good reputation to their customers since they meet the customers demand on time and ensures that they still retain more raw materials for the next supply. Also through the system deliveries are made on the scheduled time without delays. Automated MRP system saves a lot of time since most of the operations will be run mechanically instead of manually by the employees.

References

Harwood, S. (2003). ERP: The implementation cycle. Oxford: Butterworth-Heinemann.

Sharma, R. R. K. (2008). Material requirement planning system: Heuristics for improved performance. New Delhi: Vitasta Pub.

Shields, M. G. (2001). E-business and ERP: Rapid implementation and project planning. New York: Wiley.