Market Management - the Importance of Material Requirements Planning

Introduction:

As part of the management team at PPQ Parts, I have been asked to research and select what I feel are the most compatible software packages that can be used for PPQ Parts needs. In order to be of the highest use for the company the software must encompass 3 different types of planning platforms, which are enterprise resource planning (ERP), materials requirement planning (MRP) and capacity requirement planning (CRP) (Heizer, 2012). Having all of these utilizations will enable PPQ Parts to run a more efficient business, which allows a better chance of success.

The Importance of Material Requirements Planning (MRP):

Material Requirements Planning is a planning system that is used for production and is ideal for the use of new project planning in particular. Material Requirements Planning is also used to maintain inventory stock, which in the big scheme of things saves a great deal of time versus writing each item on paper. This can help the company maintain many different manufacturing details as well as control stock and inventory throughout the system itself. Most of the Material Requirements Planning is done though the use of a computer system, but it can also be compiled and planned by hand. The main points for using a MRP system are three fold, which have to happen simultaneously for the system to work efficiently.

Materials planning system ensures there are enough materials available to utilize the degree of production as well as delivery for the customer base that has ordered products. Also this system is used to help the company keep the costs as low as possible, through keeping track of warehouse stock and supplies as well as how much is needed for the desired output of product.

To help companies like PPQ Parts succeed in their valet effort to stay organized and keep track of all relevant data there are many prepared software suites designed to help with just this. One of these solutions MRP solutions, which also produces an ERP solution and offers a variety of server operating systems, is by Merlin Software. Merlin has realized the sheer amount of pressure and stress that these companies are overcome with to manufacture and produce high quality products (Merlin MRP Software, n.d.). Due to the economic short comings in recent years and companies desperately trying to keep costs down and increase profits both whilst keeping in with the competitors isn't easy which is why This software is a free model of MRP and has been around since 1992.

Material Requirements Planning and capacity requirement planning are closely tied together; they both have the basic ability to predict the needs of materials needed in order for the production of a certain number of products. Discrepancies that may happen within the company are A. The demands thrust upon it due to the customers and B. the capacity of the organization into which the number of customers. If the company does not have the facilities, merchandise or product for the number of customers that are in demand then the business is sure to fail. Either way you look at it there will be an inefficiency of satisfaction of customers or the company itself. Ideally when looking at capacity planning, the company should minimize their discrepancies. As for the demands thrust on the business itself by the customers and the problems with the lack of capacity can vary due to changing the output of production levels. Doing so should in hindsight increase productivity and quantity of desired products, in turn creating customer satisfaction and eliminating the problem. The increase of capacity can be done through using easier/faster techniques to churn out a higher number, use more efficient machinery and equipment and looking at the workers themselves, make sure they are satisfied. This will ensure optimal workload. And finally to elevate these issues the company could expand ensuring more products is being produced for the customers satisfaction. Each of the said computerized programs has many different suites pros and cons that make them determinable.

In an ideal world a company would want to get 100% production and profit rates, unfortunately this rarely happens its hard to have a company run equally efficient in all parts of business. That is why different planning platforms come into play to optimize success to the highest degree. The important things for the company to provide is firstly customer satisfaction, a business is nothing without its customer base, there for this is a must. If the customers are kept satisfied they are less likely to stray into other competitors product range. It is also vitally important to try and spread cost throughout, this means buying in bulk or large discounted amounts. And remember the more products you can manufacture with minimal fixed cost the best outcome for profit you will get in return.

A company is limited by how much they can in fact increase the level of production without corrupting the financial and economic structure. The optimal production levels will undoubtedly increased costs due to the extra shifts