The core principles of Material Requirements Planning (MRP) were first constructed by Joseph Orlicky in 1964. That same year, Black & Decker served as the pioneer in employing this netting algorithm. By 1981, the number of organizations using MRP quickly grew to over 7,000!
To this day, this number continues to rise and some of the largest and best-operated manufacturing facilities rely on statistical methods originating from Orlicky’s documentation in his book The New Way of Life in Production and Inventory Management.
As computers started to dominate the industry, production planning and inventory control systems were implemented to streamline MRP. Although material requirements planning could be done by hand, to be competitive, most companies like modern pioneer John Deere, use software-based systems.
Unfortunately, antiquated design may create problems in production, not to mention leave your material flow vulnerable during times of disruption. As with any tightly knit data-reliant software, there are common MRP system drawbacks that should be evaluated:
- Accuracy and integrity of the data
- Time it takes to make a product from its
component parts - The disconnect between factories within an
enterprise
In this article, we will discuss possible solutions to each one of the Material Requirement Planning system problems encountered, and how MRP systems are able to be used to enhance every organization’s ability to better manage their manufacturing processes. Before we do so, let’s look at the scope of MRP in manufacturing.rise
Common problems Material Requirement Planning DOES solve
An MRP system helps you in the planning of production, scheduling, and inventory control throughout the manufacturing process.
The three main objectives of an MRP are:
- Ensure raw materials are available at production time of need and products are available for delivery to customers.
- Maintain the lowest possible material and product levels in warehousing
- Plan manufacturing tasks, mapping delivery schedules and purchasing activities.
In essence, an MRP tool provides solutions to several questions like: What items are required? How many are required? When are they required?
Businesses can control what type and how much material they purchase, plan which products to produce and in what quantities, and of course, minimize waste and cost.
MRP synchronizes the flow of materials, parts, and product components in phases, considering the production schedule. It also combines and tracks hundreds of variables, including:
- Purchase orders
- Sales orders
- Due dates
- Forecasts
- Marketplace demand
MRP software is just one tool that Material Flow Managers at enterprise organizations need to stay competitive in today’s demanding world. But since these tools often come as features within bigger enterprise resource planning (ERP) software solutions, the workflows are often out of the hands of the people managing the frontlines.
If you are in the manufacturing industry, it’s worth taking a critical look at your set-up and making sure you’re not missing any opportunities to improve.
1. Accuracy and Integrity of Data
Businesses generate tons of data, but all too often this vital resource is used unproductively — or not at all. Information about everything from tracking part shortages, tacking material expedites from the warehouse, and root-cause of disruptions should be gathered. The opportunity to gain insights from such data could, however, be wasted, and any benefits from these insights are lost if the business has the ‘Material Requirements Planning drawbacks’ of having limited IT systems.
However, data, when correctly collated and analyzed by modern fit-for-purpose material flow software, can provide material flow managers and supply-chain engineers with real and quantifiable benefits. The right software should be easy to use by material flow managers and help you synchronize trends for continuous improvement and further waste reduction.
2. Time it takes to make a product from its component parts
Close control over inventory is vital for profitability and proficiency. Just-in-time (JIT) manufacturing has made good control processes even more important: if you don’t carry a lot of inventory, you need to know what you have in stock and be able to re-purchase it when needed.
But the advantages of effective inventory control extend beyond pure production efficiencies. While beneficial for improving productivity and spending, legacy MRP systems present the problem of assuming all components are present at the point of use. Additionally, the system scheme also assumes that this “lead time” in manufacturing will be the same for each time the product is made, without consideration to how many are being made, or other items being made at the same time in the factory.
Modern software programs can deliver these efficiencies. Consider implementing a workflow system that will help you determine why a cycle count increases or decreases in inventory has occurred. Being able to record errors will help you find the root cause and stop the problem from happening again. The right software will help you track downtime and find opportunity for improvement in part flow, training, quality control, staff shortages and more.
See how StrataFlows’ tried and true Software-as-a-Service platform can help you never stop the production line again
Learn More
3. The disconnect between factories within an enterprise
As manufacturing organizations have grown, legacy material requirement planning systems may not be enough to track all inventories and allow for streamlined communication. Multiple warehouses and manufacturing centers exist to meet demand.
The consequence on the factory is clear: poor access to materials puts production at a standstill. At the same time, too much raw material will cause higher costs in purchasing and warehousing.
Bridging the gap between different factories within an enterprise, those of your suppliers, distributors, and resellers will require digital transformation. Consider implementing a system that allows for real-time visibility and communication into disruptions. The right software will allow you to automate workflows and capture information to perform Root Cause Analysis (RCA) for continuous improvement.
MRP system software integrations to solve common problems
Manufacturing organizations looking to integrate software to solve the common drawbacks we discussed in this article, should ensure the minimum standards of their businesses are met. While the functions of each business slightly differ, even across factories, broad features in modern fit-for-purpose material flow software should include:
- Tracking material deliveries: the best systems should enable you to track missed or inconsistent materials and help you gain real-time visibility into part requests from internal and external factories.
- Automation: when working to avoid imminent impact or recover from material disruptions, communication, speed, and coordination is critical. Look for features that enable you to automate these functions while keeping record of who, what, when, how and why to optimize trends.
- Cloud managed solution: Put the system in the hands of material flow managers and simplify the need for IT. This will allow for ownership of the process and clear and coordinated workflows that you can build to help keep morale of all employees and partners involved.
Existing supply chain solutions do not focus on how to handle cases where systems or processes have gaps or break down. StrataFlows was built upon the premise of empowering the frontlines of production. It’s tried and true, cloud based, Software-as-a-Service (SaaS) model helps organizations in handling the cases where existing processes and solutions breakdown or bridging process gaps.
To learn more, try StrataFlows for free today.
