Page 313 - Orlicky's Material Requirements Planning
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292                                                 PART 3      Managing with the MRP System


             Although this looks like a great idea, the material planning functionality plans by
        date. Somewhere in the MRP system there must be a conversion to a date. Consider that
        this date can be the expected receipt date, the expected release date, or the expected ship
        date. Be very sure when purchasing a system that claims to have serial effectivity to fully
        understand the requirements of making the material planning function work as desired.
             Another challenge for the MRP system is dealing with as-required and zero-quanti-
        ty items. As-required items typically are things such as shims, fasteners, lubricants, and
        hardware. The engineer is resistant to spending time counting up and specifying all the
        fasteners required for an assembly. This is further complicated by the ability to substitute
        fasteners of comparable quality, material, and grip length. In the event of a production
        problem, oversize fasteners also may be used. As anyone knows who has ever tried to get
        an assembly put together without all the fasteners, the fasteners may look small and
        inconsequential, but they can stop a major project from shipping. The most prevalent
        strategy is to standardize on the fasteners that will be used in all assemblies. These com-
        ponents then are kept on an order-point system, where the bins are refilled when they get
        low. This is an excellent area for vendor-managed inventory. Getting a supplier to take
        care of the fasteners and negotiating so that the enterprise pays only for what is actually
        used from the bins can reduce the overall cost dramatically and improve availability of
        these critical yet low-cost parts.
             The same process can be used for “zero per” items. Zero-per items are things such
        as epoxy, LockTite™, and paint, where the amount used is so small that it does not bear
        quantifying on the BOM. However, similar to fasteners, these items can stop an assembly
        in its tracks. The risk of the vendor-managed inventory approach is that future orders
        may not require what was used in the past. Provided that product mix in the future is
        similar to that product mix in the past, this approach is very effective. As products change
        dramatically or require a unique material or configuration, these materials must be con-
        trolled through the formal material planning systems.
             For consistency, some organizations will attempt to control everything through the
        formal enterprise resource planning (ERP) system and find out that the transactions
        required quickly become too cumbersome to manage. Remember to use the right tool for
        the right job, and the job will be much easier. Understand the process and the desired
        results before developing and implementing systems to achieve that goal.


        SUMMARY
        The project manufacturer is a different and difficult type of enterprise to manage. Its abil-
        ity to compete effectively in the market rests on its ability to be quicker than the compe-
        tition to design and build products that are very low in volume and extremely high in
        variety. One of a kind is not unusual. Project management and project control costing
        adds a whole level of complexity to the MRP implementation. Projects may span well
        over a year, and the cost collection must continue at the very top project level. Effectively
        managing scope, time, and resources, including costs, is essential for the enterprise.
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