Materials Requirement Planning - Essay Example

Operations Management Operations Management Titus Rock Manickam Order No. 257881 12 December 2008 Table of Contents Thesis. 3 Introduction3 Materials Requirement Planning3 Total Quality Management.5 Inventory Management...7 Conclusion..9 Operations Management Thesis Operations Management is an integral component of a manufacturing industry and needs to be continuously assessed and refined. Introduction Operations Management is the buzzword of a business operation and carries with it all the elements that serve the materials aspect of the business. It transcends non-materials aspect also. In its non-material form, it is mainly connected to quality and research. In this paper, I am dealing with Materials Requirement Planning (MRP), Total Quality Management (TQM), and Inventory Management (IM). Materials Requirement Planning (MRP) MRP, as the name suggests, is the planning of materials requirement by a plant. Under this planning, the material required by a plant is forecast from time to time, say on a weekly basis. The material requirement of a plant during the following week is forecast based on customers' orders and the material is then procured internally or through external contract suppliers. MRP is the organizing of materials for the purpose of production and delivery to the customers. It is done in order to maintain a minimum level of inventory for production purposes. It engages in planning manufacturing activities and maintaining delivery schedules. MRP ensures that there is just about enough materials available for production. If this planning is not efficiently done, there is the likelihood of either finding oneself in a situation where the materials for production is less than required leading to disruption in production or having too much of materials resulting in wasteful spending. MRP has evolved with the computer technology. Its full potential embracing all aspects is prevalent in data base software and there is tremendous scope for utilization of all the heads and sub-heads for the purpose of manufacture of unique and desirable product. It operates on the basis of a master schedule and develops the requirement for materials. The software is programmed to procure different materials for a product. MRP has to be tuned to production planning. Otherwise there will be mismatch in procurement. Normally, MRP through the use of computer is good for mass production where the volume of manufacture is high. Production planning is a part of the master schedule and sees through the MRP. It is an input to capacity plan. The MRP software is complex and so the user has to be provided training so that he is in a position to apply his knowledge in the use the software to the actual requirement of the organization. He must be capable of understanding the software to maximize its use so that the computer is not seen as something that only produces reports with information of non-relevance and disuse. Once the details in the customers' orders are fed into the integrated database, the system checks the schedule as against the current capacity. If the inputs of the materials requirement exceed current capacity, it provides the alternatives for increasing capacity or creating adjustments in the master schedule. The process of MRP must suit its environment to optimize production. In other words, business adapts MRP to suit the market. The computerized version of MRP is complex and is designed to cater to high volumes (Material Requirement Planning MRP). While on the subject, it is necessary to gauge the break-even point with MRP. There are several ways of analyzing the break-even point. Costs and sales forecast analysis is one of them (Decision Making). Total Quality Management (TQM) Total Quality Management is that aspect of management where there is awareness of maintaining quality at every level. According to the International Organization for Standardization, "TQM is a management approach for an organization, centered on quality, based on the participation of all its members and aiming at long-term success through customer satisfaction, and benefits to all members of the organization and to society." The origin of TQM could be traced to the 1920s when the focus expanded from quality of products to the observation of quality in all issues within the organization. In Japan, it was given the term kaizen, meaning "continuous process improvement." The Japanese began implementing kaizen in the 1940s and never looked back. TQM as a philosophy is now prevalent for continuous improvement in products and services offered to customers. TQM as a standard is now inevitably entwined in the process of manufacture or services so that the quality offered is more than what the customer is seeking to satisfy himself with. TQM is associated with everyone in the organization and every thought and deed for the purpose of manufacture or service is educationally processed so that the end result matches the original concept. The purpose of TQM is realized with good communication and regular meetings between the different players in the organization. No element, howsoever insignificant, that has relevance to the product or service is discarded without trial. The potential of any element must be tested and tried with due diligence before it can be accepted or discarded. TQM is a departure from the traditional mindset where the process is good enough if the end product or services are good enough. It delves into every aspect of the product or service and brings out the features necessary to make a good product better. Quality is essentially the desired standards of any product or service. It specifies the design of a product and aims to manufacture or procure the product. It states the minimum tolerance level to which it can accept a product (Acceptance Sampling Plans). The