MRP-system

ERPAG 5.1

MRP System


What is MRP system? What are the benefits of using MRP system? How to implement one?

In past blogs, we have already covered basic concepts of  MRP systems.
We have also analyzed the difference between ERP / MRP system.

Today we will cover modern implementations of MRP systems from the small business perspective.
Which parts should we focus on and what parts of the MRP system we can implement on the basic level.

From our experience, the MRP system represents a core component for any Small business that transforms the material. Based on this principle, we can identify the next business models:
  • Process Manufacturing 
  • Discrete Manufacturing
  • Contracting Manufacturing
  • Mixed 
 Each of these manufacturing types needs a specific approach in order to fully implement MRP in the company. Before we go through what we need to do, we will first stress out top 5 mistakes that managers do when they implement MRP\ERP in their Small business companies.
  1. Short deadlines
    • instead of the preparation period, people just jump to implementation because it is the eg. start of the fiscal year.
    • in SMB price range no software can offer ETL process for a reasonable price. That's the way you cannot expect that all your previous data entries will be transferred with some kind of magical transfer process.
  2. Now or never
    • The most typical mistake in software implementation. We will make an example. Company A cannot control stock levels, not to mention automated purchasing or manufacturing planning - but in their feature list is to acquire software feature like -integration of CRM with email platforms or social networks.
  3. Ad-hock approach
    • ad hock execution from the perspective: if I had a specific software I wouldn't lose $$$
  4. Low priority
    • not assigning enough priority to the new software implementation process compared to standard business process 
  5. Conflict of interests
    • Pass implementation process to the employees that have no interest to implement, or even worse have the interest to sabotage implementation process. We can identify a few scenarios:
      • employees that in some way derive authority from the past software.
      • not a skilled employee
      • an employee that prioritize other business processes instead of implementing
      • an employee that is stripped off decision-making 
Today in the era of the 4th industrial revolution, the implementation of new software is probably the biggest decision that you need to make in your business. That's why you need to explore, get prepared and act with confidence once you decide to implement a new MRP system.

Enough with critics, let's go back to the practical bits of advice.

A team that is assigned with this blog, was included in more than 500 MRP software implementations, during the 10 yrs course of time.

We saw it all, done it all -  bad practices learned from failures (and yes we saw them too). Furniture, guns, food production robotics and high precision instruments. Each company had its own unique business process but here is what we found in common:

You need to take a step by step approach. It is almost like an onion skin - layer by layer.

The most important thing is, of course, a firm foundation


  1. First, you need to create a perfect inventory control system. Every MRP system is basically an upgraded inventory management system.
    • Plan your SKUs
    • Define Lot and serial numbers
    • Smartly plan product categories and how to group them
    • Translate you complex products with Bill of materials feature
  2. Secondly, enter all other entities
    • Suppliers
    • Customers
    • Machines
    • Employees
    • Bank accounts
  3. Prepare for transition 
    • PLAN the date and take the company's SNAPSHOT of:
      • inventory levels
      • debit/credit balances for Customers and Suppliers
      • Bank account standings 
  4. Connect your eCommerce
    • connect - integrate
    • sync
  5. Let it run
When you complete all of this you can start using your system. You don't need to wait to implement mobile apps, or time capturing on the shop floor level.
Just let the system to roll out. WHY?

Because:
  • You could easily manage all the bad things that can go wrong.
  • Your employees will get used to the system, gain speed and efficiency. 
  • The project itself will get the authority and the whole company will know that you are moving forward with it.
Once you see that everything is at place go to the next phase - Shop floor level.

A shop floor is a place for your manufacturing where the real action takes place. It is responsible to bring out the tangible, usable and superior quality products based on days or even months of preparation. And has its own heroes. These are employees that have difficulty to engage in any kind of process that is not related to the core of their work operation.

And yes, this is a hard-core of the rebellion, where skilled workers see themselves attacked with new technology gadgets.

Some of them cannot even understand the necessity of information capturing - they tend to see it as trivial, or as a new management play toy, while they are the ones doing the real things.
And guess what, usually they are right. Due to the failed experiments, wrong steps during previous attempts - it is expected to see them more pessimistic than the sales team or purchasing team.

And to win this battle you need to play it safe, step by step, with implementing one feature at the time:
E.g first month try to use mobile devices to input real-time use per work operation.
In the second month - implement material movement.
During the transitional period assign one person to use a spreadsheet in order to pass info from the shop floor to the MRP system. In ERPAG, we have developed a 3-way input depending on the implementation level.

That's why you need to take user interface and ease of use in matter. It not enough just to deliver technology - you need to deliver it in the most human possible way.

These are some of the pre-requirements necessary in order to implement MRP System on a shop floor level:
  • simple interface 
  • simplified workflows
  • automated data inputs (scan, capture, picture)
  • stable internet connection
  • step-back control
  • authorization levels
In conclusion, the MPR system will make your life and your business flow easier. Like coloring by numbers - it seems boring and dull at the beginning, and further you go with coloring (implementation) it makes more sense as it gets its shape.

Regards,
ERPAG Inc.

0 comments:

Post a Comment