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Material Requirements Planning & ERP
Outline <ul><li>GLOBAL COMPANY PROFILE:  COLLINS INDUSTRIES </li></ul><ul><li>DEPENDENT INVENTORY MODEL REQUIREMENTS </li>...
Outline - Continued <ul><li>MRP MANAGEMENT </li></ul><ul><ul><li>MRP Dynamics </li></ul></ul><ul><ul><li>MRP and JIT </li>...
Outline - Continued <ul><li>DISTRIBUTION RESOURCE PLANNING (DRP) </li></ul><ul><li>ENTERPRISE RESOURCE PLANNING (ERP) </li...
Learning Objectives <ul><li>When you complete this chapter, you should be able to : </li></ul><ul><li>Identify or Define :...
Learning Objectives - Continued <ul><li>When you complete this chapter, you should be able to : </li></ul><ul><li>Describe...
Collins Industries <ul><li>Largest manufacturer of ambulances in the world </li></ul><ul><li>International competitor </li...
Collins Industries <ul><li>Collins requires: </li></ul><ul><ul><li>Material plan must meet both the requirements of the ma...
Inventory Classifications Inventory Process stage Demand Type Number & Value Other Raw Material WIP Finished Goods Indepen...
Dependent versus Independent Demand Item Materials With Independent Demand Materials With Dependent Demand Demand Source C...
Requirements for Effective Use of Dependent Demand Inventory Models <ul><li>Effective use of dependent demand inventory mo...
Inputs to the  Production Plan Aggregate Production Plan Marketing Customer Demand Engineering Design Completion Managemen...
The Planning Process Change master production schedule? Execute material plans Execute capacity plans Detail capacity plan...
Aggregate Production Plan 1,200 1,500 Aggregate Production Plan (shows the total quantity of amplifiers 100 300 75 watt am...
Typical Focus of the Master Production Schedule Make to Order (Process Focus) Assemble to Order or Forecast (Repetitive) S...
<ul><li>List of components & quantities needed to make product  </li></ul><ul><li>Provides product structure (tree) </li><...
Product Structure for “Awesome” A
<ul><li>Modular bills </li></ul><ul><ul><li>Modules are final components used to make assemble-to-stock end items </li></u...
Bill-of-Material  Product Structure Tree Bicycle(1) P/N 1000 Handle Bars (1) P/N 1001 Frame Assembly (1) P/N 1002 Wheels (...
Time-Phased Product Structure 1 2 3 4 5 6 7 8 3 weeks F 2 weeks E A 1 week 1 week C G 2 weeks D 1 week E 2 weeks Start pro...
<ul><li>Manufacturing computer information system  </li></ul><ul><li>Determines quantity & timing of dependent demand item...
<ul><li>Computer system </li></ul><ul><li>Mainly discrete products </li></ul><ul><li>Accurate bill-of-material </li></ul><...
<ul><li>Increased customer satisfaction due to meeting delivery schedules  </li></ul><ul><li>Faster response to market cha...
Structure of the MRP System Master Production Schedule BOM Lead Times (Item Master File) Inventory Data Purchasing data MR...
Gross Material Requirements Plan for 50 “Awesome A” Speaker Kits
MRP and The Production Planning Process Forecast & Firm Orders Material Requirements Planning Aggregate Production Plannin...
MRP Systems - Input and Output Inventory Purchasing Master Production Schedule Bill of Materials Material Requirements Pla...
<ul><li>Shows items to be produced </li></ul><ul><ul><li>End item, customer order, module </li></ul></ul><ul><li>Derived f...
Derivation of Master Schedule Therefore, these are the gross requirements for B Periods 10 10 1 2 3 Master schedule for S ...
MRP Dynamics <ul><li>Supports “replanning” </li></ul><ul><ul><li>Problem with system “nervousness” </li></ul></ul><ul><li>...
MRP and JIT <ul><li>MRP  - a planning and scheduling technique with fixed lead times </li></ul><ul><li>JIT  - a way to mov...
Lot-Sizing Techniques <ul><li>Lot-for-lot </li></ul><ul><li>Economic Order Quantity </li></ul><ul><li>Part Period Balancin...