commitment to TQM is reinforced with training and development. A trained personnel better understands what is required of him and is in a position to respond appropriately in a demanding environment. He is bold and motivated and understands what it takes to be quality conscious member of the organization. TQM is a skill. The top brass in the organization must define TQM clearly because it helps in coordination of the different activities for achieving the stated goals. TQM can be successful in an atmosphere of efficient coordination and skilled execution. TQM standards demand such atmosphere and anything less will only lead to stagnation and demise of the organization (Ron Fitzgerald). TQM abounds in an organization with good support system. Leading by providing support and motivation to improve is a big boost to TQM. No organization that has TQM as its goal can afford to have nonchalant employees who are either too scared or too egoistical to seek support. The prosperity of an organization is built on its ability to have people on its rank who ask the right questions. Ultimately, the purpose of TQM is to eliminate poor quality and wastage. The scope for poor quality and waste exists when the top management does not have proper communication with its workforce. It is not only essential to have good communication in place at all times within the organization but also ensure that such communication hold sway when things appear to go out of control. One can regain control quickly if the overall system is in place and the reason for the lapse is identified and dealt with in the shortest moment. Inventory Management (IM) Inventory is the list of stock required for the manufacture of a product in a given time. It is necessary to hold some extra stock to serve as buffer so that production continues unhindered should the need arise. The purpose of holding inventory is to achieve the goals of the organization, sales targets and materials requirement planning. The management of inventory is a challenging one and needs to be done with proper planning because of the changes in the market arising out of globalization. Planning, organizing, staffing, control and maintenance are all tied to inventory and it is necessary to keep in tune with all of these for the purpose of good inventory management. The system for maintenance and procurement of inventory must be healthy for the organization to meet its stated goals at all times. Inventory stock controls, the flow of inventory, position of each inventory stock level, etc. provide information to the management for the purpose of placement of fresh orders or otherwise and handle the overall goals of the organization. Inventory management is managing the flow of inventory, the staff, the production operation of the organization, and the overseeing of the entire inventory into the end product of the company. Inventory management is the lifeline of the organization as the functions of the organization can come to a grinding halt without it. Planning of inventory requires an eye for production as well as the costs. Normally, cost cutting can be achieved through orders for higher volume of an item. Suppliers provide inventory at lower costs when ordered in higher quantities (Special Inventory Models) Every organization has a minimum level and maximum level of inventory stock that it holds at any given time. It needs buffer stock in order to meet contingencies. It has to keep in constant touch with its suppliers so that there is no scope for emergency at any point of time. Until the time when the inventory is changed into manufactured product for delivery, the IM is accountable for inventory. Inventory is the biggest asset of an organization. No organization can hope to survive without it. The basic principles of IM are the same although their execution may differ from one organization to another. They are also the same now as they were before. Excess inventory may result in dead stock. That is why it is important to keep close vigil on the amount of inventory required and how much the organization is possessing at a given time (Purpose of Inventory Management). IM is the link between the supplier and the organization. It is also the mainstay of the organization and essential for the survival of business. It is always a challenge for the organization to maintain a steady level of inventory that will oversee its requirement and also take care of its contingencies. Conclusion Operations management is a challenge for every organization because this is what makes an organization stand. An organization has to be vigilant in order to keep its materials requirement, total quality management and inventory management in good order. It is very difficult to be in a position where a company can satisfy itself on maintaining the right inventory level. At the end of a year, there is the chance of some items in the inventory showing excess. There may also be some items that are deficient. In either case, there must be minimum and maximum levels that can be allowed. More than these must not be encouraged. It takes experience and wisdom to keep operations management in good shape. A vigilant management will be able to keep itself in a sound position through proper planning and execution. Sources: Acceptance Sampling Plans, http://www.academia-research.com/files/instr/257881_SUPP_F.PDF Decision Making, http://www.academia-research.com/files/instr/257881_SUPP_A.PDF Material Requirement Planning MRP, RCG University, http://rockfordconsulting.com/mrp.htm Purpose of Inventory Management, Indian Institute of Materials Management, http://www.iimm.org/knowledge_bank/6_purpose-of-inventory-management.htm Ron Fitzgerald, Total Quality Management in Education, http://www.minuteman.org/topics/tqm.html Special Inventory Models, http://www.academia-research.com/files/instr/257881_SUPP_H.PDF Read More