mrp in services & erp

MRP IN SERVICES

María Ayuso

Carmen Delgado

Ana Parias

OPERATIONS MANAGEMENT II

-relates all the activities in a company to customer demands.

-manage all the resources in a company by using MRP logic & data processing

• MRP:

• Nature of Demand:

o Independent demand: of an item that is unrelated to the demand for

other items. (e.g. finished goods, parts required for destructive testing,

and service part requirements)

o Dependent demand: is directly related to or derived from the bill of

material structure for other items or end products. Such demands are

calculated and need not be forecasted.

A given inventory item may have both dependent and independent demand at any

given time.

For example: a part may simultaneously be used as a component of an assembly and

also sold as a service part.

PREVIOUS KNOWLEDGE:

- Usually, those services require trees of the product structure.

- MRP can contribute significantly to the operating management of these services.

1. RESTAURANTS

· Meal common components are complementary ingredients.

Like bread, vegetables and condiments.

· These components depend on the demand of food.

· In the plan food is seen as a finished product.

EXAMPLE:

Preparation of Veal Picante, a very important meal for the restaurant

DEMAND IN SERVICES?

Tree of the product structure

1. RESTAURANTS

Bill of labor

Bill of materials

1. RESTAURANTS

2. HOSPITALS

• Especially when we talk about surgery that require teams, materials and known

provisions.

• Many hospital suppliers use this tool to improve inventory programming and

administration of costly surgery materials.

3. HOTELS

• When renewing each of its rooms, Marriot Hotels develops a Bill of materials

(BOM) to calculate materials, furniture and decoration requirements and a

structured list of labor

• After that, MRP provides net requirements and a program can be used by the

sales and HHRR departments.

Times for the aircraft arrival

(X) and departure (Y)

SCHEDULED

Marshaling services (A):

Performed at

PREDETERMINED

TIMES. The other services

(B, C, D, E) can be scheduled

between the earliest start

time (EST) and the latest

start time (LST)

Services Flow Chart

INTERNATIONAL AIRPORT SERVICES

EXAMPLE OF MRP IN SERVICES:

* We now create a “service master file”:

** Structure of the services:

Service-time of a service = Its

duration

The Offset Time (OT) and

Quantity-Per (QP) determine that 2

lavatory trucks are required during a

period of 2 consecutive time buckets.


*** The data structure of the Bill Of Service file:

Focusing on Toilet Cleanning Service, the Offset Time

(OT) and Quantity-Per (QP) determine that 2 lavatory

trucks are required during a period of 2 consecutive time

buckets.


MRP procedure:

• Services have neither inventories nor scheduled receipts as in the cases of

manufacturing. Services must be provided at the moment when customers use

them : In the MRP calculation procedure Gross Requirements = Services that

customers need.

• Since there is no on-hand or on-order inventory Net Requirement = Gross

Requirement.

• Only two rows remain in the MRP reports. MRP is now renamed as Service Requirement Planning and the rows are named “required” and “scheduled”.


DISTRIBUTION RESOURCE PLANNING

(DRP)

When techniques to face dependent demand are used for the supply chain, we call it

Distribution Resource Planning (DRP). DRP is used to develop a stepped plan of

inventory replenishment for all the levels of the supply chain.

Procedures and logic DRP are analogic to MRP. With DRP, the expected demand

turns into gross requirements. This net requirements are determined when assigning

the available inventory to the gross requirements.

DRP process starts with the forecast at the retail sales level. As in MRP, after this,

inventory is reviewed to satisfy the demand. This way the inventory will be able

when needed and the net requirements will be compensated with the delivery time

needed. The planned exemption quantity of orders turns into the total requirement

of the inferior next level of the supply chain.

DRP controls inventory through the system. This process starts at the level of the

retailer that orders more products. Assignations are done in the highest level from

inventory and production available.

Effective use of DRP requires an integrated information system to quickly

communicate orders among levels.

The objective of the DRP system is to replenish inventory in small quantities and do it frequently.

