MRP Inventory and Customer Service

Material Requirements Planning -MRP is sometimes called just in case inventory control, essentially, is production management of computers used for planning and inventory. (Vonderembse, & White 2013). The MRP approach is a dynamic part of the production process.

MRP is also a proactive method to control production planning and it allows efficient resource management even though it keeps the inventory to a minimum. As cited by Damand, Derrouiche, & Barth (2013), “MRP was introduced in the 1960s and “MRP has become an essential method and represents the production control core in enterprise resource planning” (p. 5658).

Big organizations use the MRP to control their inventory and shopper’s demand.  This is done by reducing the inventory and using a development timeframe to schedule their production which allows them to complete it by a certain time and keep a small amount of their inventory to avoid related costs for production. When a business is able to provide to its customers the products demanded in a timely fashion, a time an association is formed between the manufacturer and the purchaser. This process is mostly used by large firms.

In addition, MRP inventory preserves the lowest product, and even material levels possible. The system of identifying customer service to improve relations, engage consumers, improve productivity and provide feedback to leaders to implement changes, is a key role in the production planning and manufacturing process.

Companies control which goods to purchase, produce, and the volume; which is based on the customer product demand.

One of the first companies that use the MRP systems is Stanley Black & Decker. The global supply chain strategy for Stanley Black & Decker constantly operated 175% to reach specific inventory and complete products at distribution. Almost twice as much inventory is needed to conceal normal demand in their current business model. Inventory mistakes discovered include 75%, considered unnecessary inventory, and 32% is the result of a combination of line balancing for manufacturing efficiency, averment of capacity or supplier constraints known as pre-building and excessive planning effects relates to most MRP and advanced planning systems.  The focus and integration of Black & Decker process area is inventory optimization. The functionality of using this process is to merge the total physical value chain of raw materials to finished goods at the point of everything in between the sale. The process proficiencies and real demand variances at Black & Decker will grasp the lesser amount of total inventory while servicing and delivering to consumers. The improvement initiative identified at Black & Decker was steadfast as a rapid and effective method to resolve supply chain issues such as excess inventory and unsatisfactory fill rates.

Reference

Damand, D., Derrouiche, R., & Barth, M. (2013). Parameterisation of the MRP method: automatic identification and extraction of properties. International journal of production research, 51(18), 5658-5669. Retrieved from http://eds.a.ebscohost.com.proxy-library.ashford.edu/eds/

Vonderembse, M. A., & White, G. P. (2013). Operations management [Electronic version]. Retrieved from https://content.ashford.edu/

Respond to…

Explain how MRP can decrease a company’s inventory while improving its customer service level. Include a real-life example.

Material Requirements Planning or MRP is an approach used to calculate the amount of materials or inventory needed to produce a specific product. In other words, “the objective of MRP is to ensure that the correct quantities of component parts are available at the proper time to produce finished products according to the master production schedule,” (Vonderembse & White, 2013, Chap. 9.5). To use this system successfully, you need input from several different data files. Those files include the master schedule, the bill of materials and inventory records. From an inventory perspective, another method just in time or JIT is used in conjunction with MRP.

JIT utilizes a method where raw materials are brought in as needed for manufacturing of a product. This differs from traditional ways where raw material is brought in and stored then pulled from inventory as needed from the manufacturing side (Gubata, 2019). This methods helps reduce costs. Those costs can be associated with less space needed for storage or in labor, where less is needed to manage large volumes of stock on hand.

A real world example comes from my organization. We utilize a vendor for all shipping supplies. These supplies are custom made for our specific shipping needs. For our molded coolers, we order those weekly, according to a set schedule, so that we do not take up valuable warehouse space storing these. We could easily look at our monthly usage and order truckloads, so that we had these on hand, but the labor it takes to store and organize is not worth the effort. By having these deliver the week prior, most stay on the floor available immediately for shipping customer orders.

References

Gubata, J. (2019). Just-In-Time Manufacturing. Salem Press Encyclopedia. Retrieved from http://search.ebscohost.com.proxy-library.ashford.edu/login.aspx?direct=true&db=ers&AN=89163806&site=eds-live&scope=site

Vonderembse, M. A., & White, G. P. (2013). Operations management [Electronic version]. Retrieved from https://content.ashford.edu/