MRP, DRP, and ERP - PowerPoint PPT Presentation


PPT – MRP, DRP, and ERP PowerPoint presentation | free to view - id: 581e6-NDk2Z


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation



... applications provide a platform for manufacturers, distributors, and ... Sales rep from Intl Sneaker takes an order for 1000 shoes from a Brazilian retailer. ... – PowerPoint PPT presentation

Number of Views:3713
Avg rating:3.0/5.0
Slides: 32
Provided by: Prof165
Tags: drp | erp | mrp


Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: MRP, DRP, and ERP

  • Henry C. Co
  • Technology and Operations Management,
  • California Polytechnic and State University
  • Read Coyle, et al, Supply Chain Management A
    Logistics Perspective, Ch. 6 and part of Ch. 9

Information Technology and Supply Chains
  • Information, along with materials and money, must
    readily flow across the supply chain to enable
    the planning, execution, and evaluation of key
  • Each participant in the supply chain needs
    relevant information to make effective forecasts
    and operational decisions.
  • Existing supply chain information technologies
    support timely, cost-efficient sharing of
    information between suppliers, manufacturers,
    intermediaries, logistics services providers, and

Figure 6-1 Coyle, et al, Supply Chain
Management A Logistics Perspective
Materials Requirements Planning
  • Deals specifically with supplying materials and
    component parts whose demand depends on the
    demand for a specific end product
  • Consists of a set of logically related
    procedures, decision rules, and records designed
    to translate a master production schedule into
    time-phased net inventory requirements and the
    planned coverage of such requirements for each
    component item needed to implement this plan

(No Transcript)
Elements of an MRP System
  • Master production schedule (MPS)
  • Bill of materials file (BOM)from the product
    structure tree
  • Inventory status file (ISF)
  • MRP program
  • Outputs and reports

Illustration Product Structure Tree
Illustration Gross Requirements
  • The Gross Requirement (GR) is the projected needs
    for an item during each period.
  • For an independent-demand items, the GR comes
    from the Master Production Schedule (MPS).
  • For a dependent-demand item, the GR is derived
    from its immediate parent(s).
  • Suppose the Master Schedule shows that 1 egg
    timer must delivered in week 8 (see slide 11).
  • With a lead-time (LT) of 1 week, production of 1
    unit of egg timer is scheduled on week 7.
  • The GR of supports is computed based on this and
    product structure tree (see slide 7) We need 3
    supports for each egg timer. Thus, the GR of
    support 3 x 1 3 units, on week 7.

(No Transcript)
Illustration Planned Order Receipts
  • In our example (see slide 11)
  • The GR of support at week 7 3 units.
  • The inventory on-hand (see slide 10) of support
    2 units The net requirement on week 7 3 -2 1.
    Thus, we schedule to receive (scheduled receipt)
    1 unit at week 7.
  • Since the lead-time for support 1 week, we
    should release the order in week 7-1 6.
    (planned order release of 1 unit in week 6),

(No Transcript)
Requirements of MRP
  • Computer and necessary software
  • Accurate and up-to-date
  • Master schedules
  • Bills of materials
  • Inventory records
  • Integrity of data
  • Management support and user knowledge and
  • 100 component availability

Capacity Planning
  • Capacity requirements planning The process of
    determining short-range capacity requirements.
  • Load reports Department or work center reports
    that compare known and expected future capacity
    requirements with projected capacity availability.

  • Closed Loop MRP
  • MRP II Expanded MRP with and emphasis placed on
    integration of Financial planning, Marketing,
    Engineering, Purchasing, and Operations.

