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Making MRP Work
- 1. "...optimising MRP systems and re-engineering business processes" Giles Johnston Smartspeed Consulting Limited
- 2. "...optimising MRP systems and re-engineering business processes" MRP’s 40th birthday is near
- 3. "...optimising MRP systems and re-engineering business processes" 1. Check Your Map
- 4. "...optimising MRP systems and re-engineering business processes" 2. Clarify Process Owners MD Sales Orders Engineering Production Control Purchasing Production MRPProcess#1 MRPProcess#2 MRPProcess#3 MRPProcess#4 MRPProcess#5 MRPProcess#6 MRPProcess#7 MRPProcess#8 MRPProcess#10 MRPProcess#9 MRPProcess#11 MRPProcess#12
- 5. "...optimising MRP systems and re-engineering business processes" 3. Test Database = Best Friend
- 6. "...optimising MRP systems and re-engineering business processes" 4. Lead Times Purchasing LT Manufacturing LT PSD
- 7. "...optimising MRP systems and re-engineering business processes" 5. Replenishment Settings Time Qty Consumption Rate Re-Order Lead Time Re-order level Stock level
- 8. "...optimising MRP systems and re-engineering business processes" 6. Effective Routines
- 9. "...optimising MRP systems and re-engineering business processes" 7. Know The Vital Questions
- 10. "...optimising MRP systems and re-engineering business processes" 8. Effective SOPs Learn Master Agree Capture Link
- 11. "...optimising MRP systems and re-engineering business processes" 9. Play ‘eye spy’
- 12. "...optimising MRP systems and re-engineering business processes" 10. Use PDCA
- 13. "...optimising MRP systems and re-engineering business processes" Is MRP our friend? Streamlines operations Reduces day-to-day headaches Improves on time delivery Supports LEAN manufacturing
- 14. "...optimising MRP systems and re-engineering business processes" “Making MRP Work” Rapid Audit Tool – Now Available Here
Editor's Notes
- This presentation was first delivered on the 19th of November 2014 for the Advanced Manufacturing Forum.
- MRP has been ‘officially’ around since 1975. MRP stands for ‘Materials Requirements Planning’ and helps factories to replenish their inventories, satisfy customer orders and manage production orders. MRPII (Manufacturing Resources Planning) arrived shortly afterwards in 1977 and answered these questions: - How are we going to make the order? Do we have the capacity to make our orders? In what sequence should we make our orders? ERP came along in the early 1990s and stands for Enterprise Resources Planning. ERP links up a company’s operations; from Estimating through to Finance. More developed ERP systems integrate suppliers and customers for even greater leverage of what an ERP system can do. So, why this presentation? After forty years many businesses still don’t seem to get the results they need from their MRP system (read that as MRP / MRPII / ERP). The following slides offer ten points to consider, that you can take away to make your own MRP system work more effectively. As a side note, if you don’t operate a MRP system then most of the following points will also help you to get more out of the other computer systems that your business operates.
- Our first point is to look at your business processes as they currently stand. Get out some sticky notes and a wall and map out your main business process (usually from enquiry through to despatch / invoicing of an order). Find out what really goes on and list out all of your concerns. Scrutinise what your business does day to day and decide if you can do it better. I find that many businesses take twenty steps when five will do. Whether this ‘bloating’ is down to history, an evolving business or down to general confusion, this is a great time to work out how it could be simpler. Considering the overall MRP process alongside this piece of activity is crucial to helping your MRP system truly work.
- When you get to a point in time that you need to push some changes through your business in terms of how MRP is operated it is essential to know who is responsible for which process. Not only does this give everyone clarity as to who is involved with the process, but it helps to keep your teams accountable for operating their parts of the system correctly. It doesn’t take long to do and can make a big difference later on. Point two is to clarify who own what MRP processes in your business.
- Point three is all about your test database. Many people are concerned about ‘blowing up’ the system. To take the pressure away from this feeling you can often use a test version of your MRP system, usually with a dead copy of your real business data (so that the results look familiar). If you need to test something this dummy database is an ideal place to do the work. You don’t have to fear making a mistake and it is a great environment to trial your ideas. After many years of reading the help files and manuals of MRP systems I welcome the use of the test database. Occasionally what is written down in the help manuals isn’t 100% accurate and knowing the outcome in your own system, with your settings, is invaluable.
