Manufacturing resource planning

Manufacturing resource planning (MRP II)

This is not exclusively a software function, but the management of people skills, requiring a dedication to database accuracy, and sufficient computer resources. It is a total company management concept for using human and company resources more productively.

Key functions and features

MRP II is not a single specific proprietary software system and can thus take many forms. It is almost impossible to visualize an MRP II system that does not use a computer. An MRP II system can be based on either purchased–licensed or in-house software.

Almost every MRP II system is modular in construction.^[2] Characteristic basic modules in an MRP II system are:

• Master production schedule (MPS)
• Item master data (technical data)
• Bill of materials (BOM) (technical data)
• Production resources data (manufacturing technical data)
• Inventories and orders (inventory control)
• Purchasing management
• Material requirements planning (MRP)
• Shop floor control (SFC)
• Capacity planning or capacity requirements planning (CRP)
• Standard costing
  (cost control) and frequently also Actual or FIFO costing, and Weighted Average costing.
• Cost reporting / management (cost control)

together with auxiliary systems such as:

and related systems such as:

The MRP II system integrates these modules together so that they use common data and freely exchange information, in a model of how a manufacturing enterprise should and can operate. The MRP II approach is therefore very different from the "point solution" approach, where individual systems are deployed to help a company plan, control or manage a specific activity. MRP II is by definition fully integrated or at least fully interfaced.

MRP and MRPII

History and evolution

Material requirements planning (MRP) and manufacturing resource planning (MRPII) are predecessors of enterprise resource planning (ERP), a business information integration system. The development of these manufacturing coordination and integration methods and tools made today's ERP systems possible. Both MRP and MRPII are still widely used, independently and as modules of more comprehensive ERP systems, but the original vision of integrated information systems as we know them today began with the development of MRP and MRPII in manufacturing.

MRP (and MRPII) evolved from the earliest commercial

Material requirements planning (MRP) was an early iteration of the integrated information systems vision. MRP information systems helped managers determine the quantity and timing of raw materials purchases. Information systems that would assist managers with other parts of the manufacturing process, MRPII, followed. While MRP was primarily concerned with materials, MRPII was concerned with the integration of all aspects of the manufacturing process, including materials, finance and human resources.

Like today's ERP systems, MRPII was designed to tell us about a lot of information by way of a centralized database. However, the hardware, software, and relational database technology of the 1980s was not advanced enough to provide the speed and capacity to run these systems in real-time,^[4] and the cost of these systems was prohibitive for most businesses. Nonetheless, the vision had been established, and shifts in the underlying business processes along with rapid advances in technology led to the more affordable enterprise and application integration systems that big businesses and many medium and smaller businesses use today.^[5]

General concepts

Material requirements planning (MRP) and manufacturing resource planning (MRPII) are both incremental information integration business process strategies that are implemented using hardware and modular software applications linked to a central database that stores and delivers business data and information.

MRP is concerned primarily with manufacturing materials while MRPII is concerned with the coordination of the entire manufacturing production, including materials, finance, and human resources. The goal of MRPII is to provide consistent data to all members in the manufacturing process as the product moves through the production line.

Paper-based information systems and non-integrated computer systems that provide paper or disk outputs result in many information errors, including missing data, redundant data, numerical errors that result from being incorrectly keyed into the system, incorrect calculations based on numerical errors, and bad decisions based on incorrect or old data. In addition, some data is unreliable in non-integrated systems because the same data is categorized differently in the individual databases used by different functional areas.

MRPII systems begin with MRP, material requirements planning. MRP allows for the input of sales forecasts from sales and marketing, or of actual sales demand in the form of customers orders. These demands determine the raw materials demand. MRP and MRPII systems draw on a master production schedule, the breakdown of specific plans for each product on a line. While MRP allows for the coordination of raw materials purchasing, MRPII facilitates the development of a detailed production schedule that accounts for machine and labor capacity, scheduling the production runs according to the arrival of materials. An MRPII output is a final labor and machine schedule. Data about the

• Reduced working capital for inventory^[6][7]
• Improved cash flow through quicker deliveries
• Accurate inventory records

Criticism

Authors like Pochet and Wolsey

References