MRP Lot-Sizing Problem: Lot-for-Lot Techniques
MRP Lot-Sizing Problem: EOQ Technique
MRP Lot-Sizing Problem: PPB Technique
Extensions of MRP <ul><li>Closed loop MRP </li></ul><ul><li>Capacity planning - load reports </li></ul><ul><li>MRP II - Ma...
Closed Loop MRP
Extensions of MRP Capacity Planning <ul><li>Tactics for smoothing the load and minimizing the impact of changed lead time ...
Initial Resource Requirements/Smoothed Resource Requirements
Extensions to MRP Enterprise Resource Planning <ul><li>MRP II with ties to customers and suppliers </li></ul>
MRP and ERP Information Flows, Integrated with Other Systems
MRP in Services <ul><li>Can be used when demand for service or service items is directly related to or derived from demand...
Product Structure, Bill of Materials, Bill of Labor for Veal Picante
Distribution Resource Planning <ul><li>DRP requires: </li></ul><ul><ul><li>Gross requirements, which are the same as expec...
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Material requirements planning & erp ppt @ bec doms

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Material requirements planning & erp ppt @ bec doms

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  • One thought to be remembered from Collins is the emphasis on maintenance of record integrity. Error rates as low as 2 - 4 percent may lead to instability in an MRP system.
  • We start this chapter by linking Dependent Demand Inventory back to Independent Demand Inventory. You might note to students that independent demand is created external to the company, dependent demand, internally.
  • You might add to this list that the operations manager must know that inventory records, bill-of-materials, etc., are accurate.
  • Students should be asked to explain why the focus of the Master Production Schedule changes depending upon the nature of the production process.
  • A bicycle provides a good example for deriving a bill-of-material. Most students remember enough of the parts of a bicycle to develop several levels.
  • You might ask students to develop a similar product for a product with which they are familiar. Possibly a ball-point pen?
  • The bicycle is simple, yet complex enough to be used for a special bills example also. Modules - pair of wheels; gearshift &amp; cables; multiple sprockets; etc. Etc. The following slide outlines such an example.
  • This slide has been animated to demonstrate backward scheduling - item A is scheduled first, then the remaining items are scheduled so as to produce A at the proper time.
  • A point to stress here is that while MRP is heavily computer-based, it is more than simply a computer program.
  • It is important to emphasize the need for accurate records - both bill-of-material and inventory.
  • While MRP certainly can produce these benefits, it is useful to discuss the problems faced in establishing an MRP system. A number of companies have given up on the task - the necessary transformation of old processes has simply proven too difficult.
  • Emphasize that this slide illustrates the overall technological structure of MRP - people and process are also extremely important in its actual success.
  • This slide illustrates the fit of MRP into the overall production planning process. It would be helpful to walk through the actual relationship with your students.
  • It is helpful here to briefly review the “contents” of each of the boxes - i.e., what is contained in an Item Master file, what purchasing data is expected, etc.
  • This slide is also animated in an attempt to demonstrate the “building” of the master schedule.
  • This slide does merit discussion - especially the items about system nervousness and the manager’s reaction to change.
  • Students sometimes begin to think of MRP and JIT as in some way interchangeable. Here is a chance to stress the differences.
  • What does one gain by implementing one of the extensions of MRP?
  • It usually seems to be helpful to discuss the overall concept of load leveling before tackling load leveling and MRP.
  • Have the students consider what modifications may be necessary for MRP to be valuable in services.
