Tag Archive: MRP

Should I Upgrade Now or Later?

October 10th, 2019

A Client Question
Since we have a simple reorder point system largely in place and we plan to focus on an ERP upgrade in the coming year, should we continue to roll out MRP (material requirements planning) and DRP (distribution requirements planning) or should we just put our efforts into the new ERP system?

In this case, there is still much of the planning process that is done manually. However, a manual process could be good or bad. Employees forced to perform manual processes learn the process in detail yet they might not understand why they are doing what they are doing. Would there be a larger benefit in learning the process in the current system and then re-learning in the new one or vice-versa? After all, resources are limited and the people performing these roles understand key customer requirements in detail. How should we best utilize their time for maximum benefit?

The Answer
In this case, resources are limited. So, the key question becomes how to best leverage the planners to meet customer expectations while getting ready to support the future. Since the simple reorder point works but only to a degree (since they cannot see their bill of materials explosion) in this case, the rest has to be manually calculated. When looking at a configure-to-order situation across multiple sites not connected by DRP, inventory disappears and the complexity of planning materials increases. Also, unfortunately, the only resource that gains an understanding of MRP / DRP concepts is the material planner. The production planners remain unclear as to how these concepts apply. So, it makes sense to roll out the concepts in the current system so that the team gains exposure to how it works. This understanding will prove valuable in implementing the new system, and most importantly, if the material planners do not have to spend countless hours manually calculating numbers, they can provide better service to customers, as well as contribute valuable input in setting up the new system for success.

Food For Thought
Although the MPS/ MRP module of ERP systems can be valuable in improving service and reducing inventory, they do not always make sense. Take a step back to look at the complexities in your planning process. Have you overbuilt the process? We also find that simplifying creates substantial improvement for almost every client. Perhaps you should simplify rather than add complexity, even if you already own the system or your key resources think complexity is needed. At least 80% of the time, we simplify to some degree.  We might take what seems like a step back to simplify in order to take a giant leap forward.

If you are interested in running your situation by us, contact us.

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Which Inventory Planning Method is Best?
Systems Pragmatist

Which Inventory Management Planning Method Is Best?

March 8th, 2016
inventory management planning

Use a combination approach to inventory management planning to promote growth, increase profits, free up cash flow and improve operational efficiency.

I’ve incorporated three planning method options into a presentation on inventory management best practices. I’ve been receiving more and more requests for this topic as executives experience the impact poor inventory management can have on an organization — it can stunt growth, weaken profits, tie up cash unnecessarily and negatively impact operational efficiency.

I run across conflicts frequently among these options. Unfortunately, the method is often dictated. Resources are not valued. And results struggle. On the other hand, my best clients view these as complementary options to be used at the “right” time in the “right” situation for the “right” products.

Briefly reviewing these methods:

  1. Lean: In lean circles, planning is seen as a Kanban process. In essence, the demand is pulled through the system by the customer. For example, when a customer consumes 5 pieces, the manufacturer produces 5 pieces. This type of process works effectively when demand is even.
  2. MPS/MRP: Master production schedules and material requirements planning are system tools and related processes that derive production requirements and purchase plans from a compilation of demand (sales orders, forecasts, independent demand), inventory levels, expected production plans and receipts, etc. This process looks at lead times and calculates what should be produced, regardless of the environment (make-to-order, make-to-stock, configure-to-order, etc.). This type of planning can work effectively with uneven demand.
  3. TOC: The theory of constraints focuses on subordinating all resources to the bottleneck or most overtaxed resource. The focus is often-times on throughput. Since throughput will be limited by the bottleneck, it makes sense to focus there.

I cannot tell you how many disagreements I’ve seen over the years on the optimal planning method. In some companies, executives have become purists to one method or another, and it created havoc — unhappy customers, high costs, etc. Instead, I’ve found it is well-worth it to evaluate what combination of methods makes the most sense for each particular company, product line, machine, team, etc. My most successful clients use a combination approach.

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Often Overlooked Value of Production Planning

What’s Driving HUGE Supply Chain Results in Manufacturing?


5 Ways to Improve Processes

July 23rd, 2013

Stay focused on continual improvement of your processes to keep your business at the forefront of your industry.

Process improvement has been around for centuries. I laugh as I see the fads come and go with different names and hoopla yet the fundamentals remain the same. What is process improvement if not just in time, lean, Toyota production system, TQM, demand driven MRP? …and the list goes on. How do we stimulate ideas that will help our companies?

1. Ask – It is always prudent to start by asking your employees, peers and managers. This is an often overlooked secret to rapid cost savings and revenue generation ideas.

2. Read – Read the latest industry magazines, the newspaper, blogs, newsletters (of course Profit through People!) etc. You’ll be surprised what ideas can apply to your situation.

3. Listen – Slightly different than asking is to listen. Instead of talking, listen to your colleagues with an ear towards interesting ideas. Asking clarifying questions during conversations can be revealing.

4. Network – There are countless industry, geography and topic-related events and groups. For example, my APICS (Association of Operations Management) chapter hosts events on manufacturing and distribution topic areas. Industry groups such as aerospace and defense have numerous events. Attend, ask, listen, network and learn.

5. Social media – There is also an overwhelming amount of information available on social media. Join a LinkedIn group and ask how to leverage your ERP system to become more efficient etc.

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