Implementation of Materials Requirements Planning - Case Study Example

 Implementation of Materials Requirements Planning The major problem comes in on the implementation of Materials Requirements Planning (MRP) system demanded by Charlean Gmunder, the Premio Food’s vice president of operations. Material Requirements Planning is a module that plans production parts, materials and assemblies. MRP usually operates with other larger software such as ERP or MRPII focusing on various levels of purchasing and production essential on getting and manufacturing a product. The problems associated with the implementation of Material Requirements Planning are shop floor scheduling, batch sizes and lead times, capacity planning and conflicting programs (Barrett, 2010). There was a delay on ordering and forecasting due to jumbling of trucks. Vice president recommended that for the software to work, it needed at least 25 Premio employees and managers to adjust their jobs. The minor problem was only lack of adequate parking space for the customers or visitors due to the parking of delivering trucks. Gmunder insisted that the system would overhaul production, procurement and shipping as well as imposing the required discipline, which Cinque, the company’s CEO wavered. Gmunder estimated the system would raise the annual money flow by $500000 and an annual savings of $150000 through the reduction of wasted material. Cinque still questioned about the system claiming that the numbers were worth pursuing, but with no sales yet. Cinque elaborated that the system affects every operation of Premio Foods Company. Employees started complaining about because some of them would be laid-off from job (Barrett, 2010). The system was also doubted by one of the veterans and also a director of technical services, suggesting that the company would end up getting solid sales forecasts. The veteran viewed it as a big corporate BS. He also feared to undergo from the shortage of raw materials especially during the holiday. Section II The effect of implementing Materials Requirements Planning system would result to the following issues as analyzed by the shareholders of Premio Foods Company. Mark Renna, who is the director of logistics and aged eight years, warned Cinque about an eruption of a similar case of installation of MRP system. He elaborated that customers were not getting their orders, and most of the trucks left the firm half full, which might happen to the company. Clinque got shocked and when he heard that the company would spend $100000 on materials and packing store for more than 12 tractor-trailers. Even if Gmunder tried to convince Cinque about the MRP system, the financial figures for the implementation of the system made his mind that it was worth of risk. Cinque never tried even once to sell the idea to his working team. He was full of doubts on everything contrary to his mission. Section III It seems MRP system is based on the assumption of deterministic region. Leads and demand times are the most assumed determinists. In a manufacturing environment, however, the assumptions are invariably violated. There exists a conflict between reality and assumptions in the execution of MRP system, which often causes the failure of the system in fulfilling the promise. The studies have been conducted to understand the determinants of MRP behavior and demand and supply factors grouped into three classes, namely valuable value, constant value and uncertain value of the factor (Barrett, 2010). Both variable and constant factors imply the length of the planning perspective whereas uncertain factor values usually changes with time without advance. It is very difficult to implement MRP system but has some benefits as discussed; The MRP system enables inventory managers to decrease the level of raw materials and inventory parts. Maintenance of lower inventory levels decreases the amount of capital spent in inventory and also reduce the inventory carrying costs. MRP ordering has an economic ordering. It mostly considers the production demand for the carrying costs, quantity carrying breaks, items and transport cost for an effective order of great accuracy. The system also helps in purchasing planning. Inventory requirements particularly help the managers in planning for future expansion of facilities. MRP system assists in production planning. Production of goods depends on the availability of constituent parts and raw materials. MRP particularly assists in identification shortages in inventory items enabling the managers to shift production assets to manufacture of constituent items. MRP system gives a clear image on the inventory accessible for the production process. The information is essential for the managers in scheduling work crews to meet the requirements of the production process with no over staffing the line of production. Information on MRP system can benefit the representatives of the customer service in the provision of precise order delivery dates. Section IV; alternative solution to MRP solution 1. Course of Action 1; doing nothing about the existing operational system Pro; the primary market of Premio Food products will not be alienated Con; failure to implementation of MRP system will decline the sales of the company, which is a financial ruin. 2. Course of Action 2; getting the people on board where CEO should be convinced that implementation of MRP system is the best action to take. Pro; the MRP system will ensure that every step of the procurement is virtually automated. For example, any order would be tracked and being fulfilled where meat and supplies inventories are deducted. Con; MRP system will lead to a change of more than 25 Premio employees and managers to completely adjust their working conditions at once all at once. 3. Cause of Action 3; listening to everyone’s idea. The CEO is required to have the conversation about the change and act by doing it. Pro; the input from employees can also bring positive change in employees working conditions. Involvement of employees will make them they have some ownership of the system. Con; the employees input will not set up the mechanism of solicitation. Some will oppose it while others will propose it causing a delay in Premio operations. 4. Cause of Action 4; address the fears of the employees about the MRP system. The changing effort of the Premio Foods comes from the top to bottom. Pro; the management can comply with the employees at the best. Con; the employees can resist the change at the worst level failing to support the operating successfully. Recommendations The best action to take is the management to have best compliance with the employees about the implementation of the MRP system. The top management should address the importance of the system to the manager and the employees. The system would automatically handle billing and accounting, process orders and schedule production process. The system will maximize the resources for efficiency. If the majority of the shareholders support the implementation of the system well and good, but if the majority declines the implementation, the management should take the extra effort of convincing them to accept the change. Eventually, the working effort will be leaner, but more industrious. References Barrett, A. (2010). Increase of Cash Flow and Reduction of Waste. New York. Print. Read More