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To MRP or not to MRP

To MRP or not to MRP. Franz Schoeman. Agenda. Why use MRP? Demand management The calculation Materials Capacity DRP (Distribution Requirements Planning) Where to from here Q&A. Why use MRP?. What are we trying to achieve….. Higher throughput Less cost (less stock)

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To MRP or not to MRP

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  1. To MRP or not to MRP Franz Schoeman

  2. Agenda Why use MRP? Demand management The calculation Materials Capacity DRP (Distribution Requirements Planning) Where to from here Q&A

  3. Why use MRP? • What are we trying to achieve….. • Higher throughput • Less cost (less stock) • Better service levels • Is using MRP the only way to do this? • Buffer Management (TOC) • Drum buffer rope • Kanban

  4. Buffer Management • Simple and effective • Well suited to simple repetitive manufacturing • Self healing • Business philosophy first then build solution

  5. Why use MRP? • What are we trying to achieve….. • Higher throughput • Less cost (less stock) • Better service levels • Is using MRP the only way to do this? • Buffer Management (TOC) • Drum buffer rope • Kanban • What did we do before computers. • Single product calculations • Difficult consolidations • So what’s the bottom line……. • Its just a tool.

  6. Business Plan Sales Plan F E E D B A C K Master Production Schedule Resources OK? Materials Plan Bill of Materials Routings Capacity Plan Planning OK? Inventory Status Purchasing Shop Floor Control Performance Measurement Buker Closed Loop Demand Planning Execution

  7. Agenda Why use MRP? Demand management The calculation Materials Capacity DRP (Distribution Requirements Planning) Where to from here Q&A

  8. Business Plan Sales Plan F E E D B A C K Master Production Schedule Resources OK? Materials Plan Bill of Materials Routings Capacity Plan Planning OK? Inventory Status Purchasing Shop Floor Control Performance Measurement Demand management Business Strategy (Competitive Business Drivers) Meaningful sales info Consolidate demand into MPS

  9. Meaningful sales info

  10. Meaningful sales info

  11. Meaningful sales info

  12. Meaningful sales info

  13. Business Plan Sales Plan F E E D B A C K Master Production Schedule Resources OK? Materials Plan Bill of Materials Routings Capacity Plan Planning OK? Inventory Status Purchasing Shop Floor Control Performance Measurement Demand management Business Strategy (Competitive Business Drivers) Meaningful sales info Consolidate demand into MPS

  14. Consolidate demand into MPS

  15. Business Plan Sales Plan F E E D B A C K Master Production Schedule Resources OK? Materials Plan Bill of Materials Routings Capacity Plan Planning OK? Inventory Status Purchasing Shop Floor Control Performance Measurement Demand management Business Strategy (Competitive Business Drivers) Meaningful sales info Consolidate demand into MPS

  16. Agenda Why use MRP? Demand management The calculation Materials Capacity DRP (Distribution Requirements Planning) Where to from here Q&A

  17. Business Plan Sales Plan F E E D B A C K Master Production Schedule Resources OK? Materials Plan Bill of Materials Routings Capacity Plan Planning OK? Inventory Status Purchasing Shop Floor Control Performance Measurement The calculation

  18. The calculation • 1. Snapshot: • Copy live files • 2. Potential demand files are processed: • Build schedule • Forecast • Sales Order (Quotations) • 3. Potential supply files are processed: • Work in Progress • Purchase orders (Requisitions) • Stock on hand • 4. Implosion: • “Each structure in the Bill of Materials system is processed. The demand caused by a top level item on a lower level item needs to be exploded through all levels to calculate the quantity required at the lowest level.” • 5. Netting off: • Available quantity + Supply quantity - Demand quantity = Result • 6. Capacity Profile

  19. Business Plan Sales Plan F E E D B A C K Master Production Schedule Resources OK? Materials Plan Bill of Materials Routings Capacity Plan Planning OK? Inventory Status Purchasing Shop Floor Control Performance Measurement The calculation

  20. Bill of Materials (Routing)

  21. Agenda Why use MRP? Demand management The calculation Materials Capacity DRP (Distribution Requirements Planning) Where to from here Q&A

  22. Business Plan Sales Plan F E E D B A C K Master Production Schedule Resources OK? Materials Plan Bill of Materials Routings Capacity Plan Planning OK? Inventory Status Purchasing Shop Floor Control Performance Measurement MRP Output - Materials Bought out items Made in items Pegging (Verification)

