Page 236 - Orlicky's Material Requirements Planning

CHAPTER 11 Product Definition 215

The MPS (further discussed in Chapter 12) is essentially a procurement, fabrication,
and subassembly schedule. Its object is to furnish the component items required for final
assembly of the product. Different categories of subassemblies are under the control of
this schedule and the final assembly schedule. When the BOM is being modularized, a
given subassembly is, in effect, being assigned to one or the other of these two schedules,
that is:
1. To the MPS, by retaining it in the planning BOM
2. To the final assembly schedule
Thus the question of how far modularization should go tends to answer itself when
the BOM for a particular product is analyzed and when the nature of the various sub-
assemblies in a particular manufacturing environment is examined.
Level 0 products, those sold to customers, are rarely used in master scheduling.
Instead, particularly for complex products with options, level 1 and level 2 modules are
established, associated with individual options, and promoted to end-item status in the
MPS. However, BOMs for level 0 products and other subassemblies excluded from plan-
ning BOMs are needed in execution; these products have to be ordered, scheduled, and
assembled, and requisitions must be issued for components. Final assembly schedules
may match customer or warehouse orders in quanti ties and delivery dates; larger quan-
tities, however, may be assembled and shipped in smaller lots. Marketing, sales, indus-
trial engineering, cost accounting, and others need level 0 BOMs as well.
Modular BOMs, called M-bills, meet these needs. M-bills are coded to distinguish
them from planning BOMs that MRP uses exclusively. M-bill items can be components of
end products or of other M-bill items. M-bill components may be other M-bill items or
end items in the MPS, the top-level items in planning BOMs. Purchased and manufac-
tured items procured to support execution of final assembly schedules (rather than to
support the MPS) belong in M-bills, but they also may be included in kits in planning
BOMs to ensure procurement in time. M-bills are not involved in planning; they are
intended for use in execution. Planning defines the resources needed to support the
plans; execution assigns available resources to produce what customers have ordered.
Ideally, planning should result in available resources being adequate for execution;
this never happens. At best, planning is good enough to limit shortages of resources to
amounts that can be acquired during execution with minimal cost and few harmful
effects on customer deliveries.
To conclude the present discussion, it may be proper to reflect on the objectives of
modularizing the BOM. In addition to the specific objectives brought out earlier, there is
another, broader one. And that is to maintain flexibility of production with a minimum
investment in component materials inventory. The goal is to be able to offer a wide choice
of products and to give maximum service to customers and at the same time keep com-
ponent inventories low. Modular BOMs are designed to help achieve just that.