Manufacturing Organizations used re-order point system till 1960 to regulate their stocks and shares. Whenever the stock fells to a specific quantity they were reordered resulting large numbers of inventory.
During sixties customers become more demanding, competition between the firm and the interest increases. The upsurge in interest creates serious financial problem for company because large amount of money tangled up in inventory. This made organizations understand to improve their system to gratify the requirements of customer and to control inventory level.
The two main troubles faced by supply string management in recent were scheduling of product and difference between centered and impartial demand (a demand which is not predicated on the demand of other is 3rd party demand while a demand which is dependant on the demand of other item would depend demand) resulting the higher level of inventories which was increasing the total cost of business.
MATERIAL Necessity PROGRAM (MRP)
In order to differentiate both of these types of demand and well-timed supply of goods MRP (Materials Need PROGRAM) was created.
MRP is used to control timely delivery of the components and the organic material required in the development of the final good.
The main function of MRP system is
1. Inventory control
2. Bill materials processing
3. Elementary scheduling
MRP will answer what, when and how much will be necessary for manufacturing the final product.
Many small companies are employing Microsoft excel to control their processing process instead of MRP software which are made to perform such jobs.
Manufacturing, purchasing, delivering are also managed by MRP program.
ADVANTAGES:
COST:
Raw materials inventory and component inventory are reduced by using MRP system. Lower level of inventory reduces the inventory taking cost.
EFFECTIVE PURCHASING:
Purchasing becomes more effective by using MRP. It decides the actual fresh material or part material needed to acquire for final product.
IMPROVEMENT IN PRODUCTION PLANNING:
Production planning will improve by using MRP system. It identifies the lack in inventory therefore the manufacturer changes the creation resources to the creation of other items which are readily available.
PRODUCT PRICES:
It reduces the cost of production so the business competitively prices their products.
PROBLEMS IN MRP:
MRP system is highly costly and there are many technological complexities in putting into action it.
It is very time consuming.
Considerable inputs are required for data accessibility and record maintenance.
Forecasted principles can be misleading.
Late deliveries from distributor as a result past due deliveries to customers resulting large number of complains.
MANUFACTURING RESOURCE PLANNING (MRPII)
In material requirement program it isn't possible to get opinions from customers or production personnel only strategies are sent to them because of this it was not possible to adjust the plan to keep carefully the program valid, it was assumed that infinite capacity was available and suppliers always provided raw material promptly and correct for example
Time for good may be differ because of problem in machine or past due delivery from company, goods are damage etc
Manufacturing source of information planning is an prolonged version of MRP which includes strategic processing and business processes such as
1. Material necessity planning.
2. Accounting and distribution.
3. Ordering
4. Tracking of inventory.
5. Ensuring the capacity.
6. Forecasting the demand.
7. Tracking the quality.
8. Employees attendance recording.
9. Contribution and production of labor.
10. Managing demand and offer.
MRP II has greater impact then MRP on business operations and peoples. Developing resource planning moves several steps further then material requirement program. Throughout the manufacturing process to the shipment of good are incorporated in MRP II.
ADVANTAGES:
Inventory is control to greater extent than early on.
It escalates the productivity.
Performance of distributor increases.
Reduce purchase cost, stress and expediting.
Timely delivery of good enhances the satisfaction of customer and reputation of organization.
DISADVANTAGES
MRP II is complicated and requires accurate data implementation.
Lot of commitment is required to set an effective MRP II.
If any unpredicted variance occurs planning process may also be started again from starting.
Its require determination at all degree of organization.
ENTERPRISE Source PLANNING
Enterprise reference planning (ERP) systems combination external and internal management facts and characters across complete company including accounting, manufacturing, fund, sales and service, customer marriage management, etc.
The thing of ERP is to permit the motion or stream of information internally and externally in every business functions.
In today's global market rising demand of customer has dramatically reduced margins of company. To be able to meet the requirements of customer manufacturer should have all necessary information on everything from shop floor scheduling, supply chain inventories, planning of creation, data on customer demographics and interest. It is now turn into a requirement of global supply chain management to collect, analyze and share these details for a supplier.
In order to provide awareness to customers and achieve reliable and effective use of manufacturing assets a enterprise learning resource planning is very helpful. Managing inside business procedures through ERP gives competitive gain to manufacturers. To contend in global market, it can be an operating platform for every manufacturer. It really is a fast course for company to reduced cost, increase the acceleration of work and improve transparency that rises profitability and customer satisfaction.
ADVANTAGES:
DEVELOP BETTER CUSTOMER UNDERSTANDING:
In today's global world to make strong and a long term relationship with customer you will need to understand your customer, you ought to have complete knowledge of customer, you have to know all the problems and really should know the demand of customers for long-term romantic relationships with customers. This means that you keep up full view of your visitors.
ERP system enable manufactures to look tactical order fulfillment and also have a better understanding of customer needs for improved products and services. It will help the business to increase their revenue and its offering.
It will identify:
What will be the purchasing habits?
Are orders being driven larger to customers?
Are our demand is increasing or lessening that we must respond to?
Attain global view in a demand lively supply string:
To provide excellent customer support and optimize in inventory investment in an age of troublesome cost management for manufacturers, is very critical. Additionally it is important to provide customer with presence into inventory and option of product. To improve plan for re-supply and creation in critical condition it is very important to learn when and where inventory is needed. To take action, they must have complete information of inventory and ERP system can provide them complete information of source chain.
Lean manufacturing, universal sourcing, and provider integration:
Now a times it is vital for a company to manage the lowest possible cost to get competitive advantage, by using ERP system producer can efficiently manage their manufacturing cost.
Locating the best distributor is also very very important to business practice it requires a complete data source of supplier that makes a manufacturer to determine that any opportunities are present for lower costs. The existing technology of ERP makes it possible; it offers all real-time production data exchange with suppliers and operations that ensure lean operation.
Managing for advanced performance:
Today involved ERP systems include business analytics that allow management to standardize metrics over the firm and supervise creation and profitability. Whatsoever level of group it will provide actionable information to all or any employees and it will bring speed with their work and help these to make quality decision.
DISADVANTAGES:
Cost:
ERP applications are incredibly expensive and not affordable by small companies; only big companies find the money for ERP system. It could also require modifying the inner infrastructure of a business, so that it will improve the execution cost.
TRAINING:
It will be necessary for an organization to train their employees which means increase in expenditure to acquire an efficient ERP system.
Time:
It is not particularly time consuming task, however in order to use ERP system effectively it's important that all the employees are correctly trained it could requires a time otherwise the whole ERP system will be inefficient and the utilization of money and time will maintain vain.
Efficiency:
When ERP system will use correctly it'll raise the efficiency of a business but through the training period the efficiency of corporation might put up with.
Customization:
ERP systems entails a lot of time in customization or either they aren't customizable. They require other software's for customization which may make the processes complicated.
Conclusion:
MRP, MRP II and ERP have same purpose of controlling inventory, cost, creation, tracking all inner process inside a company and gratify customer needs. They provide several benefits for a corporation however it takes a complete training of worker to get all benefits associated with these technologies.