  23. Bought out items

  24. Business Plan Sales Plan F E E D B A C K Master Production Schedule Resources OK? Materials Plan Bill of Materials Routings Capacity Plan Planning OK? Inventory Status Purchasing Shop Floor Control Performance Measurement MRP Output - Materials Bought out items Made in items Pegging (Verification)

  25. Made in items

  26. Business Plan Sales Plan F E E D B A C K Master Production Schedule Resources OK? Materials Plan Bill of Materials Routings Capacity Plan Planning OK? Inventory Status Purchasing Shop Floor Control Performance Measurement MRP Output - Materials Bought out items Made in items Pegging (Verification)

  27. Pegging (Verification)

  28. Business Plan Sales Plan F E E D B A C K Master Production Schedule Resources OK? Materials Plan Bill of Materials Routings Capacity Plan Planning OK? Inventory Status Purchasing Shop Floor Control Performance Measurement MRP Output - Materials Bought out items Made in items Pegging (Verification)

  29. Agenda Why use MRP? Demand management The calculation Materials Capacity DRP (Distribution Requirements Planning) Where to from here Q&A

  30. Business Plan Sales Plan F E E D B A C K Master Production Schedule Resources OK? Materials Plan Bill of Materials Routings Capacity Plan Planning OK? Inventory Status Purchasing Shop Floor Control Performance Measurement MRP Output - Capacity Scheduling Shop Floor Data Collection

  31. Scheduling

  32. Business Plan Sales Plan F E E D B A C K Master Production Schedule Resources OK? Materials Plan Bill of Materials Routings Capacity Plan Planning OK? Inventory Status Purchasing Shop Floor Control Performance Measurement MRP Output - Capacity Scheduling Shop Floor Data Collection

  33. Shop Floor Data Collection

  34. Business Plan Sales Plan F E E D B A C K Master Production Schedule Resources OK? Materials Plan Bill of Materials Routings Capacity Plan Planning OK? Inventory Status Purchasing Shop Floor Control Performance Measurement MRP Output - Capacity Scheduling Shop Floor Data Collection

  35. Business Plan Sales Plan F E E D B A C K Master Production Sched. Resources OK? Materials Plan Bill of Materials Routings Capacity Plan Planning OK? Inventory Status Purchasing Shop Floor Control Performance Measure Obvious points of failure…… Inaccurate demand (Forecast) Errors in BOM (Routing) System stock accuracy!!! No SFDC MRP cannot just be implemented by the production guys!!!

  36. Agenda Why use MRP? Demand management The calculation Materials Capacity DRP (Distribution Requirements Planning) Where to from here Q&A

  37. FG Warehouse Factory DRP (Distribution Requirements Planning) Sales Branch 1 Jhb DC Sales Branch 2 Sales Branch 3 Sales Branch 1 CPT DC Sales Branch 2 Sales Branch 3 Sales Branch 1 Dbn DC Sales Branch 2 Sales Branch 3

  38. DRP (Distribution Requirements Planning)

  39. FG Warehouse Factory DRP (Distribution Requirements Planning) Sales Branch 1 Jhb DC Sales Branch 2 Sales Branch 3 Sales Branch 1 CPT DC Sales Branch 2 Sales Branch 3 Sales Branch 1 Dbn DC Sales Branch 2 Sales Branch 3 Buffer Stock (TOC): Qty consumed during RRQ (Reliable Replenishment Time) + Safety

  40. Supply chain review

  41. FG Warehouse Factory DRP (Distribution Requirements Planning) Sales Branch 1 Jhb DC Sales Branch 2 Sales Branch 3 Sales Branch 1 CPT DC Sales Branch 2 Sales Branch 3 Sales Branch 1 Dbn DC Sales Branch 2 Sales Branch 3 Buffer Stock (TOC): Qty consumed during RRQ (Reliable Replenishment Time) + Safety

  42. Agenda Why use MRP? Demand management The calculation Materials Capacity DRP (Distribution Requirements Planning) Where to from here Q&A

  43. Where to from here…… • Performance measurement: • Forecast accuracy • Stock levels • WIP levels • Efficiency • Customer service levels • Profitability • Your Supply Chain? Are you becoming more competitive?

  44. To MRP or not to MRP • The question still remains…… • Does MRP suite your environment • Is it all or nothing • Is it still a valid approach to manufacturing MRP represents and integrates all elements of your fulfillment process (a double edged sword)

  45. Agenda Why use MRP? Demand management The calculation Materials Capacity DRP (Distribution Requirements Planning) Where to from here Q&A

  46. Questions…..

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