Improving Financial Performance with MRP Software

So you’d like to improve your manufacturing company’s financial performance. You’ve looked around and heard a lot about MRP. There seems to be a lot of hype and claims on the surface. What will manufacturing software really do for the bottom line?

In its current state, your company is a world of spreadsheets, reports and meetings. Even the material list of each part you make is on spreadsheet. To this point, the system has done alright for you. The spreadsheets are accurate, the reports seem relevant and everything goes along. Isn’t MRP just automated spreadsheets you wonder? Lets walk through the building blocks of MRP software and see.

Probably the main building block of any MRP system is the Bill of Material. Like the venerable spreadsheet, the Bill of Material contains all of the material needed for the job including raw material, components and sub assemblies. Also entered into the MRP software are constraints like time required to make parts and order quantities.

There are two important outputs from MRP; a material order, and a shop routing. The material order is run at intervals and will show when to buy material for this job, along with other material for jobs in the system; allowing planned material buys, which prevent cash form being utilized before it is actually needed. This can happen daily with a few mouse clicks or even self-launching macro. So how does that compare to the spreadsheet world? You’d begin with numerous people having their open order on theri spreadsheets then, as a group, would review jobs and create a materials list. By running an open order report on manufacturing software, you can have the most up to date material buy list, with a fraction of the labor.

The second important output created is the Shop Router. These can be formatted as simple as a sequential order of operations, combined with a material list, to a detailed step-by-step narrative, including comments to support manufacture and quality assurance. Then, when each step is completed, information is reported back to the system. This allows the job and due date to be tracked, and any shortages trigger actions to notify the customer or begin work to replace the shortage.

Again, lets compare this to the spreadsheet world; a job is put out on the floor with a (spreadsheet) router. The router is followed and the manufacturing process goes along. At each step, a daily log is completed, and brought to a production meeting. In many cases a data entry operator then takes the information and updates each job. Along with this is an exceptions log for fallout from the process. Time, delay and opportunity for error abound, not to mention all of the labor to back up the process.

So even if your spreadsheet form of production is accurate, the MRP process holds many opportunities to increase the accuracy of your reporting and reduce your costs.