MRP Remains Integral to Success
The value of MRP (material requirements planning) remains intact no matter the company size or industry. We work with organizations from small, owner operators to private equity backed to large enterprises, and they all have the need to utilize and upgrade with processes like MRP in common to better serve customers and support EBITDA growth. Who knew such an old concept like MRP would be such an upgrade!
It is widespread that companies are performing MRP manually or using their ERP’s MRP engine but updating dates, adjusting quantities, and/or performing 80% of the work manually. Since every company needs a way to figure out which materials, components, and products to order, in what quantities and for what timing on a daily basis, MRP remains integral to success. Our clients are frequently performing MRP manually which utilizes at least ten times more time than it otherwise would. Thus, determining how to automate the process, utilize the MRP system and potentially further enhance it with artificial intelligence and advanced technologies can yield powerful results.
Why Isn’t MRP Fully Utilized in Every Company?
Since MRP performs such as basic and required function, you might wonder why MRP isn’t fully utilized in every company. We have found that companies struggle to get MRP to provide directionally correct results as they aren’t sure of how to set up the parameters, MRP variables, item master, boms, routings, and other core manufacturing and purchasing data appropriately to get the correct results. Frequently, we see planners try a few changes, but if the results don’t make sense with what they think they should get, they revert back to their manual method.
We have been brought into several companies recently to consult with their teams to upgrade planning and scheduling processes (including advanced planning) or roll out SIOP (Sales Inventory Operations Planning) programs, and we determined that we had to jump into MRP to fix the fundamental to gain the results from the upgraded processes. In essence, you couldn’t upgrade with the base held up with a house of cards. For example, in some cases, a high-skilled planner had to run circles around whatever was going on to keep the process moving; however, that fix wasn’t scalable. In other cases, the client thought the planning and scheduling process was the issue causing customer issues and operations inefficiencies yet it couldn’t be resolved if materials weren’t in the right place at the right time and/or the system didn’t support the fundamentals. To learn more about why MRP isn’t fully utilized by 80% of companies and for more information on how to resolve, refer to our recent article.
MRP to the Rescue
MRP is key to automating and digitizing basic recommendations for material purchases and production schedules. Our best clients utilize MRP to perform the legwork for 80% of the workload. That way, their high-skilled planners can focus on managing exceptions and optimizing results. For example, a client was able to refocus their high-skilled expert from chasing issues to optimizing the schedule which improved customer lead times and maximized operational efficiencies, thereby increasing output. In another example, the client was able to refocus their high-skilled planner on upgrading to an advanced planning system (APS) in conjunction with SIOP which provided what-if scenario planning among sites to optimize customer needs and freight costs. To learn about additional strategies to optimize with SIOP, download our complimentary eBook, SIOP: Creating Predictable Revenue and EBITDA Growth.
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Maximizing Performance and Margins with SIOP