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02mfg62s-ERP&MRPII

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02mfg62s-ERP&MRPII

    2010-4-29 2:57:00

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    Unit 2ERP and MRP II

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    Unit 2ERP and MRP II Unit Introduction ........................................................................................................ 1

    Objectives ............................................................................................................. 1

    Terminology .......................................................................................................... 1 ERP and MRP II ......................................................................................................... 2

    Manufacturing Objectives ..................................................................................... 3

    Evolution of ERP .................................................................................................. 4

    ERP Global Integration......................................................................................... 6

    The Ideal ERP System ......................................................................................... 7

    Electronic Data Interchange ............................................................................ 8

    Distributed Computing .................................................................................... 9

    MRP II Process ................................................................................................... 10

    Foundation .................................................................................................... 11

    Strategic Planning ......................................................................................... 12

    Operations Management Planning................................................................ 13

    Operation Execution and Control .................................................................. 15

    Communication ................................................................................................... 16 ERP and MRP II Review .......................................................................................... 17

     Table of Contents 2-i

List of Figures

    Figure 2 - 1. ERP and MRP II Business Objectives .................................................. 2 Figure 2 - 2. Manufacturing Objectives ..................................................................... 3 Figure 2 - 3. Evolution of ERP .................................................................................. 5 Figure 2 - 4. Global Integration of ERP ..................................................................... 6 Figure 2 - 5. The Ideal ERP System ......................................................................... 7 Figure 2 - 6. Manufacturing Resource Planning (MRP II) Process ......................... 10 Figure 2 - 7. MRP II Foundation .............................................................................. 11 Figure 2 - 8. MRP II Strategic Planning .................................................................. 12 Figure 2 - 9. MRP II Operations Management Planning ......................................... 14 Figure 2 - 10. MRP II Operation Execution and Control.......................................... 15 Figure 2 - 11. Manufacturing Communication ......................................................... 16 2-ii Manufacturing WorkshopStudent Guide

Unit Introduction

    This unit covers Manufacturing Resource Planning (MRP II) Fundamentals. It introduces

    concepts used in manufacturing, as related to BPCS applications.

    Objectives

    At the end of this unit you will be able to:

    ? Describe the basic characteristics of ERP and MRP II.

    ? Identify foundation pieces that are part of the MRP II process.

    ? Identify processes that are part of MRP II Strategic Planning.

    ? Identify processes that are part of MRP II Operations Management Planning.

    ? Identify processes that are part of MRP II Operations Execution and Control.

    Terminology

    Enterprise Resource PlanningPlanning philosophy tying ERP

    manufacturing decisions to the entire supply chain,

    recognizing that all production decisions impact and are

    impacted by all major business areas.

    Material Requirements Planning Set of techniques using MRP

    bill of material, inventory data, and master production

    schedule, to calculate material requirements.

    Manufacturing Resource PlanningClosed loop business MRP II

    concept integrating manufacturing, supply chain

    management, and financial processes.

    MRP II functions performed in the short term, these Operations Execution and

    processes are used when manufacturing goods. Control

    MRP II functions performed as medium range planning, Operations Management

    these processes are used to balance supply and demand Planning

    creating a schedule and production plan.

    MRP II functions performed in the long term, these Strategic Planning

    processes are used to determine future demand and supply

    requirements.

     ERP and MRP II 2-1

ERP and MRP II

    The operating goal or business objective of manufacturing and supply chain management

    companies is effective planning and control of resources, priorities, and performance.

    Enterprise Resource Planning (ERP) provides a framework enabling companies to provide the

    right products in the right quantity to customers at the right time, price, and quality.

    CRight Products

    u

    Right Quantitys

    tBusiness

    Right Timeo

    Objective

    m

    Right Pricee

    r

    Right Quality

    s

    Figure 2 - 1 ERP and MRP II Business Objectives

    2-2 Manufacturing WorkshopStudent Guide

Manufacturing Objectives

    A manufacturing company has several key objectives. These objectives are not always

    consistent with one another.

    ? Increase Customer Service

    ? Decrease Plant Costs

    ? Decrease Inventory Investment

    By applying ERP and MRP II principles BPCS software enables you to balance these

    objectives in order to meet manufacturing goals by balancing supply and demand.

    The figure below illustrates the relationship between these objectives. Problems occur when

    these objectives are in conflict.

?Increase customer service

    ?Decrease plant costs

    ?Decrease inventory

    investment

    Plant

    DemandSupply

    CustomersSuppliers

    Closed Loop System

    Figure 2 - 2 Manufacturing Objectives

     ERP and MRP II 2-3

Evolution of ERP

    Enterprise Resource Panning (ERP) is a relatively new planning philosophy tying manufacturing decisions to the entire supply chain. It recognizes that all production decisions impact and are impacted by all major business areas.

    This planning philosophy evolved over a period of time incorporating existing manufacturing processes.

    MRP

    Material Requirements Planning (MRP) became popular in the 1970’s. This technique uses the master production schedule to determine what materials are needed to produce required goods. This technique is effective but does not take into account capacity constraints, schedule deviations, and other factors which can invalidate a the material plan. MRP II

    Manufacturing Resource Planning (MRP II) became popular in the 1980’s. This expanded on the MRP philosophy by incorporating actual production data and capacity constraints into the process. MRP II created a closed loop business concept integrating manufacturing, supply chain management, and financial processes.

    ERP

    Enterprise Resource Planning (ERP) came about in the 1990’s to address the manufacturing and supply chain companies serving the global marketplace. It is a planning philosophy tying manufacturing decisions to the entire supply chain and recognizes all production decisions impact and are impacted by all points in the supply chain.

    ERP incorporates and expands on the philosophies of both MRP and MRP II.

    2-4 Manufacturing WorkshopStudent Guide

The following figure illustrates the transition from MRP to ERP. It shows the evolution from

    linear planning to integrated closed loop planning.

    ERP

    1

    9

    9

    0

    MRP II

    1Manufacturing

    9Resource

    Planning8

    0

    MRP

    1

    Material9

    Requirements7Planning0Closed Loop

    Planning

    Linear Planning

    Figure 2 - 3 Evolution of ERP

     ERP and MRP II 2-5

ERP Global Integration

    Enterprise Resource Planning (ERP) is made possible by the implementation of Client Server

    software technology. In order for a business to fully integrate all points on the supply chain

    (both before and after actual production), data must be exchanged between systems. The

    following are part of ERP systems:

    ? Worldwide financial system

    ? Supply chain management integration

    ? MRP II manufacturing

    ? Quality and performance tools

    ERP realizes that nothing in a manufacturing company happens in a vacuum. ERP ties all

    parts of the manufacturing process together, giving your entire organization access to

    accurate, up to date information.

    The following figure illustrates the global integration of ERP.

    ERP

    All facilities tied to

    worldwide financial system

    MRPII Manufacturing

    Supply Chain Management

    Figure 2 - 4 Global Integration of ERP

    2-6 Manufacturing WorkshopStudent Guide

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