Material Requirements Planning (MRP)

The Material Requirements Planning (MRP) system is tightly integrated with the Customer Orders, Inventory, Sales Analysis (Forecasting), Purchasing, and Manufacturing modules of System 2000, and is sensitive to company and location (plant) specific criteria.

MRP analyzes the existing on-hand position of an item, open purchase orders, open manufacturing orders (including planned, stock, and custom orders), open commitments (open customer orders, future orders, and standing orders), the sales forecast, and then produces a balance.

This analysis can be viewed on-line daily, weekly, or monthly by selecting the appropriate option. Complete pegging is supported allowing the user to view critical data such as when purchase orders are due, when manufacturing orders are due to be completed, and the actual customer orders making up the commitments of an item.  Contact A4G today for a free consultation.

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   Planning   

By selecting the option to apply an action, MRP will determine how to resolve the shortage issue. It will blow through the Bill Of Materials (BOM) to schedule purchases of raw materials, and/or to schedule manufacturing orders for sub-assemblies. The action is then displayed on the screen, in the proper time bucket.

The action is only a suggestion. The user can then add or edit the system-developed suggestion manually, and then firm it up. In the case of a purchased part, System 2000 will allow the user to create the purchase order using min/max, EOQ, or the actual MRP suggestion. In the case of a manufactured part, System 2000 will allow the user to create the manufacturing order using either the MRP recommended quantity or the manufacturing lot size.

**Please note that in System 2000's MRP, the user can generate a purchase order for a manufactured item.

Users also have the ability to view orders that are deemed to be in a status of critical, expedite, and delay. Through the setup of MRP, the user can define time periods as to when orders will meet these criteria. Users can then choose to select only those orders in a given status and take appropriate action.

  What MRP Does

MRP is a tool to help manage production and purchasing management. MRP assumes that there is sufficient capacity to produce the suggestions put forth.

Although MRP is a common term, no two MRP systems look and plan in the same ways. The differences may include the underlying logic, the user interface, and the phrases or jargon used, etc. The purpose of this document is to outline how System 2000's MRP operates, and the data used to develop the plan. In order to fully utilize MRP, several other modules of System 2000 are required to be installed, and operational. These modules include Customer Orders, Purchasing, Inventory Management, Sales Analysis, and Manufacturing Orders.

Every effort has been made to clearly explain the components of demand and operations of System 2000's MRP. Please refer to the appropriate documentation for more details on any of the points discussed in this white paper.

  MRP Has Three Basic Steps:

1. Identifying Requirements For Items To Be Included In An MRP Run

2. Running MRP - Creating The Suggestions

3. Firming The Suggestions To Release MO's And PO's

Step I: Identifying Requirements

MRP plans the purchasing and manufacturing of products. Careful attention must be made to the accuracy and completeness of the data. For example, System 2000 will allow the user to purchase an item coded as manufactured. In order to achieve this result, the preferred vendor must be entered in the item balance file. Further, MRP is company and location sensitive so all data must be accurate in order for MRP to be truly effective. Elements such as out dated bills of material, and lead times can negatively impact the results of MRP.

MRP looks at several components of demand in order to create its suggestions. The requirements include:

• Quantity On Hand

• Quantity On Open Purchase Order

• Quantity In / Or Planned For Manufacturing

• Quantity Committed To Existing Orders

• Quantity Forecasted

MRP is highly date sensitive. As such, it is important to understand the dates used in running MRP. The quantity on open Purchase Orders uses the line item due date for MRP purposes, the quantity in or planned for manufacturing uses the Manufacturing Order due date, and the quantity committed uses the requested ship date from the customer order. The forecasted quantity is populated from the selected forecast schedule that was created in Sales Analysis. Please note that MRP does not require forecasting in order to run.

In planned manufacturing orders, a Manufacturing Order type of 'P' is entered in much the same way as a made-to-stock order, and will be included in an MRP run. It is critical that the proper due date be entered when creating the planned Manufacturing Order.

For an item coded as an 'M' or 'K', System 2000 will blow through the Finished Assemblies file, determine which items will be effected, and create suggestions for those components as well.

For items coded as 'C' for configured, System 2000 only plans for this item type when a Customer or Manufacturing Order has been created and the features and options selected. Please refer to the System 2000 documentation for more details on Item Configuration.

MRP generation may be done at any time, and then analyzed on the screen, or in a report (see samples below). Both the on-screen inquiry, and the report, allow the user to determine which items are considered 'critical', 'expedite', or 'delay' based on the user-defined parameters. As part of the end of day routine, MRP will be run automatically.

MRP may be run for one plant, one item, only items being coded as 'critical', 'expedite', or 'delay', etc. The parameters for defining these statuses are user-defined.

Step II: Running MRP - Creating The Suggestions

MRP will be run as part of the end of day routine to identify items as 'critical', 'expedite', or 'delay', but the user may also select to run the full MRP at any time by selecting the MRP Report program. MRP suggestions may be viewed on a daily, weekly, or monthly basis directly on the screen. The user can dynamically change the planning horizon while in MRP. MRP will highlight where shortages exist allowing the user to drill down to any of the factors effecting the MRP run for greater details including expected receipt dates, and customer orders making up the demand.

Once the apply action option is selected, MRP will blow through the Finished Assembly file for a given 'K' 'M' or 'C' item with open demand, select the effective components, and suggest the manufacturing / purchasing of the components. At this point in the MRP process, this is a suggestion only. The date bucket into which MRP will suggest the purchase / manufacture of a product will take into account all lead times found in the item balance file.

Step III: Firming The Suggestions To Release MO's And PO's

MRP then allows the user to override the MRP suggestion in a number of ways. The user can manually override the quantity and vendor, or use the batch size found in the item balance file. The user may also opt to simply accept the MRP suggestion and create a Manufacturing Order / Purchase Order.

Once accepted, Purchase Orders can be reviewed and released. Once completed, the Purchase Order may be faxed, printed, and/or e-mailed to the vendor based on the settings in the Vendor Master File.

Manufacturing Orders are then created including the appropriate lead-time offsets, and the components allocated or ordered. The production schedule will be affected and manufacturing scheduling will be alerted through the Production Scheduling system.

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