MRP

System

· Is an information system

· Used to plan and identify the wide business resources needed to take,

process and account client orders.

· It is a software which eases companies automatize and integrate many of

their business processes, share a common database and the commercial

practices of the company and produce information on real time.

ENTERPRISE RESSOURCES PLANNING (ERP):

Technological enhancements

Open systems platforms

Client/Server architecture

ERP

Plans the allocation

of manufacturing

resources

Other resources

and has applications in

service as well as

manufacturing industries.


· Is an extension of the MRP system to tie in customers and suppliers

1. Allows automation and integration of many business processes

2. Shares common data bases and business practices

3. Produces information in real time

· Coordinates business from supplier evaluation to customer invoicing

· ERP modules include

- Basic MRP

- Finance

- Human resources

- Supply chain management (SCM)

- Customer relationship management (CRM)

Table 13.6

Bills of Material

Work Orders

Purchasingand

Lead Times

Routingsand

Lead Times

Master Production Schedule

Inventory Management


MRP


Customer Relationship Management

Invoicing

ShippingDistributors,

retailers,and end users

Sales Order(order entry,

product configuration,

sales management)

Supply Chain Management

Vendor Communication(schedules, EDI, advanced shipping

notice,e-commerce, etc.)

Table 13.6

Finance/Accounting

General Ledger

Accounts Receivable

Payroll

Accounts Payable


· ERP can be highly customized to meet specific business requirements

· ERP systems can be integrated with

- Warehouse management

- Logistics

- Electronic catalogs

- Quality management

Flows of information of MRP and ERP that

show the administration of the relations with

the client (CRM) the administration of the

supply chain (SCM), and finance and

accounting.


· Together with date integration, ERP software assure transaction cost reduction and more precise and quicker information.

The strategic importance of just in time systems and the narrower relationship among suppliers and distributors makes ideal the integration of the whole company.

EXAMPLE: NIKE

In an ERP system data is introduced only once to a shared database, complete and consistent:

Production personnel starts working the order if there’s no inventory, accounting area prints the bill, and loading area notifies to Foot Locker the delivery date.

These data is immediately available in

the thousands pairs of shoes for Foot

Locker plant.

When a vendor of Nike introduces into his

ERP system an order of 20 thousands

pairs of shoes for Foot Locker


EXAMPLE: NIKE

The vendor, and also the client can verify the order progress in any moment.

However, to reach this level of sense, date fields must be defined in the same way for the whole company.

In Nike’s case, this means to integrate operations in the production places in Vietnam, China and Mexico, in the business units of the world:

- In different currency

- And with reports in many languages.


· Each ERP vendor offers unique products.

· The main vendors, SAP AG (German Company), BEA (from Canada), SSAGlobal, American Software, People Soft/Oracle, CMS Software (from the US), sell software of modules designed for specified industries. Here we see a group of modules of SAP:

ADVANTAGES & DISADVANTAGES OF ERP

Advantages

1. Provides integration among the supply chain, production and the

administrative process

2. Creates shared databases

3. Can add improved processes, redesigned or “the best processes”

4. Increases communication and collaboration between sites and business units

5. It has a software database with commercial code

6. Can provide a strategic advantage above competitors

ADVANTAGES & DISADVANTAGES OF ERP

Disdvantages

1. It is very costly to buy but even more to customize

2. Its implementation can require important changes in the company and its

processes

3. It is so complex that many companies are not able to adapt to it

4. Its implementation entails a continuous process that maybe never ends

5. ERP experience is limited and assign personnel to it is a constant problem

ERP IN SERVICES

• Wealth care, government, retail shops and financial services.

• Hotel market - software that manage all customer service and

administrative functions

• client history, take reservations of the rooms and restaurants, programming

the times of a golf match and also administrate all the properties of a chain.

• PeopleSoft/Oracle - ERP with the administration of the supply chain to

coordinate the preparation of food for airlines

• Efficient Consumer Response (ECR) - administration system of the

supply chain that link purchases with sales, inventory, logistic and

production.

mrp in services & erp

Business