Om lect 06(r1-sep08)_basics of mrp_erp _mms_sies

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  • 1. Materials Requirement PlanningEnterprise Resource Planning N.K.Agarwal
  • 2. Material Requirement Planning (MRP) • Objectives of MRP in Operations Management are – To improve customer service by meeting delivery schedules promised and shortening delivery lead times – To reduce inventory costs by reduction in inventory levels – To improve plant operating efficiency by better use of productive resources • A computer based programme – Most helpful to the organisation • With finished goods or end products – Which are made from a number of components, and also – Which are subject to uneven or lumpy demand
  • 3. MRP - Functions • MRP performs three important functions in Operations Management – Order planning and control i.e. when to release orders and what quantity – Priority planning and control i.e.comparison of expected date of availability with the need date of each item – Provisions of a basis for planning capacity requirements and development of broad business plans • MRP primarily applicable to companies that carry out the fabrication of parts and assembly of standard products in batch quantity
  • 4. Material Requirement Planning (MRP) • Main inputs for preparing MRP – Master Production Schedule • Shows the number of units to be produced in each period – Bill of Material • Shows the materials, parts and components needed for the product – Inventory Records • Shows what is available in stock, on order etc useful for working out the net requirement of material to be ordered
  • 5. MASTER PRODUCTION SCHEDULE BILL OF MATERIALS GROSS REQUIREMENTS CURRENT STOCKS INVENTORY RECORDS NET REQUIREMENTS SCHEDULED RECEIPTS MATERIALS TO ORDER STANDARD ORDER INFORMATION TIME AND QUANTITIES TO ORDER MRP PROCEDURE
  • 6. MRP – Application in service industry • Hospitals – Hospitals use MRP for scheduling surgical operations and ensure that supplies and equipment are ready when needed – Schedule of • Surgery gives the planned operations in any period, • The bill of materials contains information about the equipment and resources needed for each type of surgery, and • Inventory file contains information about surgical instruments, disposable materials, reusable instruments, sterilized materials etc
  • 7. MRP – Application in service industry • Restaurants – Restaurants use MRP to schedule food and equipment. Menus give the meals planned for the restaurants, and the recipes for each meal provide the bill of materials • Universities – Universities’ MPS show the number of students who will be graduating from each programme in each term. The bill of material describes the courses the students take in each term. MRP can find the number of teachers, classrooms, laboratories etc
  • 8. Material Requirement Planning (MRP) • Benefits – – – – – – – – – – Material supply is directly linked to known demand Stock levels are lower, with savings in capital, space, etc There is higher stock turnover Customer service is better with no delays due to shortages of materials Delivery times are more reliable and faster Higher utilization of facilities as materials are always available Less time spent on expediting and emergency orders Better planning MRP schedules can be used for short-term planning MRP shows the priority of jobs supplying materials
  • 9. Manufacturing Resource Planning (MRP II) • Financial and marketing functions are tied to operation function in MRP II • Production and finance work together to ensure availability of desired resources to meet the production requirement • Marketing and plant people update sales forecast and update master schedules • MRP II provides a convenient vehicle for cocoordinating the efforts of manufacturing , finance, marketing, engineering and personnel departments towards the common business plan
  • 10. Enterprise Resource Planning (ERP) • A software package developed for optimum use of resources of an enterprise in a planned manner • Integrates the entire enterprise starting – From the supplier to the customer • Covering logistics, financial and human resources • A package for cost saving • A single solution addressing the information needs of the whole organisation
  • 11. ERP- Features • A central data base • Accommodating Variety – Provides multi-lingual and multi-currency, multi mode manufacturing and multi- facility capabilities to compete and succeed globally • Integrated Management Information – Used for Flexible reporting tools to extract information as and when needed without depending on MIS department – For Electronic data interchange to accepting information like Purchase Orders, Schedule amendments, cash payments, order acknowledgements, raising invoices etc.
  • 12. ERP- Features – For Imaging to provide the ability to display drawings , specifications, store original sale orders, Purchase Orders, quotation etc. – For Database creation starting with attendance reporting, monitoring and control of machines and post sale statistics • Seamless Integration – Integration of new product introductions or changes to existing products fully into the enterprise system of Engineering Change Management, to include electronic approval, routing, change order process routing, revisionlevel control etc.