  • Transcript of "Material requirements planning & erp ppt @ bec doms"

    1. 1. Material Requirements Planning & ERP
    2. 2. Outline <ul><li>GLOBAL COMPANY PROFILE: COLLINS INDUSTRIES </li></ul><ul><li>DEPENDENT INVENTORY MODEL REQUIREMENTS </li></ul><ul><ul><li>Master Production Schedule </li></ul></ul><ul><ul><li>Bills of Materials </li></ul></ul><ul><ul><li>Accurate Inventory records </li></ul></ul><ul><ul><li>Purchase Orders Outstanding </li></ul></ul><ul><ul><li>Lead Times for Each Component </li></ul></ul><ul><li>MRP STRUCTURE </li></ul>
    3. 3. Outline - Continued <ul><li>MRP MANAGEMENT </li></ul><ul><ul><li>MRP Dynamics </li></ul></ul><ul><ul><li>MRP and JIT </li></ul></ul><ul><li>LOT-SIZING TECHNIQUES </li></ul><ul><li>EXTENSIONS IN MRP </li></ul><ul><ul><li>Closed-Loop MRP </li></ul></ul><ul><ul><li>Capacity Planning </li></ul></ul><ul><ul><li>Material Requirements Planning II (MRP II) </li></ul></ul><ul><li>MRP IN SERVICES </li></ul>
    4. 4. Outline - Continued <ul><li>DISTRIBUTION RESOURCE PLANNING (DRP) </li></ul><ul><li>ENTERPRISE RESOURCE PLANNING (ERP) </li></ul><ul><ul><li>Advantages and Disadvantages of ERP System </li></ul></ul><ul><ul><li>ERP in the Service Sector </li></ul></ul>
    5. 5. Learning Objectives <ul><li>When you complete this chapter, you should be able to : </li></ul><ul><li>Identify or Define : </li></ul><ul><ul><li>Planning bills and kits </li></ul></ul><ul><ul><li>Phantom bills </li></ul></ul><ul><ul><li>Low-level coding </li></ul></ul><ul><ul><li>Lot sizing </li></ul></ul>
    6. 6. Learning Objectives - Continued <ul><li>When you complete this chapter, you should be able to : </li></ul><ul><li>Describe or Explain : </li></ul><ul><ul><li>Material requirements planning </li></ul></ul><ul><ul><li>Distribution requirements planning </li></ul></ul><ul><ul><li>Enterprise resource planning </li></ul></ul><ul><ul><li>How ERP works </li></ul></ul><ul><ul><li>Advantages and disadvantages of ERP systems </li></ul></ul>
    7. 7. Collins Industries <ul><li>Largest manufacturer of ambulances in the world </li></ul><ul><li>International competitor </li></ul><ul><li>12 major ambulance designs </li></ul><ul><ul><li>18,000 different inventory items </li></ul></ul><ul><ul><ul><li>6,000 manufactured parts </li></ul></ul></ul><ul><ul><ul><li>12,000 purchased parts </li></ul></ul></ul><ul><ul><li>MRP: IBM’s MAPICS </li></ul></ul>
    8. 8. Collins Industries <ul><li>Collins requires: </li></ul><ul><ul><li>Material plan must meet both the requirements of the master schedule and the capabilities of the production facility </li></ul></ul><ul><ul><li>Plan must be executed as designed </li></ul></ul><ul><ul><li>Effective “time-phased” deliveries, consignments, and constant review of purchase methods </li></ul></ul><ul><ul><li>Maintenance of record integrity </li></ul></ul>
    9. 9. Inventory Classifications Inventory Process stage Demand Type Number & Value Other Raw Material WIP Finished Goods Independent Dependent A Items B Items C Items Maintenance Operating
    10. 10. Dependent versus Independent Demand Item Materials With Independent Demand Materials With Dependent Demand Demand Source Company Customers Parent Items Material Type Finished Goods WIP & Raw Materials Method of Estimating Demand Forecast & Booked Customer Orders Calculated Planning Method EOQ & ROP MRP
    11. 11. Requirements for Effective Use of Dependent Demand Inventory Models <ul><li>Effective use of dependent demand inventory models requires that the operations manager know the: </li></ul><ul><ul><li>master production schedule </li></ul></ul><ul><ul><li>specifications or bills-of-material </li></ul></ul><ul><ul><li>inventory availability </li></ul></ul><ul><ul><li>purchase orders outstanding </li></ul></ul><ul><ul><li>lead times </li></ul></ul>
    12. 12. Inputs to the Production Plan Aggregate Production Plan Marketing Customer Demand Engineering Design Completion Management Return on Investment Capital Human Resources Manpower Planning Procurement Supplier Performance Finance Cash Flow Production Capacity Inventory
    13. 13. The Planning Process Change master production schedule? Execute material plans Execute capacity plans Detail capacity plan Material requirements plan Master production schedule Aggregate production plan Change requirements? Change capacity? Realistic No Yes Change production plan? Is capacity plan being met? Is execution meeting the plan?
