erp 101: mrp - step through an overview of this vital erp subset
TRANSCRIPT
ERP 101MRP – ERP’s Material Planning ToolDavid BushSenior Manufacturing Consultant,Rootstock
The ERP 101 Webinar SeriesDate Topic
Aug 2, 2016 An Introduction to ERP for Manufacturing
Aug 16, 2016 Engineering – Learn how to create Part Master Records and Bills of Material
Aug 30, 2016 Engineering – Learn how Change Orders and/or Revisions ensures that ERP system data is accurate and up-to-date
Oct 11, 2016 Shop Floor – Explore how ERP is used to create and maintain Work Centers, Routings and Procedures
Nov 1, 2016 Shop Floor – See how scheduling the Shop Floor through ERP controls Labor and Machines
Nov 29, 2016 Procurement – Link your Vendors and Purchased Parts via ERP
Dec 13, 2016 MRP – Step through an overview of this vital ERP subset
Jan 24, 2017 Work Orders – The starting point of manufacturing
TBA Inventory - Maintaining Accurate and Reliable Data
TBA Sales – See how you can link your Customers and Products via ERP
TBA Manufacturing Accounting – An overview using standard cost
TBA Manufacturing Accounting – An overview using weighted cost
Meet Our SpeakerDavid BushSenior Manufacturing Consultant, Rootstock• 30+ years of manufacturing and MRP/ERP
systems experience• Previously at General Microcircuits,
Consona Corporation, Relevant Business Systems, Inc
A Quick Recap• Our first webinar discussed the differences
between MRP and ERP– MRP came first, many years prior to ERP– MRP was designed primarily for material
planning…ERP expanded on that.– ERP absorbed MRP and still uses it.– MRP requires information from across the ERP
system– MRP mimics thinking process of a planner
Today we will see how that information is gathered and used by MRP
The Bigger Picture Revisited
Material Planning WITHOUT MRP• Spreadsheets are used to track material supplies and demands.
Data includes:– Current Inventory Levels– Current Demands – Future Demands– Re-order points
• Planner calculates actual demand over time• Open supply orders considered• Open demands then deducted from inventory and supply orders to
determine necessary actions:– We’re ok– Uh oh… about to run out– Uh oh… we have way too much!
Done for every active part on the system.. .PFEW!
Let’s look at an example
Example of Manual MRPBicycle handlebar assembly• BOM called for 1 handlebar assembly per 26”
bicycle.• Planner finds 10 handlebar assemblies in
inventory.• Open work order will bring 2 more into inventory.• Unreleased work order for 5 26” bicycles will
need 5 handlebar assemblies.• New sales order for 15 26” bicycles will need 15
handlebar assemblies.
How will the planner use all this information?
Let’s Do the MathMaterial we HAVE
Inventory: 10
Work Orders: 2
Total: 12
Delta
Have: 12
Need: 20
Difference to be reconciled: 8
Material we NEED
Open Work Order Demands: 5
New Sales Order: 15
Total Requirements: 20
Is that all there is to consider?
Even More to Consider• Is there an economic order quantity (EOQ) that
needs to be considered when ordering this part?
• Have changes happened since I last reviewed this part (cancelled or changed orders, f/e)?
• Is the item used anywhere else that could impact the quantity I need?
• Are there any other factors to consider, like scrap or spare parts requirements?
It’s a lot to keep in mind, so how does an ERP system handle all of this?
Data from Previous Webinars used by MRP
• Bill of Material Quantity Per• Bill of Material Scrap Factor• Open Purchase Orders
But much more information is needed… what is it and where does it come from?
Additional Information held by the ERP System
• Inventory– On hand, hold, allocated
• Forecast– What do I THINK I will require over the future?
• Order Modifiers– Information that helps me determine how much I need to
order, lead times, inspection requirements, etc.
Let’s take a look at the Rootstock Inventory Item Master to see how some of this information is stored for use by the MRP engine.
The Inventory Item Master
• Holds data uniquely required for purchasing.– Direct, Indirect and Service Items.
• The header holds both – the source (where do we get this?) and – the unit of measure (how do we keep it in inventory?)
• Additional Information is still needed.
Inventory Item Master MRP parameters
• Planning Policy… how do we determine the quantity to order?• Maximum/Minimum quantity for a single order (work or purchase order)• Is there a safety stock requirement?• What is the yield factor and does it pertain to this item?
Quantity by Location
• Where is my inventory located (division and site)• Within THIS division/site, what is the physical location number and ID where I
store this item?• What quantity is in this location?
More information about this part is held within the ERP system, but we have enough to calculate requirements at this point, so let’s run MRP!
Running the MRP Engine
This is the easy part! • All the data has been collected and entered into the ERP system.• Select how you want to run MRP.. For all items, by project or for re-order point items.• Click ‘Run MRP Now’ and watch the process unfold in the MRP status area below.• Results are found in several areas.. Suggested work orders for manufactured parts, purchase requisitions for
purchased parts, MRP action messages for issues uncovered during the run.
MRP has done the work, leaving the system users time to plan, negotiate, troubleshoot and review.
Where Do We Go From Here?We’ve covered the manufacturing (material and labor) sides of ERP, and, today, the MRP function. Here’s what is coming:
• Order Entry – Feeds the ‘demand’ side of ERP– Maintains customers, products, orders, etc
• Work Orders. – Typically created by MRP, work orders are SUPPLIES of manufactured items
(subassemblies and final assemblies) needed to satisfy customer requirements.– Work Orders provide MRP and Capacity planning ‘demands’ on the system for
materials and shop floor capacity.• Inventory
– Maintains current balances of direct material– Provides means to issue material as needed to work orders and subcontract
purchase orders.
And much more…..
The ERP 101 Webinar SeriesDate Topic
Aug 2, 2016 An Introduction to ERP for Manufacturing
Aug 16, 2016 Engineering – Learn how to create Part Master Records and Bills of Material
Aug 30, 2016 Engineering – Learn how Change Orders and/or Revisions ensures that ERP system data is accurate and up-to-date
Oct 11, 2016 Shop Floor – Explore how ERP is used to create and maintain Work Centers, Routings and Procedures
Nov 1, 2016 Shop Floor – See how scheduling the Shop Floor through ERP controls Labor and Machines
Nov 29, 2016 Procurement – Link your Vendors and Purchased Parts via ERP
Dec 13, 2016 MRP – Step through an overview of this vital ERP subset
Jan 24, 2017 Work Orders – The starting point of manufacturing
TBA Inventory - Maintaining Accurate and Reliable Data
TBA Sales – See how you can link your Customers and Products via ERP
TBA Manufacturing Accounting – An overview using standard cost
TBA Manufacturing Accounting – An overview using weighted cost