MRP II: Inventory Management

While MRP I primarily address the inbound ply of inventory ( corporals prudence), MRP II adds other interfaces such as finance, marketing, and integrated logistics. akin MRP I, MRP II is a push inventory model which pushes harvest-home finished manufacturing and distribution processes in arrangement to bump forecast demand. However, it adds further dimensions to the underlying model. MRP II not only considers the inbound flow of material, but in like manner how much material keister actu wholey be handle at bottom the plant.Further more than than, it actu entirelyy handles drudgery scheduling, labour pick outs, inventory budgets, and personnel needs. But the to the highest degree important feature is the addition of the finance interface. This module provides the capability of transforming the operating(a) production plans into financial terms, consequently the data can be employ for financial readying and reserve purposes of a more general heed nature.Another sig nificant addition is the simulation module. This simulation capability enables management to perform a more comprehensive alternative planing work in developing the marketing and business plans. Operating variable could be adjust to examine the governance of ruleswide response to the proposed operating change.Besides MRP II includes the entire focalize of activities involved in the planning and control of production operations. It consists of a phase of functions of modules and includes production planing, resource requirement planning, master production scheduling, materials requirements planning (MRP I), wander floor control, and purchasing.Step 1 Market Demand the process begins with an collection demand from all sources. Examples of sources argon firms orders, forecasts, and safety stock requirements.Step 2- proceeds signal Plan with inputs from manufacturing, finance, and marketing, the production plan would be derived.Step 3- Rough-cut message planning it involves short-term cogency considerations that are affected by irregularities in demand. It formulates benchmarks for the proper use of personnel, machines, and shifts. Bills of cognitive content and agitates of labour resources are the primary inputs to turn back rough-cut capacity. In the event of incapability in producing the require output ( payable to limitation of capacity), adjustment to the production plan would be made.Step 4- overlook production schedule formulation of the master production schedules provides a realistic, detailed, controversy of what the firm expects. It is more detail than the aggregate plan, it translates the aggregate plan into proper(postnominal) numbers of specific products to be produced in a specific bound of succession.Step 5- Material requirements planning (MRP) MRP is the heart of the entire process (MRP II). When MRP comes into play, material and schedule requirements would be generated.Step 6- Capacity requirements planning at this stage, the capacity requirement planning determine whether the firm has enough capacity (e.g. worker, space, money) to meet the schedules. Again, if schedules could not be met, some adjustment in the master production schedule would be required else requirements would be scheduled. Improved consistency in one-time customer delivery Reduction in purchasing cost due to fewer expedited shipments Inventory reduction of one-fourth to one-third (cost reduced) Improve re drill to demand changes completelyowing more planning flexibility Minimization of workforce overtimeProblems in Implementation of MRP IIImplementation an MRP II musical arrangement is a monumental effort. The system requires a trem decisionous amount of information, which moldiness be accurate if the system is to be successful. The MRP II systems is capable of affecting all function within Forgess marketing, production, purchasing, accounting, finance and logistic. All personnel who choose any interaction with the MRP II system require training. Further, Forges must be committed to make the MRP II system work. The problems that occur in experienceing MRP are frequently organizational and behavioral rather than technical.Existing schemas and the Informal SystemIf an MRP II system is replacing an existing production and inventory control system, Forges may see significant resistance to change, even if the existing system has been unsatisfactory. People generally resist to change, and they prefer the familiar to the unfamiliar. Also, when a system performs poorly, an informal system develops to deal with problems.For MRP II to operate effectively, the familiarity must defend a large amount of timely and accurate data. Besides, story of material must be developed for all items. Furthermore, all the dick of material (BOM) must be reviewed, updated, and structured that provide the data require by MRP II. This would not be a simple task. Frequency product changes and modification can make the process of d eveloping a BOM challenging. To state the integrity of the BOM, the phoner must practice effective configuration control, that is, the company must control and coordinate changes to its products to ensure a smooth transition to new product designs.After a system is installed, careful heed and discipline must be exercised to ensure at all data used by the system is accurate. For example, if a clerk is supposed to encipher a code 3, indicating that the item is purchase in thousands, but kind of enters code 1, indicating that it is purchase in dozens, serious error and material shortages are likely to occur. If a system gives erroneous data at times, citizenry may develop other way to get the data they need and may no yearner bother to update the system, since they no longer use it. The system could then become even less accepted and be a burden rather then a benefit.All MRP II data must be accurate to ensure system integrity, but the inventory data are the most difficult to de clare because they change frequency. The MRP II inventory data must be compared periodically with the actual physical inventory to maintain accuracy. Periodic counting involves more than just counting posts. Forges must maintain proper housekeeping so that parts are properly located, accessible and identified. When implementing MRP II for the first time, acquire inventory under control can be a redoubtable task.Top-level managers and managers are in all parts of the organization that will be affected by MRP must clearly recognize all the efforts need to achieve this new way of managing their activities. These mangers must fully support all the changes and must remain supportive of the new system.The participation of users of the system in its development will make the people more familiar with the system. Besides, they would too be more committed as they play a part in the systems development.For the system to work, the entire user would have to be properly trained. Users must u nderstand the system in order to used it effectively.A well-designed MRP system could help to improve a companys operation greatly, however a poorly designed can lead a company into deep trouble.Wallaces Proven way of life for MRP ImplementationAccording to Thomas Wallace, an MRP II expert, the instruction execution could be finished in 18 months. 12 months for implementing MRP, 3 months to close the loop, and three more months to implement MRP II. Figure above is a graphic representation of the implementation timetable.The process starts with first-cut education follows by developing a consensus that the company should implement MRP. Next, the education and training phase will begin and it is an ongoing activity even after implementation. By the second month, inventory accuracy and bill of material accuracy and structure will begin, they are the most time and labour consuming step. In the mid of the third month, production planning and MPS policies together with the system and s oftware participation would start. By the ordinal month, the first pilot program would attempt. Subsequently the cutover phase would start. By the end of the twelveth month, the implementing of the basic MRP would be completed.The next three-month is for closing the MRP loop which encompass shop-floor control, capacity requirement planning and purchasing. Routings, work centers and system preparation will commence simultaneously. Once finished, another pilot program will commence follows by the cutover program. By the end of the fifteenth month, the MRP loop would be closed.