    14. 14. Aggregate Production Plan 1,200 1,500 Aggregate Production Plan (shows the total quantity of amplifiers 100 300 75 watt amplifier 450 450 500 500 150 watt amplifier 100 100 100 100 240 watt amplifier Master Production Schedule (Shows the specific type and quantity of amplifier to be produced 8 7 6 5 4 3 2 1 Weeks February January Months
    15. 15. Typical Focus of the Master Production Schedule Make to Order (Process Focus) Assemble to Order or Forecast (Repetitive) Stock to Forecast (Product Focus) Schedule finished product Steel, Beer, Bread Light bulbs, Paper Print shop Machine shop Fine dining restaurant Examples: Number of end items Number of inputs Typical focus of the master production schedule Schedule orders Schedule modules Motorcycles, autos, TVs, fast-food restaurant
    16. 16. <ul><li>List of components & quantities needed to make product </li></ul><ul><li>Provides product structure (tree) </li></ul><ul><ul><li>Parents: Items above given level </li></ul></ul><ul><ul><li>Children: Items below given level </li></ul></ul><ul><li>Shows low-level coding </li></ul><ul><ul><li>Lowest level in structure item occurs </li></ul></ul><ul><ul><li>Top level is 0; next level is 1 etc. </li></ul></ul>Bill-of-Material
    17. 17. Product Structure for “Awesome” A
    18. 18. <ul><li>Modular bills </li></ul><ul><ul><li>Modules are final components used to make assemble-to-stock end items </li></ul></ul><ul><li>Planning bills </li></ul><ul><ul><li>Used to assign artificial parent </li></ul></ul><ul><ul><li>Reduces number of items scheduled </li></ul></ul><ul><li>Phantom bills </li></ul><ul><ul><li>Used for subassemblies that exist temporarily </li></ul></ul>Special Bills-of-Material
    19. 19. Bill-of-Material Product Structure Tree Bicycle(1) P/N 1000 Handle Bars (1) P/N 1001 Frame Assembly (1) P/N 1002 Wheels (2) P/N 1003 Frame (1) P/N 1004
    20. 20. Time-Phased Product Structure 1 2 3 4 5 6 7 8 3 weeks F 2 weeks E A 1 week 1 week C G 2 weeks D 1 week E 2 weeks Start production of D D 1 week B 2 weeks to produce Must have D and E completed here so production can begin on B
    21. 21. <ul><li>Manufacturing computer information system </li></ul><ul><li>Determines quantity & timing of dependent demand items </li></ul>Material Requirements Planning (MRP) © 1995 Corel Corp.
    22. 22. <ul><li>Computer system </li></ul><ul><li>Mainly discrete products </li></ul><ul><li>Accurate bill-of-material </li></ul><ul><li>Accurate inventory status </li></ul><ul><ul><li>99% inventory accuracy </li></ul></ul><ul><li>Stable lead times </li></ul>MRP Requirements © 1984-1994 T/Maker Co.
