B2B Markeplace

So you’d like to improve your manufacturing company’s financial performance. You’ve looked around and heard a lot about MRP. There seems to be a lot of hype and claims on the surface. What will MRP software really do for the bottom line?

Currently, you run a company that consists of a massive amount of spreadsheets, reports and meetings. Even the material list of each part you make is on spreadsheet. This system you say has worked well. The spreadsheets are accurate, the reports seem relevant and everything goes along. Isn’t MRP just automated spreadsheets you wonder? Lets walk through the building blocks of MRP software and see.

Probably the main building block of any MRP system is the Bill of Material. Like the venerable spreadsheet, the Bill of Material contains all of the material needed for the job including raw material, components and sub assemblies. Also entered into the MRP software are job constraints such as time to make each part or each step, as well as an order quantity.

There are two important outputs from MRP; a material order, and a shop routing. Material orders are run at intervals and tell users when to buy materials for the job, along with other material for jobs in the system; allowing planned material buys, which prevent cash form being utilized before it is actually needed. This can happen daily with a few mouse clicks or even self-launching macro. So how does that compare to the spreadsheet world? You would start with all manufacturing personnel and their open order on their spreadsheet, and then the group would review jobs and compile a common material buy list. By running an open order report on manufacturing software, you can have the most up to date material buy list, with a fraction of the labor.

The Shop Router is probably the second most important output that MRP software creates. These can be formatted as simple as a sequential order of operations, combined with a material list, to a detailed step-by-step narrative, including comments to support manufacture and quality assurance. Then, when each step is completed, the necessary information is automatically reported in the system. This allows the job and due date to be tracked, and any shortages trigger actions to notify the customer or begin work to replace the shortage.

Again, lets compare this to the spreadsheet world; a job is put out on the floor with a (spreadsheet) router. The router is followed and the manufacturing process goes along. At each step, a daily log is completed, and brought to a production meeting. In many cases each job is then updated using this information by a data entry operator. Along with this is an exceptions log for fallout from the process. Time, delay and opportunity for error abound, not to mention all of the labor to back up the process.

So even if your spreadsheet form of production is accurate, the MRP process holds many opportunities to increase the accuracy of your reporting and reduce your costs.