Production and Resource Planning

Manufacturing Resource Planning (MRP II) aims to keep required amount of resources at the time and place they are needed, in order to increase the efficiency of the production.

It consists of tools that utilize information in a common database. These tools provide the senior management a better decision-making process aligned with the strategies of the company.

MRP II is an integrated series of planning techniques developed to ensure the efficient use of all resources such as materials, machinery, money and people.

The MRP II system was introduced by adding functions such as marketing, finance and capacity planning to the Material Requirement Planning (MRP) system. In addition to MRP, MRP II also covers capacity planning activities for machinery and labor.

• In a business, the production system and the financial system are identical. Both have the same operations and the same numbers. Based on this feature, MRP II ensures that the numbers generated at the time of the transaction are reflected in the financial system.
• A good system should be the simulation of the real system. MRP II gives the opportunity to examine the results of different master production schedules or different policies with what-if analysis.
• MRP II is a system that integrates basic components of planning and control such as sales, products, inventories, business centers, production schedules, cash flows and so on.

The opportunities provided by the computers were transferred to the production management by
taking inventory tracking in the computer environment.

In 1960, the MRP concept was introduced to the business world, as IBM launched the first economic
computer that commercial enterprises could own.

The MRP system calculates the requirements for each material by examining the levels of BOM according to the determined production plan and it calculates whether the stocks of these materials meet the requirement.

After the MRP, a more efficient system called “Closed Loop MRP” (CL-MRP) was developed in order to overcome some of the inadequacies of MRP. With CLMRP companies were able to answer additional questions such as: “Is there enough capacity for the orders received?” and “Which resources are the bottleneck resources?”.

The Closed Loop MRP, controls the capacity and warns the master production schedule by sending a feedback if the available capacity is not sufficient. With this system, MRP is not only a material management tool that plans the orders, but also contributes to production control.

In 1980s, MRP II systems covering all activities related to the production of production companies started to become widespread. Thanks to the new developments, MRP II systems have not only covered stocks and procurement but also production planning, production control, capacity planning, product costing, accounting and limited financial management. MRP II systems collect all company-level resources in a common database and enable all employees within the company to speak the same language.

MRP II has three major components: management planning, operations planning, and operations execution.

The third generation of ERP, which is described as the future of ERP emerged in 2010’s. It includes the cooperation of Web 2.0 technology with the ERP functions, provides enterprises with an extroverted and interactive environment in corporate management.

New generation ERP systems, also called ERP 3, uses the internet-based infrastructure; e-business portal functions managed directly through the corporate ERP system, including social media integration, video conferencing, online messaging, e-mail, forum, survey management. Thus, it includes a communication and information sharing environment that can integrate the enterprise with all its components such as dealers, customers and suppliers.

Master Production Schedule (MPS) is the process of preparing a schedule to show the date and amount of all materials to be sold or to be produced within a certain planning horizon.

• To keep customer satisfaction as high as possible. To do so, balance product stock levels and delivery dates to customers.
• To ensure the best use of material, labor and production tools.
• To keep the level of investment in the material at the desired level.

Rough cut capacity planning (RCCP) is the approach of roughly estimating and determining the
required level of capacity problems in order to realize the master production schedule. It can also be
considered as a transformed form of the master production schedule into workloads.

Material requirement planning is a more useful technique in the management and control of production operations when compared to other systems. The primary task of MRP is to determine when all parts and components for the products included in master production schedule should be ordered individually by going backwards from gross requirements and lead times.

• Design of new plant and manufacturing systems or dispatch work
• Checking whether the current capacity is sufficient to obtain a new job
• To examine the utilization levels of existing or planned facilities
• Evaluation of different routes or priority rules
• Determining the parts that are in the process and determining the facilities that are idle

Enterprise Resource Planning (ERP) is an integrated management system that enables the efficient use of resources such as labor, machinery and materials required for the production of goods and services.