A different material planning approach is required

What does all this have to do with developments in ERP systems in general and with, and about, new ways of material planning and control specifically? As discussed previously, a Planned order generated by standard MRP does not provide sufficient granularity of data on the total materials and components requirement.

And when you look at what is required of production organizations today, that is precisely the problem. Detailed information about the demand for articles, materials and components and their coverage is crucial to control the demands required. And the way planning and control of both production and materials work currently should be aligned with this.

The logic of the current MRP is based on the capacities of past computing, ergo: that logic is now no longer valid.  It is necessary to develop a new kind of MRP mechanism in which everything that the MRP encounters in terms of requirements calculations can be recorded in detail in the ERP system. Producing ‘on stock’ is outmoded and no longer fit for purpose.

Most production organizations only start producing and purchasing when there is a demand from their customers for their product. Only those materials and raw materials that cost little and are widely used are still kept in stock for a long time. So being able to know in detail exactly where the demand comes from and who, or which order is responsible for it, has become crucial. Additionally, being able to:

• identify exactly to which order, or which piece of stock, that the production organization already has ‘in house’ could be allocated, or
• the production result of which semi-finished product work order could be allocated to which end product work order,
• or which Purchase Order that still has to be delivered can be assigned to which end product work order or sales order,

has also become crucial. But if all information is merged, as is the case with Planned orders in an ERP system with standard MRP, you do not have access to such individual detailed information.

It is therefore incredible that such an MRP concept and the standard MRP function in ERP systems have not been developed and evolved in that direction. Lack of computer power and the costs that it entails can no longer be the argument, given Moore’s Law.