Initial assessment of MRP system for possible problem areas

The statement of the problem assigned to us was ROP generated by MRP software contains excessive/unwanted items.

The problem related to systems operating on a set of inputs and generating the corresponding outputs is best tackled by analyzing the inputs first. Assuming that there is nothing wrong with the planning system in this case the MRP software COMET, the problem must lie with the inputs hence generating unexpected outputs.

BOM MPS INVENTORY DATA

MRP
Figure 1

Figure 1 shows the key inputs to the MRP system. The primary output is the schedule of the replenishment orders i.e. their timing and Quantity.

The ROP generated here at KSB is sent to Procurement, Foundry and Production. Some possible problems are listed and discussed in this report under the separate headings of the inputs.

1. Integrity of the Inventory Data: One of the most important inputs to the MRP system is the inventory data and its integrity greatly affects the outputs of the software. Materials related to the items that are already delivered to the customers need to be updated on a regular basis and if possible the gap between each update must be short. If the inventory data isnt updated soon enough the shortage or excess of material may not be reported on time and the net requirements of materials in the MRP may not be calculated correctly.

2. Bill of Material (BOM): Companies incorporate design changes in a certain product according to customer requirements or any other factor. e.g. a change of coupling in a certain pump type. Now the problem arises when these design changes are not accounted for in the already existing BOMs. This may result in an order generated by MRP for a certain item that is no longer used in the latest assembled product. This results in delays and missed deliveries. Along with that inventory gets stocked with unnecessary items hence wasting companys money. To get over this problem BOMs need to be verified by physical inspections and getting latest BOMs of the product using CAD software.

3. MPS: For the output of the MRP software to be accurate the independent demand of the end product and its time of delivery and quantity must be specified correctly in the MPS. Orders that have been already delivered must be removed from the MPS as soon as possible. Sales department needs to update the material planning department about the deliveries and the possible delays so that they can be accounted for in the Master Production Schedule.

This report summarizes the types of problems usually encountered when entering the inputs to the MRP. Our goal is to go into the depth of some of these major problems and propose ways to eliminate them.