12 MRP and ERP. Dr. Ron Lembke
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1 12 MRP and ERP Dr. Ron Lembke
2 Historical Perspective MRP II Manufacturing Resource Planning ERP- Enterprise Resource Planning mrp material requirements planning
3 MRP Crusade (1975) Material Requirements Planning Make sure you have enough parts when you need them Take future demands, factor in lead times (time phase), compare to on hand, order Determine order size and timing Control and plan purchasing vs. OSWO inventory management
4 Closed-Loop MRP Capacity Consideration: Part routings Calculate loads on each work station See if scheduled load exceeds capacity Lead-time long enough to allow some shuffling to make plan feasible
5 MRP II -- Manufacturing Resource Planning A method for the effective planning of all resources of a manufacturing company (APICS def.) Financial accounting incorporated Sales Operations Planning Simulate capacity requirements of different possible Master Production Schedules 1989, $1.2B MRPII sales in U.S., one third of total software sales
6 Success? MRP Crusade Begins
7 ERP differences Material planning Capacity planning Product design Information warehousing All functions in the entire company operate off of one common set of data Instantaneous updating, visibility
8 ERP Sales Y2K: Worldwide sales of top 10 vendors 1995 $2.8 B 1996 $4.2 B 1997 $5.8 B $3.2 B SAP Fortune survey: 44% reported spending at least 4 times as much on implementation as on software
9 ERP Challenges Modules assume best practices: Change software to reflect company ($) Change company to follow software (?) Accuracy of data Drives entire system Ownership of / responsibility for Ability to follow structure
10 ERP Novel? Goal-like novel Hero learns more about ERP, deciding if it is right for his company Company rushes through installation General introduction to ERP systems, what they do, how different from MRP SAP R/3 screen shots
11 The Heart of the Matter - mrp System for organizing WIP releases Work in Process work that has been started, but not yet finished Consider Lead Time (LT)for each item Look at BOM to see what parts needed Bill of Materials what goes into what Release so they will arrive just as needed Example Snow Shovel Order quantity is 50 units LT is one week
12 MRP Table Gross Requirements Scheduled receipts (begin) 50 Projected Available Balance (ending) Net Requirements 6 Planned Order Receipts Planned Order Releases 6 units short
13 MRP Table Gross Requirements Scheduled receipts (begin) 50 Projected Available Balance (ending) Net Requirements 6 Planned Order Receipts 50 Planned Order Releases 50 Order 50 units week earlier
14 Ending Inventory Gross Requirements Scheduled receipts (begin) 50 Projected Available Balance (ending) Net Requirements 6 Planned Order Receipts 50 Planned Order Releases 50 Ending inventory
15 Terminology Projected Available balance Not on-hand (that may be greater) Tells how many will be available Available to Promise the units aren t spoken for yet, we can assign them to a customer Planned order releases scheduled receipts Only when material has been committed to their production Move to scheduled receipts as late as possible Preserves flexibility
16 1605 Snow Shovel 1605 Snow Shovel 314 scoop assembly Rivet (4) 048 Scoop-shaft connector Top Handle Assy 062 Nail (4) 118 Shaft (wood)
17 314 scoop assembly 314 scoop assembly 019 Blade (steel) Rivet (6) 2142 Scoop (aluminum)
18 13122 Top Handle Assembly Top Handle Assembly Welded Top handle bracket Assembly 1118 Top handle Coupling (steel) 129 Top Handle Bracket (steel) 082 Nail (2) 457 Top handle (wood)
19 BOM Explosion Process of translating net requirements into components part requirements Take into account existing inventories Consider also scheduled receipts
20 BOM Explosion Example Need to make 100 shovels We are responsible for handle assemblies.
21 13122 Top Handle Assembly Top Handle Assembly Welded Top handle bracket Assembly 1118 Top handle Coupling (steel) 129 Top Handle Bracket (steel) 082 Nail (2) 457 Top handle (wood)
22 Net Requirements Sch Gross Net Part Description Inv Rec Req Req Top handle assy Top handle Nail (2 required) 4 50 Bracket Assy Top bracket Top coupling 39 15
23 Net Requirements Sch Gross Net Part Description Inv Rec Req Req Top handle assy Top handle Nail (2 required) Bracket Assy Top bracket Top coupling 39 15
24 13122 Top Handle Assembly Top Handle Assembly Welded Top handle bracket Assembly 1118 Top handle Coupling (steel) 129 Top Handle Bracket (steel) 082 Nail (2) 457 Top handle (wood)
25 Net Requirements Sch Gross Net Part Description Inv Rec Req Req Top handle assy Top handle Nail (2 required) Bracket Assy Top bracket Top coupling
26 Timing of Production This tells us how many of each we need Doesn t tell when to start Start as soon as possible? Dependent events (oh no, not that!)