- The next point is directly aimed at MRP users. If the lead times in the system aren’t up to date / accurate then you risk having a big problem with how it tries to orchestrate your day to day activities. Whether your system calculates your manufacturing lead time from the operation times (multiplied up by order quantities) or uses a static nominal lead time, in most systems this lead time triggers the purchasing lead time. The purchasing lead time is most likely to be an approximate value, often in working days, that tells MRP how long it takes for something to be delivered once ordered. I’m sure that you can imagine the potential worst case scenario here…. If the lead times are inaccurate (too short) for both the manufacturing lead time and the purchasing lead time you will order materials too late, that can’t achieve the start of manufacturing, that hasn’t got enough time to undertake all the operations. Everyone screams at each other and the customer gets their order late. Keeping the data in your system, especially the lead time data, up to date is essential.
- Point five is a really crucial part of configuring a MRP system. In fact I find that when this part of the system is largely ignored it is the time when workarounds (spreadsheets for example) get used instead. If you ever find members of staff complaining that the system doesn’t give a meaningful output then inaccurate replenishment settings are often lurking in the background. The majority of systems allow you to specify factors such as re-order levels, re-order quantities, minimum and maximum levels. MRP is a tool that uses your rules to give you an output. If you don’t like your output then you need to review what rules you have taught it so far.
- Point six is vital to ensuring that the system works properly longer term. Housekeeping is an essential activity that is designed to ensure that the data inside your system is complete. Dirty data is a term used when information is inaccurate, incomplete, or both. MRP is also a system that requires a ‘running like clockwork’ mentality. Developing a loose timetable is a great way to do this. If you determine that you need to do your housekeeping tasks every Friday then write them down. Assign the responsibility and then manage the activities. A timetable is also a great tool for new starters and helps maintain workplace habits when everything is feeling stretched. Point six is about day to day management of your MRP system and worthy of serious attention.
- One of the most effective routine activities a business can undertake is a ‘Sunrise Meeting’. A Sunrise Meeting is a short, standardised, meeting where key members from the business meet at the start of the working day to review key aspects of how the business is running. Knowing some ‘vital’ questions about your MRP system can help you to understand if the system is working as you would expect. For example: Have all of the new sales orders been inputted onto the system? Have all of the new purchase order suggestions been reviewed and actioned? Did MRP run correctly last night? Have all of yesterday’s expected material deliveries happened? Is today’s work to list workable? Did all of yesterday’s despatches happen? I’m sure that you get the idea. Getting a ‘no’ to these types of questions is not about having a witch hunt but a way to find out if the team needs help to ensure that the day to day operations relating to MRP need to be supported. Point seven therefore is all about managing your processes without having to get involved in the detail of the activities.
- My next point is about capturing the new found knowledge you have, as a result of developing your MRP system. Writing good Standard Operating Procedures (or SOPs as they are often referred to) is a whole set of slides in their own right, but it’s what you do with them that can make the difference. You can choose to add them to your timetable of activities (as a quick reference), or to your skills matrix, so that they are more visible in the day to day running of things. The important thing about this point is that you don’t lose the new knowledge once you have created it.
- Point nine is about having a simple way to work out if you are winning. The smiley faces on this slide refer to knowing what good looks like and what bad looks like. Defining a few of these (both good and bad) will help you to figure out if all the other things are working. For example: Are people using the work to lists to schedule their activities (GOOD)? Are spreadsheets and other work arounds being used instead of the system (BAD)? Do your team pro-actively undertake their housekeeping activities (GOOD)? Do you have unexpected stock outs (BAD)? The review of these kinds of ‘outputs’ is a key management activity, of course, and if you get a whole load of smiley faces from the points you choose to inspect then you should have a good feeling about the overall effectiveness of how your MRP system is working.
- My final point is about continuous improvement. As you embark on your journey to develop your MRP system I recommend that you consider using the PDCA (Plan, Do, Check, Act) improvement cycle. PDCA works well when it is iterative. Start small with an experiment in the test database, run a small pilot on the live system and then go for a roll out once you have the confidence (and evidence) that your improvement will work. You will learn new things about your system as you develop your internal processes, so even if you have a fully functioning (and effective) system it is worth coming back to the processes after a few months have elapsed and taking another look.
- So, MRP is our friend. When it is correctly configured it will help us to have simpler operational activities. The headaches of trying to do it all manually will disappear as you finally teach your MRP system how to work and it starts to produce meaningful outputs. On time delivery will improve as long as you balance out your order intake and use the tools within the system. And, Lean manufacturing activities can work hand in hand with MRP. It is not an either / or decision. MRP and Kan Bans can work in tandem if you work out how you want to set up both systems. One of the best examples I have seen of this is with MRP driving the front half of the business and Kan Bans driving the back end (customer facing) part of the process. If you look after your MRP system it truly will be your (business’) best friend.