Enterprise Resource Planning

Question 1

Resource planning

Answer 1

• how we organise the use of our resources in the best way possible so that we achieve our objectives
• resource planning can be viewed in a hierarchical structure
• long range planning - construction of facilities, buying major equipment, purchase of other aggregated resources
• intermediate term - shows quantity and the timing of items
• short range - detailed planning process for components, parts and materials to support the Master Production Schedule

Question 2

Aggregated Production Plan APP

Answer 2

• Highest level of resource planning
• Estimate what rough quantity of materials and other resources are needed for our plan; all products
• Decisions based on; demand forecasts, marketing strategies, vertical integration, inventory policy
• time horizon 1 year +

Question 3

Master Production schedule MPS

Answer 3

• Detailed disaggregation of the APP
• Medium term planning tool so MPS can be generated for the next 12 months
• Will specify which items, in what volumes have to be produced by period
• MPS generates with customer orders and demand forecasts

Question 4

Materials Requirements Planning MRP

Answer 4

• It evaluates the volume of raw materials and components needed to meet demand (according to the MPS) and when these items should be procured
• MRP provides a way of dealing with dependent demand
• MRP is designed to help manufacturers in inventory and production management ; 1. what do we need to make it? 2. what does it take to make it? 3. what have we got already? 4. what do we have to get?
• MRP allows us to ensure materials available in sufficient quantity at the right time for production to occur
• minimising costs by managing inventory
  Inputs to MRP: master production schedule, bills of material file, inventory records file
  Outputs to MRP: Generate order release notices tells us the volume of materials we need to order to match our MPS, for every period

MRP uses aggregated demand of common use items when ordering raw materials and manufacturing the components

Typical information in an MPS:
- What end products are to be produced?
- How many of each products is required by volume?
- What period the products are ready by (timing)?
Demand for these products is given by existing customer orders and forecasts

Question 5

Bills of Material File BOM

Answer 5

The bills of material file is an engineering document that specifies listing of all components and assemblies making up final product

Question 6

How and MRP system works

Answer 6

• Using the inputs, MRP uses lead time to determine start dates for final assembly, subassembly, manufacturing and sourcing raw materials - backward scheduling
• the results are order release notices which tells us how much of the materials we need in order to match our MPS
• Benefits; reduction in WIP, improved flexibility, improved customer services, improved productivity

Question 7

Manufacturing Resource Planning MRPII

Answer 7

• MRP only deals with materials planning, doesn’t count for capacity constraints
• MRP II incorporates aspects of capacity planning, inventory control and financial systems with MRP
• MRP II builds on MRP by extending capacity
  LAN connections allows the development of MRP to MRP II
• MRP II can be defined as; extension of MRP, link together manufacturing planning and control, engineering, purchasing, marketing, financial account planning and HRM
• MRP II allows for what if questions… What if we increase capacity by X units per month? Effect of design change?

Question 8

Enterprise Resource Planning ERP

Answer 8

ERP systems were made to replace MRP II systems and coordinate information requirements for purchasing, planning, scheduling and distribution in a complex global environment

• Complete enterprise wide business solution
• Has software that helps integrate; account and finance, marketing and sales, customer relationship manager, HR
• Allows all functions to be connected in real time
• Advantages; helps in the day to day running of a complex organisation, increases visibility, superior level of control, improves comms with customers
• Disadvantages; can be difficult to integrate with older systems, difficult to align of the shelf ERp system with current

Implementing ERP

• Moving all of the functions into one system sometimes difficult and unpopular
• Critical factors in successful implementation; top management support, visioning and planning, right project leader
• Change manamagement

Question 9

ERP and the Cloud

Answer 9

• SalesForce.com

- Security major issue