Master Requirement Planning and Master Production Scheduling Software: Hard Facts Part Two: Materials Requirement Planning and Master Production Scheduling

Master Requirement Planning and Master Production Scheduling Software: Hard Facts
Part Two: Materials Requirement Planning and Master Production Scheduling
Featured Author - Ashfaque Ahmed - October 12, 2004

Introduction

Any manufacturing activity is riddled with a lot of constraints, and even though the so-called "best enterprise" software companies in the world cannot solve them in their entirety, manufacturers can look for best-of-breed solutions to mitigate problems. Some common problems in manufacturing include long and erratic production lead times, irregular patterns of ordering, high setup and change over times, process bottlenecks, and excess inventory along the process route.

Master requirement planning (MRP) is important as it calculates the exact amounts of raw, sourced, and WIP materials to make exact amounts of finished products as per orders received. This will ensure that the manufacturer sources only required quantities of materials required, that he will be making only the required quantities of WIP and finished products, and that no inventories are created unnecessarily.

Master Production scheduling (MPS) is important because it calculates the time required to make finished products as per orders from raw, sourced, and WIP materials and so the delivery dates are determined from the lead times in processing materials on different work centers. In today's manufacturing both accurate delivery dates and optimizing resources are equally important. For this, good software which has excellent MRP and MPS capabilities is a must.

Materials Planning

When fulfilling your orders, you cannot assume infinites. That is, you cannot assume you have infinite manufacturing capacity available, infinite access to quantities of raw material, and that infinite quantities of work in progress (WIP) materials can be produced by your manufacturing units. You always have fixed suppliers who supply fixed quantities of raw materials. Suppliers may be able to stretch a bit to give you more raw materials for your requirements, but there is a limit. Similarly, you have a maximum capacity to produce finished and WIP materials. Then all along your manufacturing line, there are certain constraints which prevent you to have more flexibility in your product mix beyond a certain point. With all this in consideration, you need to plan for the finite quantities of WIP that impact your production process.

Unfortunately, due to the complex requirements for making manufacturing planning and scheduling software, some vendors take the easy route of planning for quantities of materials by assuming infinite production capacity. This has resulted in proliferation of software products which do not meet production requirements.

Fortunately though, there are some vendors who have labored hard to come up with really exciting software which take care of many of these problems. You just need to know what to look for to find these software solutions.

Important Considerations

A viable production software solution is one that takes finites into consideration. This is for the simple reason that your production planning and scheduling estimates will be wrong if you assume an infinite availability of raw and WIP materials. Expressed mathematically, it is because

If the quantity to be produced is not known, then the time required to produce it cannot be computed.

The information about required quantities to be produced comes from the bill of materials [BOM] (in case of discrete manufacturing) or recipe (in case of process industries it is recipe). In a BOM or recipe, the ratio at which raw materials are consumed to produce one unit of the finished product is defined. From this information, total raw materials required for producing ordered quantities of finished products are calculated, but there is a catch. There are two considerations:

1. If capacity of the manufacturing unit as well as capacity of work centers is not taken care of, then the software will generate the wrong quantities of materials requirements. So the software should have the capability to match the capacities of the manufacturing unit and work centers against the order quantities.
   
   
2. If routing is not taken care of, then the calculations will be wrong. It is possible that two machines in the same work center may not process the same WIP materials. So one type of WIP material may always be processed at one particular machine while another type of WIP material may always be processed at another machine. Any machine has a finite capacity. If the WIPs for incoming orders only go to one particular machine, then the machine will not be able to process the WIP in the given, finite time period. Good software should be able to define production process routings and then be able to sum up quantities.

If the software is not able to handle these things then it will be a useless piece of software for you.

The other problem with many production planning and scheduling software vendors is that their software is unable to identify the bottlenecks in the process. Because of this, work centers downstream from a work center that is a bottleneck may be idle for want of work, and those work centers that are upstream may be clogged with inventory.

