MRP II (Manufacturing Resource Planning)

OBJECTIVE

■ What is MRP II
■ Development of MRP II
■ Functions involved
■ Benefits of MRP II
■ Problems faced
■ Case study
 MANUFACTURING RESOURCE PLANNING
[ MRP-II ]
■ Manufacturing Resource Planning is a method for
the effective planning of all the resources of a
manufacturing company so as to optimize the
prime task i.e. manufacturing/improving
profitability.
MRP II – The need!
■ Why has it evolved?
■ Why is it necessary?
 DEVELOPMENT OF MRP-II
■ 1960’s - Purchase Order Scheduling System was
developed from the modification of planning packages
and files, that contain costing information.

■ Late 1970’s - a Manufacturing Information System was

developed utilizing detailed production requirements, a
master production schedule, a bill of materials, lead
times, batch sizes and included feed back from the “shop
floor”.
 Continued….
■ The earliest packages were known as Materials
Requirements Planning (MRP) packages and focused only
on material inventories and the purchasing function.

■ The later, more sophisticated packages, were known as

Manufacturing Resources Planning (MRP II) packages and
incorporated capacity planning and the scheduling of
production operations.
 Comparing MRP and MRP-II
■ Essentially MRP aids the planning and control of materials
whereas MRP-II integrates the planning and control of
men, materials and machines in one comprehensive
computer based system.

■ MRP II systems are much closer to the ideal of Computer

Integrated Manufacturing (CIM) as they integrate many of
the businesses' functions through the medium of
computer technology.
 Continued….
■ Both MRP and MRP II are “demand-push” systems
in that an initial production forecast is created and
then a manufacturing plan and purchase and/or
work orders are developed to meet its
requirements. Thus forecast demand “pushes” the
manufacturing of products through the generation
of work orders.
OPERATION OF MRP-II SYSTEM
■ BUSINESS PLANNING
■ SALES PLANNING
■ MASTER PROUCTION SCHEDULING
■ MATERIAL PLANNING
■ CAPACITY PLANNING
■ EXECUTING CAPACITY PLAN
■ EXECUTING MATERIAL PLAN
■ VENDOR PLANNING
■ SHOP FLOOR CONTROL AND PURCHASE PLANNING
CONTROL.
Business planning
■ A MRP system is ultimately driven from a
master business plan that establishes a sales
forecast of what a company will sell and
when.
■ Long time vision.
■ Defining the type of business and product.
■ Strategy for the type of market and consumer.
■ Analyzing the self-sustainability of the business.
 Sales planning
■ The business plan is reviewed on a regular
basis, using data derived from the MRP system,
in sales planning meetings.
■ Using sales record (even competitor’s) for sales
forecasting.
■ Extensive market study.
■ Reviewing R & D plan and marketing strategy.
 Master production scheduling
■ The MRP-II system uses the MPS as a base point for
calculating net demands, both in terms of materials and
times, for each item of inventory. The system generates a
series of recommendations suggesting what should be
produced and when. These recommendations will then be
examined to look for any anomalies and to ensure that
the recommendations are achievable and reflect agreed
production plans. The status of key items can also be
monitored very closely by the scheduler during this stage.
 Material requirement
■ The requirements from the MPS are “exploded
back” through the BOM files that break down a
product into its constituent parts. The net
requirements are then generated by deducting
available inventory from gross requirements.
Vendor lead times are incorporated and any
purchase orders scheduled to meet the material
requirements.
 Capacity planning
■ MRP II systems also have a capacity
planning module that can help to ensure
that production is balanced and capacity
is not exceeded.
 Execution of capacity plans
■ The system will generate the work orders
required to fulfill the schedule. As orders
are fulfilled and capacity becomes free the
associated databases are updated so that
the system can maintain an up to date
picture of the state of production.
 Execution of materials plan
■ Finally the system will generate the
purchase orders required to fulfill the
schedule. As the orders are fulfilled and
material used the associated databases
are once again updated.
 MRP-II tools
■ Use of computer technology and
database management systems.
1. Product database.
2. Inventory (stock) database.
3. Orders database.
4. Manufacturing plant and employee
database.
BENEFITS OF MRP II

■ Excellent planning capabilities.

■ Centralization and coordination.
■ Simulation capabilities.
■ Greater discipline.
■ Greater transparency.
■ Better cash flow planning.
■ Increased customer responsiveness.
■ Reduction in cost and space.
Problems associated with MRP II
■ Underdeveloped management system.
■ Lack of top management commitment.
■ Lack of awareness.
■ Inaccurate data.
■ Over sophistication.
■ Resistance to change.
 Case study
■ Case study of successful MRP II implementation
at the Barden Corporation in Plymouth, England.
■ Barden is a part of the German FAG
Kugelfiscergroup and make high precision
bearings for applications such as high precision
machine tool spindles, aerospace and other very
demanding applications.
Cont….
■ Implemented the SAP R/3, during the
first week of October 1998.
■ IMPROVEMENTS:
1. Inventory record accuracy.
2. Bill of material.
3. Purchasing.