  • 13. ERP- Features • Supply Chain Management • Resource Management – Effective management of human as well as equipment resources • Integrated data model – Heart of any ERP system providing for data for employees, suppliers and customers
  • 14. Work flow Automation Electronic Mail •Strategic & Business Planning- Matls •New product introduction •Bill of Materials •Long range forecasting and cap. Plng •Engg Change Management •Order Management, •Distribution Management Imaging •Strategic & Business Planning- Resources •Intelligent resource Planning, •Human resource Planning, •Quality Management •Organisation, payroll/employee •Cost accounting, Receivables, •General Ledger, PM,Fixed Asset, •Payables,Budgeting,Inventory, •Logistics, Data Model •Operational Plng and execution- Materials •Routing, -Order Processing, •Supplier Management, •Inventory Management,Forecasting, •Distribution management, •Scheduling and WIP Management Multi- Platform Database Creation / E Data Interchanging Multi- Facility •Facilities maintenance, •Planning & implementation •Operational Plng and materials-Resources •Payroll, -Recruitment, -Costing & budgeting, •Job evaluation and performance Appraisal, •Quality control & Planning, •Maint Engg and scheduling, -Fixed asset Mngmt, •Resource MIS Multi- Mode Manufacturing General Model of ERP Multi- Currency Multi- Lingual
  • 15. ERP- Scope • Financial – Financial accounting, treasury management, asset management and enterprise control • Logistics – Production Planning, Material management, Plant maintenance, Quality management, Project management & Distribution management
  • 16. ERP- Scope • Human resources – Personnel management, Training & Development and Skills inventory • Work flow – Flexible assignment of tasks and responsibilities to locations, positions, jobs, groups or individuals
  • 17. ERP- Benefits • Some of the Tangible benefits – – – – – – Reduction of lead time (up to 60%) 99% on- time shipments Doubled business Increase in inventory turn over to over 30% Reduction of cycle time to 80% Reduction of W-I-P inventory to 70%
  • 18. ERP- Benefits • Some Intangible benefits – – – – – – Better customer satisfaction Improved vendor performance Reduced quality costs Improved resource utilisation Improved information accuracy Improved decision- making capacity
  • 19. ERP • Application – Large number of organisation nationally and internationally have implemented already/ in the process of implementing – Sales of ERP group of Industries increased from $13 billion in 1977 to over $25 billion • Selection of ERP package – Cost of package from few lakhs to a few crores – Needs of the company to be fully understood before ordering a package – Implementation period varies from 12-24 months – Building of right platform, right software vendor selection and right consultant for implementation essential to get the right ERP package
  • 20. ERP • Major vendors are SAP, Oracle applications and Baan • Others in the field include JD Edwards, People Soft, Scala, Ramco Marshal, QAD etc • A very high commitment absolutely essential for a successful implementation of ERP
  • 21. ERP with SAP R/3 • Production planning (or Production Logistics) is the SAP solution for PPC • Provides quick response by reducing planning cycle and improving the productivity of work process • SAP R/3 has highly integrated Production Planning(PP) system
  • 22. ERP • Enterprise Resource Planning is used world wide by companies to integrate business resources and thereby reduce costs and increase productivity • ERP provides a total solution on an integrated system providing information needs of the entire enterprise • Careful selection of the ERP package is extremely important to suit the specific business needs of the enterprise as it involves huge expenditure
  • 23. References • Production And Operations management : K. Aswathappa / K. Shridhara Bhat • Production Planning And Control : S.K.Mukhopadhyay
  • 24. Thank You
  • 25. STRUCTURE OF MRP COMPUTER PROGRAMME ORDERS & FORECASTS MASTER SCHEDULE PRODUCT STRUCTURES & BILL OF MATERIAL MRP PROGRAMME REPORTS: OPEN ORDERS PLANNED ORDERS NET REQUIREMENTS LOAD & CAPACITY INVENTORY SPECIAL INVENTORY STATUS
  • 26. INPUTS & OUTPUTS FROM MRP SYSTEM INPUTS OUTPUTS TIMETABLE FOR ORDERS MASTER PRODUCTION SCHEDULE CHANGES TO ORDERS TIMES FOR OPERATIONS BILL OF MATERIALS MRP PROGRAMS LEAD TIMES OTHER ORDER INFORMATION INVENTORY LEVELS EXCEPTION REPORTS PERFORMANCER EPORTS LONG TERM PLANS INVENTORY TRANSACTIONS