A new kind of MRP

To be able to do that, you actually need a new kind of MRP that would be able to record the calculations and the result of material requirement analysis in detail in the ERP database; a mechanism by which both the intermediate and the end results are stored into the ERP database at the moment that they arise. Both in, or with, sales orders and end product work orders. That should be seen as ‘from’(demand) information: where does the demand for products, materials, components and raw materials actually come from?

In addition, it needs to record the available stock and work orders recorded in the ERP system that must ‘deliver’ their production results to other work orders along with the Purchase Orders that are already running in the system and have yet to be delivered, wherein it is recorded, in detail, which sales orders or work orders, with product at the highest level of the BOM, can be covered by those work orders at lower levels of the BOM and/or Purchase Orders. You can see that as the ‘to’ (deliver) information: where should this piece of stock, or quantity produced in this work order, or quantity to be purchased by means of this Purchase Order, actually be delivered to?

For each sales order and/or finished product work order, it should be recorded in detail which part of the stock and/or which part of the already running semi-finished product work orders, and/or which part of the Purchase Orders created in the system, can be used to achieve coverage of the demand for the item that is on that sales order, or in the BOM of the finished product work order.

If there appears to be insufficient stock to cover a sales order or finished product work order, the system should check whether there is a semi-finished work order that could take care of that cover in the short term or whether it could be covered by one or more pending Purchase Orders if the manufacturing organization has outsourced production of such a material or component. For that stock and semi-finished product work order as well as that Purchase Order, it would then have to be recorded in detail who (so which sales order or work order) requires coverage and with what quantity. 

If there is not enough stock and/or no semi-finished product work orders and/or no Purchase Orders, this should lead to the creation of a Planned order for the requested material or component, whereby the source of that demand can be recorded in detail.

The acquisition time or lead time should be subtracted from the requirement date in the Planned order, so that the program ensures that the date on which the work order or Purchase Order should start does not end up in the past, but at least on the date on which this new kind of MRP program is running.

And if this threatens to jeopardize the coverage that that work order or Purchase Order must provide, because that work order or Purchase Order cannot ‘deliver’ on time, a warning or alert should immediately be raised and flagged in the system, for this specific work order or Purchase Order, to allow the material planner or purchaser to focus his or her attention on this.

This whole mechanism could then be extended to include demand from forecasting and fixed production schedules (MPS schedules) where a comparable detailed recording of demand and coverage can take place.