PROBLEMS & EVALUATION OF MRP (MATERIALS REQUIREMENT PLANNING)
There are certain problems encountered in using MRP systems which we are listing below briefly:
1. Preparation of Master Production Schedule (MPS), which is realistic in the midst of uncertainties in market environment and non-availability of adequate lead time from customersâ€™ delivery of end products. Frequent changes in MPS aggravate the problem.
2. Maintaining accurate Bill of Materials (BOM) files: Changes incorporated in BOM by the design department should be communicated to all users of BOM.
3. In correct stock (inventory) status: A major problem is to know the correct status of all materials at all stages. In correct stock status results in an erroneous net requirement of materials.
4. Unrealistic lead times: Most crucial step in the MRP system which minimizes inventory is the time phasing of requirements and release of orders; advancing by the lead time required, so that, materials arrive just when required.
Problems in Designing the MRP system
1. Inadequacies of software chosen.
2. Deficient system design.
3. Improper and untimely information flow among various related department.
Solutions to overcome the above problems in the design of MRP system are:
1. Careful choice of software package to suit organizationâ€™s specific needs.
2. Careful planning of activities and scheduling.
3. Assigning work to competent man-power.
4. Continuous monitoring of progress against schedule.
5. Substantial education and training at all levels.
6. Involvement of users at the systems design stage itself.
7. Maximum attention at the stage of creating the database.
Problems in Managing the MRP system
1. Need for formal systems and role of systems.
2. Need for proper organization of functions viz., production planning and control, materials, production, quality, engineering etc.
3. Importance of proper appreciation of planning and control systems.
4. Timeliness of generating information required in managing the plant.
5. Effective communication system.
6. Proper motivation of people concerned with the implementation of the system.
7. Right leadership.
Evaluation of MRP:
The advantages of the MRP system over conventional inventory-planning approaches viz., fixed order quantity system (Q system) and fixed order-point system (P system) are
(a) Improved customer service,
(b) Reduced inventory levels and
(c) Improved operating efficiencies of production departments.
However, MRP systems cannot be used in all the production system. Conventionally, MRP is applied only to manufacturing system which process discrete products for which BOM can be generated. MRP is seldom used in service system viz., petroleum refineries, retailing systems, transportation firms and other non-manufacturing systems.
The production systems suitable for MRP should have the following desirable characteristics:
(a) An effective computer system.
(b) Computerized BOM files and inventory status file for all end products and materials with the highest possible accuracy.
(c) A production system that manufactures discrete products made up of raw materials, parts, sub-assemblies and major assemblies which are processed through several production steps or operations.
(d) Production processes or operations requiring long processing times.
(e) Short and reliable lead times for procurement of raw materials and components from vendors.
(f) The time fence for the frozen MPS should be sufficient to procure materials without undue expediting effort.
(g) Support and commitment of the top management.
MRP is more useful in process-focused systems that have long processing times and complex multi-stage production step=s. It simplifies production and inventory planning in process-focused systems by its ability to offset planned order receipts to planned order releases to account for long lead times for in-house processed items or raw materials and components purchased from suppliers.