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Posts Tagged ‘Material Requirements Planning’

mrp“A rose by any other name would smell as sweet…” as the Bard noted.

A recent article in the Jan/Feb 2016 issue of APICS Magazine by Dave Turbide (pg. 20, “What’s In a Name?”), an APICS instructor and independent consultant reminds us that while ERP vendors may play games with names and nomenclature, the important thing is to cut through that clutter and keep your focus where it should be: on planning.

As Turbide points out, for several decades there have been “continuous strident voices in the marketplace declaring that material requirements planning (MRP) and enterprise resources planning (ERP) pursuits are worthless, antiquated and obsolete.”

Ironically, many of “latest and greatest” offerings are in reality information systems that are still built around an MRP core (in other words, ERP as we know it).

While MRP systems were originally created to meet the needs of manufacturers in a world considerably different from today’s “faster, better, cheaper” imperatives, it remains a fact that the software functionality first designed a half-century ago remains in widespread use and offers very real benefits.  Because the simple fact remains, as Turbide says so concisely: “Manufacturers still have to acquire materials and components, add value through the application of employee equipment and time, and sell and distribute the fruits of their labors.”

Not to say that MRP/ERP systems haven’t evolved.  Many of today’s systems offer extensive item drilldowns to quickly identify problems, as well inventory control and planning tools, even kanban replenishment or planning algorithms.  It’s software that’s evolved, to be sure.

But at the core of it remains… planning.  While software vendors have marketing initiatives that cause them to tout something new and different – and who can blame them? – these are not replacements for the tried and true.  And it’s confusing, as Turbide points out, to promote something as a replacement for an existing solution when it is inherently the same technology, evolved.

As we tell skeptical clients all the time: it’s not the software that matters most, it’s the advice and counsel and planning assistance that you and your provider or consultant(s) work on together that ultimately delivers the most bang for the buck.  There’s plenty of good software out there (we should know).

But the software has been around in its base form for decades.  The trick is: who can best help you implement it?

As Turbide concludes, the important message here is not to be distracted by labels and acronyms.  The planning tools manufacturers need are evolving and advancing, but the basics remain the same.

 

 

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When it comes to inventory and material planning, the goal of most manufacturing enterprises revolves around maximizing flow from production to customer, while minimizing the costs of doing so.  Easier said than done.

Lean proponents often opt for the “less is more” approach.  It sometimes gets accused of being anti-technology in its pursuit of waste reduction and the elimination of useless steps.  Lean proponents often view MRP and formal planning tools as inappropriate, transaction-intensive, and non-value added.

MRP proponents, being planning types, see it differently.  They believe that without the ability to see the full picture, companies leave themselves open to critical blind spots in planning that can lead to shortages, excesses, or ‘expedite’ situations, none of which are beneficial either to customer satisfaction or to improving a firm’s cash flow.

Is there a middle position that can reconcile the two? 

Our friends at APICS (The Association for Operations Management) recently sponsored an evening of information about “Demand Driven Planning,” courtesy of The Demand Driven Institute, chaired by Carol Ptak and Chad Smith, co-authors of Orlicky’s Materials Requirement Planning, 3rd Revised Edition.

With its primary objective to “protect and improve flow” the authors endeavor to bring harmony between Lean, with its emphasis on aligning efforts and resources as closely as possible with actual demand, and MRP, with its emphasis on providing visibility to the total requirements and planning across the enterprise.

Their hybrid approach yields an integration of Lean with MRP that in their view will help best determine:

  1. Where to place inventory to promote flow but minimize working capital;
  2. How to size and dynamically adjust strategic stock positions;
  3. How and when to replenish them;
  4. How to effectively see priority across the enterprise with respect to inventory and materials demand and supply signals.

Their solution, detailed in their book, migrates MRP (Material Requirements Planning) and DRP (Distribution Requirements Planning) from a style of “push and promote” to that of “position and pull.” 

The end result: a way to fuse relevant MRP/DRP tactics combined with the pull approaches of Lean and TOC along with innovations for better lead time compression and execution visibility.  As the authors note in a brief white paper (available from this blog free for the asking), “It takes Lean’s waste reduction focus and visibility for execution and combines it with a new set of demand driven planning tactics that provides unprecedented planning visibility across an enterprise and supply chain.”

You can download a free sample of the book at www.demanddrivenmrp.com  And you can a preview of the premise from their white paper, simply by commenting to this blog today.

 

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A recent article in APICS Magazine reminds us of the complexity of accurately and efficiently planning production in the manufacturing environment, whether you’re in a continuous or a batch environment.

As David Turbide, an independent consultant points out, traditional enterprise planning involves scheduling materials via Material Requirements Planning (traditional MRP) but seldom takes into account whether there is sufficient capacity to carry out the ultimate plan.

This “plan materials first, then check capacity” logic has been around since MRP was first automated in the 60’s.  Too often, conflicts between supply/production and capacity are detected, and changes are made on the fly, often made during or just before setup, and usually involving trade-offs of inventory vs. schedule disruptions or overtime.

The math to resolve this, if even available, is complex.  Rules that drive the process must often be broken, and blindly following rules seldom leaves every production need satisfied.  Besides, humans can still make better ‘special judgments’ than software when exceptions become the rule.

One effective solution comes courtesy from our old friend Donn Novotny, President of The Goal Institute.  Donn’s drum-buffer-rope (DBR) logic and the long heralded Theory of Constraints provide practical, real-world solutions to thorny production scheduling problems.  We’ll cover more of the basics in our next article, but you can find decent overviews here and here.

Donn, by the way — and many don’t know this — was actually the role-model for Alex Rogo, lead character in the seminal manufacturing ‘novel’ of the 1980’s entitled The Goal, which became one of the world’s best-selling business books ever.  We at PSSI have been friends with Donn (who lives nearby) for years, and have sponsored him frequently at customer events and seminars.  Donn and I are even members of a local consultants’ roundtable called the Business Improvement Group, and we’ve referred Donn to clients who faced the very kind of constraints that Donn is an expert at solving.

For those not familiar with these topics, we’ll highlight DBR and TOC approaches a bit this week.  One thing’s for sure: For every problem in business these days there is no shortage of people with proposed solutions.

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