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MRP + ERP

DR. SALEH ALKHATIB


INTRODUCTION
◦MRP (Material Requirements Planning) and
◦MRP-II(Manufacturing Resource Planning)
◦Are systems that control production and inventory
◦Many people assume that MRP programs are just a
part of an ERP (Enterprise Resource Planning)
program
◦MRP can integrate within an ERP system, and also
can function perfectly fine on their own
INTRODUCTION-ERP
◦An ERP system is a program that provides a fully
integrated manufacturing experience.
◦ERP programs allow information to be transmitted
instantaneously from the production floor to
accounting to HR.
◦Modules for each department within a facility are
transmitted through the ERP central processing
system, giving facility managers complete
transparency between departments.
INTRODUCTION-ERP
◦ ERP systems control practically every process in a
manufacturing facility, they can sometimes have
hundreds of users.
◦ The best ERP programs can coordinate functions
between multiple facilities and optimize the production
process.
◦ APS: Advanced Planning and Scheduling software systems
are designed to optimize the scheduling process. It can
take input from different departments and cross reference
them to create simulation models and projections.
INTRODUCTION-MRP
◦MRP and MRP II are systems that control production
and inventory
◦This means they are usually only utilized by the
purchasing, production, and delivery departments.
◦MRP programs, rely heavily on manual input from
their users to create production schedules.
◦MRP: Computer-based information system for
ordering and scheduling of dependent demand
inventories
MRP
◦Dependent demand:
Demand for items that are
subassemblies or component
parts to be used in production
of finished goods.
◦ MRP: A methodology that
translates master schedule requirements (MPS) for end
items into time-phased requirements for
subassemblies, components, and raw materials.
MRP
is designed
to answer
three
questions:
What is
needed?
How much
is needed?
and
When is it
needed?
MRP – INPUT PHASE
◦ master schedule One of three primary inputs in MRP; states which end items are to be
produced, when these are needed, and in what quantities.
◦ cumulative lead time The sum of the lead times that sequential phases of a process require,
from ordering of parts or raw materials to completion of final assembly.
◦ bill of materials (BOM) One of the three primary inputs of MRP; a listing of all the raw
materials, parts, subassemblies, and assemblies needed to produce one unit of a
product.
◦ product structure tree A visual depiction of the requirements in a bill of materials, where all
components are listed by levels.
◦ When a component appears on more than one level, low-level coding is used so that all
occurrences of that component appear on the lowest level at which the component
appears.
◦ inventory records One of the three primary inputs in MRP; includes information on the
status of each item by time period.
MRP
PROCESS
PHASE
MRPPROCESS PHASE

Pegging (working this process in


reverse), that is, identifying the
parent items that have
generated a given set of
material requirements for some
item such as D.
Although the process may
appear simple enough given
the product trees and
schedules, But when multiple
products are involved, the
process is more complex.
Pegging enables managers to
determine which product(s) will
be affected if orders are late
due to late
deliveries, quality problems, or
other problems.
MRP –MAIN OUTPUTS

MRP –
SECONDARY
REPORTS
OTHER CONSIDERATIONS Benefits and Requir.
◦ Safety Stock: one of the main advantages of 1. Low levels of in-process inventories, exact matching of
an MRP approach that there is no need for supply to demand.

