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Effective Material Requirements of Planning Activities

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Report on Effective Material Requirements of Planning Activities

Introduction
Material Requirement Planning (MRP) is a computerized inventory monitoring system

developed to help managers schedule and order items having dependent demands. Depending on

demand, components of completed goods, such as raw materials, constituent components, and

subsystems, rely on the manufacturing level of the end product. MRP is retroactive to a

completed goods production plan to determine component and raw material needs. MRP

commences with the plan of completed goods transformed into a program of needs for the

subsystems, components and raw materials for manufacturing the finished product in accordance

with the schedule established. MRP is made to reply to three queries: what is required? What

quantity is needed, and when is that required? MRP divides inventory demands into planning

periods so that production may be finished promptly while stock levels and associated costs of

carriage are minimized. This paper suggests recommendations to clients regarding the

optimization of business operations and presents a detailed report that clearly outlines key

components of MRP that recommend or caution against the installation of an MRP system.

Business Necessities

For the material planning to operational, there are business operating necessities that make it

feasible. They include the following;

 All the materials and products need to be in the store room and should be on stand-by for

production When there is lack of adequate resources and items in place, processing

requirements cannot be accounted for thus leading to delays in manufacturing and

customer displeasure.
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 Another feature is that inventory levels should be reviewed consistently to ensure that

volumes stay low. In as much as companies ought to have the potential to manufacture

goods as they are needed, they do not hope to have the excess In the event that the

intended product cannot meet selling expectations. By keeping with supply and demand

patterns, enterprises are able to maintain low inventory levels and save overhead

expenditures.

 Moreover, the management should organize and approve all parts of production

processes. It is therefore essential for the firm to organize and work out on the procedures

of production and schedule when the manufacturing process will take place in addition to

when they will be transported. The corporation needs to strike a balance between product

requirement and the inventory in a bid to generate more cash flow and to leverage on the

money they earn. This is the reason why without a suitable balance firms will

undergo unnecessary and superfluous costs.

 Furthermore, firms must ensure that supplies are ordered at the right time to prevent

production setbacks and from not meeting deadlines. Material requirement planning will

make it possible for production enterprises to develop and coordinate the production

schedules and to determine when and for which goods the materials need to be ordered.

Instances for Shortcomings and benefits

There are instances when the MRP ought not to be implemented as it will result in

shortcomings and also if executed and supported in a poor manner. They include the following;
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 An instance where there is lack of commitment by the senior management. MRP ought

not to be implemented if the executives are not educated enough on utilizing it as a

cohesive, strategic planning component.

 If the management considers MRP as simply a manufacturing systems rather than a

business plan, then it ought not to be implemented.

 Also when there is inadequate user training and education. Just about all research studies

indicate that the lack of training and comprehension is deemed to be major element for

not implementing MRP.

 MRP should also not be implemented if there is lack of technical expertise. This is

because this would fail to offer the leadership necessitated to execute the systems.

 The lack of high magnitude of accuracy for operation is another reason. One of the

purposes of the MRP system is to minimize the level of inventory. Therefore, if the

accuracy and precision of the recorded levels are not at par, then MRP ought not to be

implemented.

There are benefits of implementing or improving MRP in an organization. MRP systems

offer manufacturing companies a number of prospective benefits. The following is a list of key

areas that are anticipated to improve and advance through the implementation of MRP.

 Decreased overtime

 Enhanced customer service

 Diminished obsolescence

 Enhanced direct labor productivity

 Reduced inventory with less shortages or none at all and related carrying costs
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 Enhanced quality of life

 Having the numbers to operate the business

 Ascertaining the most reasonably priced lot sizes for orders

 Make it much easier to come up with fitting production schedule

 Computing quantities required as safety stock

 Increased profitability

 Reduced cash flows and lead times

 Tracking material requirements

 Apportioning production time amidst different products

Discussion on the selected items of expected improvement

Enhanced customer service .The functional areas that are constructively influenced by

this benefit are sales and marketing operations functions. There are data elements for ERP that

will serve as inputs and outputs of the MRP systems. One of them is complete order history.

After sales history is stored in the ERP system but this record of the manner in which orders are

actually completed is integrated to the MRP system.

In particular, this is beneficial to sales department, as it necessitated this information to

retail to the similar consumer incessantly. Another data element is available items in the

business; stock. More so, there is the data element of item sales history. This encompasses the

records of what all consumers are ordering at a particular time. Reduced inventory with less

shortages or none at all and related carrying costs. The functionality areas that are positively

impacted by improved or decreased inventory levels are the manufacturing, sales and marketing
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and operation functions. There are data elements for ERP that will serve as inputs and outputs of

the MRP systems.

One of them is the inventory levels. This delineates both the beginning and closing

inventory level. This is beneficial for the manufacturing and the production functions as it makes

it possible to ascertain what amount of product should be manufactured. Also, the sales and

marketing gets to know precisely what amount of products have to be sold before they become

obsolete.

There is the decreased procurement and purchasing costs. Diminished expenses for

procuring and purchasing have a positive impact on the manufacturing function and operating

function. Considering this improvement item, there are types of ERP information that can serve

as inputs and outputs of both MRP and ERP systems. Results to increased productivity. Save

time and increase productivity levels. It is not with ERP software’s automation and streamlining

capabilities. Often times, when tedious tasks take up much needed business time, there can be a

delay in production, which can affect your business and even the customer service experience.

By having redundant processes automated, users have more time to work on other time sensitive,

pressing projects and tasks that may truly require more of your attention and time. Users will

also be able to work easier since the solution was designed for ease-of-use. ERP was designed

with ease of use in mind, as well as giving business a break from long winded tasks, allowing

you to shift your focus toward other matters.

There is a cost savings. With every business, you want to be smart with your financials

and avoid making costly mistakes that could hurt your business in the end. With one source of

accurate, real-time information, enterprise resource planning software reduces administrative and

operations costs, allows businesses to utilize money in other, much needed areas. It allows
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manufacturers to proactively manage operations, prevents disruptions and delays, breaks up

information logjams and helps users make decisions more quickly. If you’ve chosen the right

solution for your business, and the right vendor who meets your needs, you’re bound to see a

powerful ROI. ERP software is available to help you become smarter about saving and spending

when necessary.

Summary on my thoughts.

MRP is especially suited to manufacturing settings where the demand of many of the

components and subassemblies depend on the demands of items that face external demands.

Demand for end items are independent. In contrast, demand for components used to manufacture

end items depend on the demands for the end items. The distinctions between independent and

dependent demands are important in classifying inventory items and in developing systems to

manage items within each demand classification. MRP systems were developed to cope better

with dependent demand items.