Manufacturing Resource Planning

• Manufacturing Resource Planning is an integrated information system

that steps beyond first generation MRP to synchronize all aspects ( not
just manufacturing ) of the business.

• It abbreviated as MRP II to distinguish from MRP.

 Manufacturing Resource Planning
• MRP system coordinates sales, purchasing, manufacturing, finance, and
engineering by adopting focal production plan and by using one unified
data base to plan and update the activities in all the systems.
 Benefits of MRP II
FOR MANUFACTURING FUNCTIONS :
• Better Control of inventories
• Improved scheduling
• Productive relationships with suppliers
FOR FINANCIAL AND COSTING FUNCTIONS :
• Reduced working capital for Inventory
• Improved cash Flow through quicker deliveries
• Accurate inventory records
• Timely and valid cost and profitability
 Benefits of MRP II

FOR DESIGN/ ENGINEERING FUNCTIONS

• Improved design control
• Better quality and quality control
Manufacturing Resource Planning
 Purchasing Objectives
Materials management brings together under one manager all the planning,
organizing, and control activities associated with the planning, organizing, and
through an organization. Physical distribution is even broader, encompassing
managing materials flow of materials into and through an organization.
 Materials Productivity - relationships with
other measurements and activities:
• Improving materials productivity is one of the most direct and important
ways of enhancing added value.
• Gaining information on material losses can help in establishing general
data for production control and costing purposes, so providing the means
to improve the planning and control of production resources generally.
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• Material losses can be related to incentive payments and help to increase
their effectiveness
The importance of data in improving materials
productivity

• Usually where materials productivity has been improved considerably the

first step has been to record how much and at what stage in the
manufacturing process material loss occurs. Such information is often
entered in a 'data book' containing other relevant manufacturing
information, which is basis for standard costs.
Material losses mainly result from two causes:

• Technical losses - these are considered to be part of the production process (grinding,
pressing, cutting, trimming, etc).
• Operational losses - these occur during the process of manufacturing and can be due to
material quality defects, poor workmanship or machine/manufacturing deficiencies.
Information should be collected under these two main headings, as the approach to
improving materials productivity could be substantially different in each case. Problems
intrinsic to the production activities may require technical improvements to the plant.
Operational losses may emphasize the need for tighter control over production and
product quality than has existed hitherto and a systems approach may therefore be
appropriate.
 Purchasing Objectives

• The objectives of purchasing can be summarized thusly; to efficiently

provide fairly valued materials, supplies, and services in a timely manner.
 The following objectives are particularly
important to operations:

1. Good value: Value is the combination of price and quality. Good value means a competitive
price, though not always the lowest one.
2. Reliable schedules: One time, just in time delivery means schedules are reliable, a crucial
quality.
3. Minimized investment: Through careful analysis, the economics of order size, caring costs,
and stock out costs determine the investment level. For example, quantity discounts must
justify the larger investment (for a larger order) or investment unnecessarily increases.
4. Efficient administration: Included here are executing a low-cost purchasing function,
effectively coordinating activities with other internal functions (operations, engineering, etc),
and maintaining good relations with vendors.
 Effective Purchasing

• Effective purchasing means learning the purchase requirements,

identifying qualified sources of supplies, minimizing the total cost of
supplies and administering the purchase.
 Here are the top objectives of most
business's purchasing departments.
•Lower costs. This is by far the primary function of the purchasing department
•Reduce risk and ensure the security of supply
•Manage relationships
•Improve quality
•Pursue innovation
•Leverage technology
 
•The primary goals of purchasing are: Ensure
uninterrupted flows of raw materials at the lowest
total cost, improve quality of the finished goods
produced, and maximize customer satisfaction.
 Purchasing Principle
• Right Quality: Quality has been defined as the capability of doing a
certain thing or the power to satisfy a particular need. In other
words quality means the useful value of a specific thing for a
specific purpose to fulfil.
the four steps of the purchasing process

• 1 – Identifying need. The procurement process always starts with

the same component – need
• 2 – Supplier evaluation and selection
• 3 – Purchase order
• 4 – Delivery.