Safety stock. But If safety stock is needed, 2. The ability to keep track of material requirements.
planned-order release amounts can be 3. The ability to evaluate capacity requirements generated
increased by the safety stock quantities for the by a given master schedule.
designated components. 4. A means of allocating production time.
◦ Lot Sizing: Managers can realize economies by 5. The ability to easily determine inventory usage by
grouping orders. no single plan has a clear backflushing.
advantage over the others. Requirements
◦ Lot-for-Lot Ordering: The order or run size for each 1. A computer and the necessary software programs
period is set equal to demand for that period. records
◦ Economic Order Quantity Model: for lower-level
2. Accurate and up-to-date:
items that are common to different parents and for
raw materials a. Master schedules
◦ Fixed-Period Ordering: provides coverage for b. Bills of materials
some predetermined number of periods.
c. Inventory records
3. Integrity of file data
MRP II manufacturing resources planning
◦Expanded approach to production
resource planning, involving other
areas of a firm in the planning
process and enabling capacity
requirements planning
MRP II manufacturing resources planning
JIT + LEAN
DR. SALEH ALKHATIB
Just-in-time (JIT): JIT Ultimate Goal
a balanced system.
A highly coordinated Achieves a smooth, rapid
processing system in which flow of materials through the
goods move through the system
system, and services are Supporting Goals
performed, just as they are
◦ Eliminate disruptions
needed,
◦ JIT lean production ◦ Make system flexible
◦ JIT pull (demand) system
◦ Eliminate waste, especially
◦ JIT operates with very little “fat”
excess inventory
Sources of Waste: Big vs. Little JIT
◦Overproduction ◦Big JIT – broad focus
◦ Vendor relations
◦Waiting time ◦ Human relations
◦ Technology management
◦Unnecessary ◦ Materials and inventory
transportation management
◦Little JIT – narrow focus
◦Processing waste ◦ Scheduling materials
◦ Scheduling services of
◦Inefficient work methods production

◦Product defects
Summary JIT Goals and Building Blocks
Ultimate Goal A
balanced
rapid flow

Supporting Goals Eliminate disruptions

Make the system flexible Eliminate waste

Building
Blocks
Product Process Personnel Manufacturing
Design Design Elements Planning
JIT Building Blocks

Product Design:
◦Standard parts
◦Modular design
◦Highly capable production systems
◦Concurrent engineering
JIT Building Blocks
Process Design:
◦Small lot sizes
◦Setup time reduction
◦Manufacturing cells
◦Limited work in process
◦Quality improvement
◦Production flexibility
◦Little inventory storage
JIT Building Blocks
Personnel/Organizational Elements
◦Workers as assets
◦Cross-trained workers
◦Continuous improvement
◦Cost accounting
◦Leadership/project management
JIT Building Blocks
Manufacturing Planning and Control
◦Level loading
◦Pull systems (e.g. Kanban)
◦Visual systems
◦Close vendor relationships
◦Reduced transaction processing
◦Preventive maintenance
Kanban Production
Control System Factor Traditional JIT

◦ Kanban: Card or other device that Inventory Much to offset forecast Minimal necessary to
communicates demand for work or errors, late deliveries operate
materials from the preceding station Deliveries Few, large Many, small

Lot sizes Large Small


◦ Kanban is the Japanese word
meaning “signal” or “visible record” Setup; runs Few, long runs Many, short runs

Vendors Long-term relationships are Partners


unusual
◦ Paperless production control system
Workers Necessary to do the work Assets

◦ Authority to pull, or produce comes


from a downstream process.
Transitioning to Obstacles to
a JIT System Conversion
◦ Get top management ◦ Management may not be
commitment committed
◦ Decide which parts need most ◦ Workers/management may not
effort be cooperative
◦ Obtain support of workers ◦ Suppliers may resist
◦ Start by trying to reduce setup
times
◦ Gradually convert operations JIT II: a supplier representative
◦ Convert suppliers to JIT works right in the company s
plant, making sure there is an
◦ Prepare for obstacles
appropriate supply on hand.
Summary - JIT
Elements of JIT – Requirements Benefits of JIT Systems:
◦ Smooth flow of work (the ultimate goal Balanced sys) ◦ Reduced inventory levels
◦ Elimination of waste
◦ High quality
◦ Continuous improvement
◦ Eliminating anything that does not add value ◦ Flexibility
◦ Simple systems that are easy to manage
◦ Reduced lead times
◦ Use of product layouts to minimize moving materials and
parts ◦ Increased productivity
◦ Quality at the source
◦ Increased equipment utilization
◦ Poka-yoke – fail safe tools and methods
◦ Preventative maintenance ◦ Reduced scrap and rework
◦ Good housekeeping ◦ Reduced space requirements
◦ Set-up time reduction
◦ Pressure for good vendor relationships
◦ Cross-trained employees
◦ Reduced need for indirect labor
◦ A pull system

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