Page 255 - Orlicky's Material Requirements Planning

234 PART 3 Managing with the MRP System

Inventory planning problems are represented by either lack of coverage of net
requirements or lack of lead time to cover net requirements. Procurement problems
consist of past-due deliveries, rejections of vendor shipments on the basis of quality,
and a vendor’s inability (usually temporary) to produce and deliver. Manufacturing
problems take the form of past-due shop orders; scrap; inability (usually temporary) to
proceed with manufacture owing to a lack of tooling, machines, or other facilities; and
overloads. Every one of these types of problem affects the integrity of shop priorities
(defined in Chapter 13), which is most important for the efficient and smooth operation
of a plant.
As pointed out previously, the objective in managing inventories and production
via the MPS is to establish and maintain a realistic relationship between plan and execu-
tion. Whenever a disparity develops between what the MPS calls for and the likelihood
of being able to do it, an effort at reconciliation should be undertaken. The first step
always should be to determine what, if any, extraordinary action can be taken to solve the
problem at the execution level so that the MPS may remain intact. This is the usual course
of action when overtime, subcontracting, expediting, and so on are resorted to and every
effort is made to meet the schedule, and it is a completely proper effort as long as there
is a reasonable probability that the schedule actually will be met.
A different case entirely is the situation where it develops that some part of the MPS
cannot and in fact will not be met. Here, the schedule must be changed promptly if it is
to remain realistic. At this point, the question is exactly what in the MPS to change and
how. The answer can be ascertained accurately through the MRP system. The pegged
requirements capability (discussed in Chapter 14) allows any of the specific problems just
enumerated to be traced and related to the MPS.
Some problems may be solved below the MPS level by revising planned-order data
in parent-item inventory records, as will be shown in Chapter 14. In other cases, it will be
necessary to use pegging to step through all the higher levels to pinpoint the end-item lot
(the quantity in a specific MPS bucket) that has to be changed to restore harmony
between the schedule and reality.

Restoring the Schedule to Valid Status
The effect of any of the problems mentioned earlier, whether caused by the MPS itself or
by unforeseen developments in the production process, is reflected in and can be traced
through the time-phased inventory records. In an MRP environment, these records pro-
vide the information that triggers all procurement and manufacturing activity, and obsta-
cles encountered in the course of this activity can be related back to the respective
records, as can inventory management problems. From the record in question, pegged
requirements provide the trace to the MPS. This was illustrated in Figure 12-4.
Problems that are caused by the MPS itself (as contrasted with problems caused by
poor performance in meeting this schedule) are the result of overstating the schedule.
The latter may be overstated in its totality (exceeding overall capacity in every period), it