    23. 23. <ul><li>Increased customer satisfaction due to meeting delivery schedules </li></ul><ul><li>Faster response to market changes </li></ul><ul><li>Improved labor & equipment utilization </li></ul><ul><li>Better inventory planning & scheduling </li></ul><ul><li>Reduced inventory levels without reduced customer service </li></ul>MRP Benefits
    24. 24. Structure of the MRP System Master Production Schedule BOM Lead Times (Item Master File) Inventory Data Purchasing data MRP planning programs (computer and software) MRP by Period Report MRP by date report Planned order report Purchase advice Exception report Exception report
    25. 25. Gross Material Requirements Plan for 50 “Awesome A” Speaker Kits
    26. 26. MRP and The Production Planning Process Forecast & Firm Orders Material Requirements Planning Aggregate Production Planning Resource Availability Master Production Scheduling Shop Floor Schedules Capacity Requirements Planning Realistic? No, modify CRP, MRP, or MPS Yes
    27. 27. MRP Systems - Input and Output Inventory Purchasing Master Production Schedule Bill of Materials Material Requirements Planning System Status Planned Order & Other Reports Item Master Data
    28. 28. <ul><li>Shows items to be produced </li></ul><ul><ul><li>End item, customer order, module </li></ul></ul><ul><li>Derived from aggregate plan </li></ul>Master Production Schedule Example Item/Week Oct 3 Oct 10 Oct 17 Oct 24 Drills 300 200 310 300 Saws 300 450 310 330
    29. 29. Derivation of Master Schedule Therefore, these are the gross requirements for B Periods 10 10 1 2 3 Master schedule for S sold directly 40 50 15 A C B 5 6 7 8 9 10 11 Lead time = 4 for A Master schedule for A 40 20 30 S B C 8 9 10 12 11 13 Lead time = 6 for S Master schedule for S 10 40+10 = 50 40 50 20 15+30 = 45 1 2 3 4 5 6 7 8 Periods Gross requirements: B
    30. 30. MRP Dynamics <ul><li>Supports “replanning” </li></ul><ul><ul><li>Problem with system “nervousness” </li></ul></ul><ul><li>“ Time fence” - allows a segment of the master schedule to be designated as “not to be rescheduled” </li></ul><ul><li>“ Pegging” - tracing upward in the bill-of-materials from the component to the parent item </li></ul><ul><li>That a manager can react to changes, doesn’t mean he/she should </li></ul>
    31. 31. MRP and JIT <ul><li>MRP - a planning and scheduling technique with fixed lead times </li></ul><ul><li>JIT - a way to move material expeditiously </li></ul><ul><li>Integrating the two: </li></ul><ul><ul><li>Small bucket approach and back flushing </li></ul></ul><ul><ul><li>Balanced flow approach </li></ul></ul>
    32. 32. Lot-Sizing Techniques <ul><li>Lot-for-lot </li></ul><ul><li>Economic Order Quantity </li></ul><ul><li>Part Period Balancing </li></ul><ul><li>Wagner-Whitin Algorithm </li></ul>
    33. 33. MRP Lot-Sizing Problem: Lot-for-Lot Techniques
    34. 34. MRP Lot-Sizing Problem: EOQ Technique
    35. 35. MRP Lot-Sizing Problem: PPB Technique
    36. 36. Extensions of MRP <ul><li>Closed loop MRP </li></ul><ul><li>Capacity planning - load reports </li></ul><ul><li>MRP II - Material Resource Planning </li></ul><ul><li>Enterprise Resource Planning </li></ul>
    37. 37. Closed Loop MRP
    38. 38. Extensions of MRP Capacity Planning <ul><li>Tactics for smoothing the load and minimizing the impact of changed lead time include: </li></ul><ul><ul><li>Overlapping - reduces the lead time, entails sending pieces to the second operation before the entire lot has completed the first operation </li></ul></ul><ul><ul><li>Operations splitting - sends the lot to two different machines for the same operation </li></ul></ul><ul><ul><li>Lot splitting - breaking up the order and running part of it ahead of the schedule </li></ul></ul>
    39. 39. Initial Resource Requirements/Smoothed Resource Requirements
    40. 40. Extensions to MRP Enterprise Resource Planning <ul><li>MRP II with ties to customers and suppliers </li></ul>
    41. 41. MRP and ERP Information Flows, Integrated with Other Systems
    42. 42. MRP in Services <ul><li>Can be used when demand for service or service items is directly related to or derived from demand for other services </li></ul><ul><ul><li>restaurant - rolls required for each meal </li></ul></ul><ul><ul><li>hospitals - implements for surgery </li></ul></ul><ul><ul><li>etc. </li></ul></ul>
    43. 43. Product Structure, Bill of Materials, Bill of Labor for Veal Picante
    44. 44. Distribution Resource Planning <ul><li>DRP requires: </li></ul><ul><ul><li>Gross requirements, which are the same as expected demand or sales forecasts </li></ul></ul><ul><ul><li>Minimum levels of inventory to meet customer service levels </li></ul></ul><ul><ul><li>Accurate lead times </li></ul></ul><ul><ul><li>Definition of the distribution structure </li></ul></ul>
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