Distribution Requirements Planning (DRP)
Distribution Requirements Planning
  • Purpose is to more accurately forecast demand and
    to explode that information back to develop
    production schedules.
  • Firm can minimize inbound inventory in
    conjunction with production schedules.
  • Outbound (finished goods) inventory is minimized
  • DRP develops a projection for each SKU requiring
    the following
  • Forecast of demand for each SKU
  • Current inventory level of the SKU (balance on
    hand, BOH)
  • Target safety stock
  • Recommended replenishment quantity
  • Lead time for replenishment

(No Transcript)
(No Transcript)
Enterprise Resources Planning (ERP)
  • What Is ERP? Why ERP?
  • The Major Players
  • ERP Market Outlook

Enterprise Resource Planning (ERP)
  • ERP systems are multimodule application software
    platforms that help organizations manage the
    important parts of their businesses.
  • ERP systems branch out to include supplier
    relationship management, customer relationship
    management, and other supply chain components,
    the connections between SCIS and ERP grow
  • ERP system provides a mechanism for supply chain
    members to efficiently share information

ERP Integration of Supply Chain Technology
Figure 6-6 Coyle, et al, Supply Chain
Management A Logistics Perspective
Source SAP AG
Related Tools
  • Supply chain collaboration tools help users
    integrate their information technology systems
    with those of trading partners to streamline and
    automate supply chain processes.
  • Data synchronization applications provide a
    platform for manufacturers, distributors, and
    retailers to aggregate and organize item-related
  • See PowerPoint on Collaborative Commerce
  • Spreadsheets and database software provides
    managers with handy, portable tools for
    gathering, consolidating, and analyzing supply
    chain data.

Table 6-1 Coyle, et al, Supply Chain
Management A Logistics Perspective
Essence of ERP
  • Record day-to-day transactions of running a
    business and provide near real-time access to
    information in a consistent manner throughout the

Why ERP?
  • Supply chain cost reduction
  • Purchasing leverage
  • Inventory reduction
  • Operating cost reduction
  • Competition is doing it
  • Catalyst for reengineering
  • Increased performance
  • Service levels
  • Responsiveness
  • Data updated in real time single set of numbers
  • Y2k problem

  • Business Week, 3/12/97

  • Sales rep from Intl Sneaker takes an order for
    1000 shoes from a Brazilian retailer.
  • From her portable PC, she taps into the R/3 sales
    module back at headquarters, which checks the
    price, including any discounts the retailer is
    eligible for, and looks up the retailers credit
  • Simultaneously, R/3s inventory software checks
    the stock situation notifies the sales rep that
    half the order can be filled immediately from a
    Brazilian warehouse.
  • The other sneakers will delivered in 5 days
    direct from ISCs factory in Taiwan.

  • R/3s manufacturing software schedules the
    production of the sneakers at the Taiwan factory,
    meanwhile alerting ISCs warehouse manager in
    Brazil to ship the 500 purple tennis shoes to the
    retailer. An invoice gets printed upin
  • Thats when R/3s HR module identifies a shortage
    of workers to handle the order alerts the
    personnel manager of the need for temporary
  • R/3s materials planning module notifies the
    purchasing manager that its time to reorder
    purple dye, rubber, and shoelaces.

  • The customer logs on to ISCs R/3 system through
    the internet sees that 250 of the 500 shoes
    coming from Taiwan have been made dyed. He
    also sees there are 500 orange tennis shoes in
    stock places a follow-up order on the net.
  • Based on data from R/3s forecasting financial
    modules, the CEO sees that colored sneakers are
    not only in hot demand but are also highly
    profitable. She decides to add a line of
    fluorescent footwear.

Data Collection and Synchronization
  • Data must be collected and synchronized so that
    it can be used by skilled individuals in the
    planning and execution of supply chain processes.
  • Data collection of relevant information is needed
    at every point in the supply chain.
  • Data synchronization focuses on the timely and
    accurate updating of item information within and
    across enterprises.
  • Functional expertise in each organization will be
    enhanced by access to the synchronized data.
  • See PowerPoint on Collaborative Commerce

Radio-Frequency Identification (RFID)
  • RFID is an automatic identification method. RFID
    tags consist of a microchip and a printed antenna
    that can be packaged into many forms, such as a
    label, or imbedded in between the cardboard
    layers in a carton or product packaging.
  • Unique product identification information, in the
    form of a universal electronic product code (EPC)
    identifying the manufacturer, product category,
    and individual item, is stored on these 96-bit
  • RFID technology costs must continue to decline to
    make product tagging economically feasible
    equipment issues such as reader range,
    sensitivity, and durability must improve the
    case for supplier return on investment of RFID
    mandates must be made and consumer privacy
    issues must be resolved.
  • See PowerPoint on Collaborative Commerce