Page 261 - Orlicky's Material Requirements Planning

240 PART 3 Managing with the MRP System

Assignment of Responsibilities

The general responsibilities, relative to the manufacturing program, of the three divisions
that are continuously involved may be specified as follows:

Marketing:
■ Responsibility for forecast of customer demand, which is basically the answer to
the question of what can be sold and when
■ In some instances, responsibility for finished-goods inventory in terms of units,
model mix, and storage location (This responsibility is sometimes retained by
manufacturing or given to a special organization in charge of distribution.)

Finance:
■ Responsibility for financing and control of finished-goods inventory in terms of
total investment, credit, and receivables
■ Responsibility for financing of the manufacturing program

Manufacturing:
■ Responsibility for development of MPSs within the constraints established by the
preceding
■ Responsibility for performance to MPSs
While finance is concerned with the broader aspects of its function and deals with
the problem in terms of dollars within the framework of fiscal periods, marketing and
manufacturing are involved more closely in that they must deal in terms of specific units
of product and cope with the day-to-day problems of producing and selling. This means
that once the broad plans for sales volume, supporting production, and overall financing
have been made, responsibility for their administration and execution rests with market-
ing (with the exceptions noted earlier) and manufacturing. If the operation is to be suc-
cessful, it becomes quite important to arrive at the proper modus operandi between these
two divisions and to define and clarify their respective specific responsibilities in the fol-
lowing three areas:
1. Forecasting versus scheduling
2. Inventories of component materials versus inventories of finished product
3. Component materials for optional product features
Forecasting of demand is clearly a responsibility of marketing, whereas the sched-
uling of production is (or should be) up to manufacturing. A forecast and an MPS are two
different things, but in practice, they are sometimes confused in that in some types of
manufacturing business the raw forecast is allowed to act as an MPS in disregard of pro-
duction considerations. In other types of manufacturing businesses, marketing goals
rather than a forecast of demand are reflected in the makeup of the MPS. The preceding
remarks also pertain to (the statements of) these goals.