-Written by Jeanne M. Lee (DCSC Guest Blogger)
Material Requirements Planning/Distribution Requirements Planning: Common and Costly MRP/DRP mistakes and how you can avoid making them
MRP/DRP for Distributors and Manufacturers is tough; balancing supply and demand is a very hard job. Despite their best efforts, they often make mistakes. Some mistakes can’t be avoided but some can by implementing MRP/DRP best practices and technology to help make the best decisions to minimize costs while meeting or exceeding customer expectations. What are some of these common and avoidable mistakes?
1. Supply Mistakes:
You may have the perfect demand forecast but what if your ERP system has inaccurate inventory information? The forecast may include demand for 100 units of an item in a month but if your inventory system tells you that you have enough stock on hand – your planner won’t know that they’re actually 50 units short because inventory counts were off dramatically. Other common mistakes around supply that will impact your plans are planning using incorrect vendor lead times, not accounting for supplier delivery and quality performance, and not planning for inter-warehouse stock transfers.
2. Date Mistakes:
Dates are very important for inventory and manufacturing planning. Which dates is your system using for sales orders? How do these dates consume forecasts which may be in different period sizes? Is your bill of material and manufacturing labor routing accurate in respect to procurement lead times for raw materials and manufacturing cycle times for production? Does your manufacturing system take into account the time it takes for materials to move to different work centers or queue times where products must cool, dry, or otherwise wait until they can move to upstream manufacturing operations? Does the system allow you to define time to setup a machine or work center or time to reset the machine or work center after producing a defined quantity of parts to ensure that the settings are still accurate, the tooling is not damaged, or other factors that will impact product quality and production time?
3. Setup Mistakes:
Are your MRP and DRP planning period’s setup properly for each item? You may be better off planning for one item monthly but planning for other items weekly because there is much more demand for those items. Do you have internal lead times established that the MRP/DRP system considers when suggesting planned purchase order, work order, or transfer order dates? Often times a vendor receipt must sit until it can be inspected and stocked in the warehouse.
4. Quantity Mistakes:
Does your MRP/DRP system allow you to define a minimum, maximum, or order multiple for items you buy, transfer, or make? This is common if you are stocking one unit of measure (such as each) but purchasing in another unit of measure (case), and possibly manufacturing in yet another unit of measure (carton). The system needs to know what quantity to suggest based on these internal, customer, and supplier requirements.
*These mistakes and others, as well as tips to avoid them, are discussed in greater detail in this free white paper
e2b teknologies is the publisher of Anytime Supply Chain, a supply chain management application with specific focus on MRP/DRP for Distributors and Manufacturers.