So in terms of MRP and MPS, the MRP should be run first to determine exact quantities of required WIP materials against the quantities of required finished products. From the capacities of work centers and quantities of finished products and work in process materials produced at these work centers, lead times are calculated. Adding these lead times together will give you the total lead times required to produce finished products (keeping in mind that the cost of production can be calculated from the duration of time machines are running, the labor required at these machines, and labor pay rates). Inventory costs can be calculated from the duration for which inventory of finished products and WIP materials are kept. Most of this information will come from the BOM. In most of the software in the market, it is MPS which is run before the MRP. Thus it is assumed that infinite capacity and infinite work in progress material are available for making schedule. Ultimately, this is why a schedule made this way will always be wrong.

Production Scheduling

Let's face it. You have a fixed production capacity at your disposal. You have a fixed list of suppliers with fixed quantities of raw material supplies. Your production processes have almost a fixed rate of production. You have a very limited option when it comes to your product mix. You are also constrained with poor profitability due to high production and inventory costs. And yet you are beset with orders which require a lot of set changes on your work centers, different routing for each order, short delivery lead times, different priorities for orders, etc. In such a situation, a big question mark is chasing you: how to plan your production to survive in such a scenario?

Important Considerations

The master production scheduling (MPS) component of the software is the one which does most of the work. It makes the schedules with the orders in hand against capacities and constraints. Once you are able to accurately calculate how much of the WIP materials are required to fulfill orders for finished products, an accurate time requirement can be calculated. Without this information, your schedule will always be wrong. Adding the time required to produce all WIP materials along the production route (process routing) will give you the total lead time needed to produce a certain quantity of the finished product.

It is the MPS part of the software—which may also be called APS, FCP, or APO, all of them work on the same principle but the degree to which they may succeed varies. Here the name of the software is not important but what it can do is what you should look for. Different vendors use different conventions in naming their product—which handles your constraints and comes up with good schedule to reduce your costs by grouping and sequencing orders against manufacturing activities. It should do this efficiently so that you need less lead time, less inventory, less labor, and fewer other resource requirements.

So how is a customer going to decide which vendor to approach for the solution? Because of the lack of standards and a plethora of names for the same kind of software which essentially does the same thing, manufacturers get confused as to which solution will be a fit for their needs. Fortunately, there are some guidelines available which can help.

The keywords here are dynamic and finite planning and scheduling with the ability to handle all your generic and specific manufacturing constraints. Not all master production scheduling software is the same. Some of them may be good for a certain industry like primary metals, whereas some other vendors may have MPS software, which is good for other industries like food. Again, some MPS systems may not be up to mark. Some vendors may have big claims, which in reality may only be partly true. On the other hand, there are small vendors who provide really good solutions. Knowing what to look for will help you find the most appropriate solution for your manufacturing set up.

User recommendations

Good and accurate production planning and scheduling is crucial for all kinds of manufacturing activities. Material requirement planning and master production scheduling are the two components of production planning and scheduling. Precision in calculation of quantities of WIP and raw materials required, production time, raw material costs, inventory costs, stock out costs, and production costs are very important. Most of the enterprise resource planning (ERP) solutions in the market today are not able to do this accurately.

At the same time, reduction in costs through reduction in production time, inventory, material costs, etc. cannot be emphasized more in today's fiercely competitive markets. Most of these challenges can be addressed by a good MRP and MPS system if it fits with your specific requirements.

Finding software that takes finites into account and looking for flexible scheduling will help you minimize costs, and maximize your return on investment.

This was the second part of a series of articles on manufacturing planning and scheduling software.

In this part of the series of articles, we have discussed material requirement planning and master planning and scheduling software.

About the Author

Ashfaque Ahmed is a consultant of advanced planning, scheduling and optimization techniques in the area of manufacturing and distribution. He works with small to medium organizations in the food and beverage, textiles, pharmaceuticals, packaging, paper, metals, CPG process manufacturing industries, and automotive in the discrete manufacturing industry to solve their supply chain-related problems. He holds an MBA in Information Systems and a bachelor degree in engineering.

He can be reached at ahmedashfaque2002@yahoo.com