Material requirements planning challenges and implementation issues

Operations & Quality management

Operations and quality management

Material requirements planning, or MRP, as it is more commonly referred to, is an integrated effort aimed at planning and controlling production and inventory. Its specific activity is that of informing suppliers of what items are required and when exactly these would be needed. Its emphasis falls on efficiency, deliverability and manufacturing activities, and it is one of the most commonly used business tools (Institute for Manufacturing).

While MRP is highly popular due to the advantages it creates, it can also cause a wide array of issues for the parties using it. On the one hand, there could be issues felt by the supplier and associated upstream in the supply chain processes. Then, there could be issues of the impacts felt by the companies and related to the quality and delivery problems of the suppliers.

In the first instance, there is the risk of inadequate planning times. Specifically, the time frames used through the MRP application are given by the user and computed based on the other variables introduced. This virtually means that the time criteria is influenced, and not set as required by the deliverability standards (Advanced Planning, 2012). Such a situation would create severe upstream problems in the supply chain as the suppliers would only be able to estimate the necessities, rather than to actually pin point them and deliver in time (SM Thacker and Associates, 2011).

At the level of the company collaborating with suppliers that use MRP, an important problem to be felt is represented by the lack of planning support. Specifically, the MRP processes are mostly software based and they provide the users with adequate support for processing orders, handling the data and managing the inventory. Nevertheless, they do not provide any support for planning (Advanced Planning, 2012). In such a setting then, the issue encountered by the company would be that of an inability to plan ahead the inventory and the supplies. In other words, it would become very difficult for the firm to quickly and efficiently identify all the materials it would require in the future. This subsequently means that the firm might encounter delays in accessing the materials, and eventually delays in honoring the orders, the potential loss of customers and the inability to sustain organizational revenues.

Student 2

Material requirements planning is a primarily software tool used by economic agents across the globe to generate data-based support for their manufacturing and inventory operations. While the process is widely recognized and used within the international business community, it is also characterized by a wide array of shortages which influence both the suppliers, as well as the company purchasing from the respective purveyors.

One example in this sense is represented by the high cost of operating the MRP. In this setting, the software system associated with materials requirements planning is often expensive and as such only accessible to large size companies, with increased budgets. This means that it would be necessary for both provider and company to invest large amounts of money into the system and only use it with compatible business partners.

Then, another shortage associated with the MRP system is that its utilization requires increased skills and technical knowledge on the part of the operators (ERP Software, 2010). For both supplier and company, this request materializes in increased costs and initially decreased efficiency, up to a point when the usage is fully understood and applied by the staffs at the two firms. In this setting then, MRP appears as restrictive and only applicable to a specific part of companies.

Student 3

Despite the numerous advantages it possesses, MRP is also restrictive and reveals a wide array of disadvantages for both the supplier as well as the company. Some of the more notable of these problems refer to the following:

MRP is only applicable with highly accurate information. Only a slight inadequacy can result in information being misplaced, misused, overstocked, lost, understocked or used in an inadequate situation

The schedule of production has to be strict and then it is important for the companies to stick to it. The slightest change in the schedule would result in the influencing of the time deliverables, which are highly sensitive

The MRP systems require significant investments from both supplier as well as company, meaning as such that not all economic agents afford them

The MRP systems are often difficult to set up and generate additional operational complexities and inefficiencies

Last, there exists the possibility for the response of the employee to the MRP systems to be a negative one, but also for the inventories to not be adequately managed, if they are also stored within different departments (Brinlee).

Part B

Student 2

The employees at the organization are generally unwelcoming of the executive decision to shift the focus from cost leadership to customization of the products. This would require increased time as well as additional efforts on the part of the employees to actually complete and deliver the customized processes. In this setting then, the employees believe that they would have to work more in order to sustain the same volume of output.

In such a context, the managerial team has to devise and implement a new reshaped organizational culture through which to change the perception of the employees towards product customization. In this setting, the following steps are recommended:

Understanding the current culture of the firm, as well as the new culture that would be implemented and assessing the differences between the two as objectives to be attained

The creation of a new organizational vision

The creation of a new plan for the desired organizational culture, and its implementation

The communication of the plan to the employees

The insurance that the organizational staff members change their behavior according to the new culture (Heathfield).

References:

Brinlee, D., MRP inventory management, Inventory Management, http://www.askdeb.com/inventory-management/mrp / last accessed on February 7, 2012

Heathfield, S.M., How to change your culture: organizational culture change, About.com, http://humanresources.about.com/od/organizationalculture/a/culture_change.htm last accessed on February 7, 2012

Johnson, R.W., Phased retirement and workplace flexibility for older adults: opportunities and challenges, Focus on Workplace Flexibility, http://workplaceflexibility.org/images/uploads/program_papers/johnson_-_phased_retirement_and_workplace_flexibility.pdf last accessed on February 7, 2012

Reh, F.J., Managing change: managing people's fear, About.com, http://management.about.com/cs/people/a/MngChng092302.htm last accessed on February 7, 2012

2010, ERP software history -- disadvantages of MRP and emergence of ERP, ERP Software, http://www.erpsoftware411.com/erp-software-history-disadvantages-of-mrp-and-emergence-of-erp / last accessed on February 7, 2012

2011, Material requirement planning, SM Thacker and Associates, http://www.smthacker.co.uk/MRP1.HTM last accessed on February 7, 2012

2012, MRP -- a planning system? Advanced Planning, http://www.advanced-planning.eu/advancedplanninge-342.htm last accessed on February 7, 2012

Customer focused low cost leadership strategy, Alagse, http://www.alagse.com/strategy/s10.php last accessed on February 7, 2012

Materials requirements planning (MRP), Institute for Manufacturing, http://www.ifm.eng.cam.ac.uk/dstools/process/mrp.html last accessed on February 7, 2012