27 13122 Top Handle Assy Top handle LT = Gross Req Sch receipts (ending) Net Req 5 Planned Order Receipt 5 Planned Order Release 5 Order policy: Lot-for-lot
28 13122 Top Handle Assy Top handle LT = Gross Req Sch receipts Order policy: Lot-for-lot (ending) Net Req Pl Order Rec Pl Order Rel
29 13122 Top Handle Assy Top handle LT = Gross Req Sch receipts Order policy: Lot-for-lot (ending) Net Req Pl Order Rec Pl Order Rel
30 457 Top Handle Top handle LT = Gross Req One handle for Each assembly Sch receipts (ending) Net Req Pl Order Rec Pl Order Rel LT = Gross Req Sch receipts 25 (ending) Net Req Pl Order Rec Pl Order Rel
31 457 Top Handle Order policy: Lot-for-lot LT = Gross Req Sch receipts 25 (ending) Net Req Pl Order Rec Pl Order Rel
32 457 Top Handle Order policy: Lot-for-lot LT = Gross Req Sch receipts 25 (ending) Net Req Pl Order Rec Pl Order Rel 18 10
33 082 Nail (2 required) Top handle LT = Gross Req Two nails for Each assembly Sch receipts (ending) Net Req Pl Order Rec Pl Order Rel LT = 1 Lot Size = Gross Req Sch receipts 50 (ending) 4 54 Net Req Pl Order Rec Pl Order Rel
34 082 Nail (2 required) LT = 1 Lot Size = Gross Req Sch receipts 50 (ending) Net Req 6 Pl Order Rec 50 Pl Order Rel 50
35 082 Nail (2 required) LT = 1 Lot Size = Gross Req Sch receipts 50 (ending) Net Req 6 26 Pl Order Rec Pl Order Rel 50 50
36 11495 Bracket Assembly Top handle LT = Gross Req One bracket for Each assembly Sch receipts (ending) Net Req Pl Order Rec Pl Order Rel LT = Gross Req Sch receipts (ending) 27 Net Req Pl Order Rec Pl Order Rel
37 11495 Bracket Assembly Top handle LT = Gross Req One bracket for Each assembly Sch receipts (ending) Net Req Pl Order Rec Pl Order Rel LT = Gross Req 5 Sch receipts (ending) 27 Net Req Pl Order Rec Pl Order Rel
38 11495 Bracket Assembly Top handle LT = Gross Req One bracket for Each assembly Sch receipts (ending) Net Req Pl Order Rec Pl Order Rel LT = Gross Req Sch receipts (ending) 27 Net Req Pl Order Rec Pl Order Rel
39 11495 Bracket Assembly Order policy: Lot-for-lot LT = Gross Req Sch receipts (ending) Net Req Pl Order Rec Pl Order Rel
40 129 Top Bracket LT = Gross Req Sch receipts (ending) Net Req Pl Order Rec Pl Order Rel LT = Gross Req Sch receipts (ending) 15 Net Req Pl Order Rec Pl Order Rel
41 129 Top handle bracket LT = Gross Req Sch receipts (ending) Net Req Pl Order Rec Pl Order Rel 23 10
42 1118 Top handle coupling LT = Gross Req Sch receipts (ending) Net Req Pl Order Rec Pl Order Rel LT = 3 Safety Stock = Gross Req Sch receipts (ending) 39 Net Req Pl Order Rec Pl Order Rel
43 1118 Top handle coupling LT = 3 Safety Stock = Gross Req Sch receipts 15 (ending) Net Req 4 Pl Order Rec 4 Pl Order Rel 4
44 1118 Top handle coupling LT = 3 Safety Stock = Gross Req Sch receipts 15 (ending) Net Req 4 10 Pl Order Rec 4 10 Pl Order Rel 4 10
45 Other considerations Safety stock if uncertainty in demand or supply quantity Don t let available go down to 0 Safety LT if uncertainty in arrival time Place order earlier than necessary Order quantities EOQ Economic Order Quantity, Fixed Size If that s not enough, order what you need, OR order two or more of the Fixed Size Lot-For-Lot, Periodic Order quantity, others
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