MRP II

MRP II means Manufacturing Resource Planning this is a extension to Material Requirements Planning (MRP). MRP II is a procedure that is used in the production planning and control of industrial companies. The inventor of MRP II is Oliver Wight, his idea is a market-oriented and resource-oriented planning of sales, production and inventory quantities (Wight 1995, p. 56).

MRP vs MRP II

Manufacturing Resource Planning (MRP II) is an extension of MRP, which only covers Material Requirements Planning (MRP) (Wight 1995, p. 56). The quantities planned in the MRP show a crucial weakness: One does not know whether they can be realized, because the production capacities were not considered in the planning. Oliver Wight first addressed this weakness with the closed loop MRP. In essence, the execution of the plans and the resulting correction requirements are fed back to planning, and capacity requirements planning is included. The step from Closed Loop MRP to MRP II is more of a paradigm than a planning one. The main concern is the integration of top management into production planning. As described in the objectives, the aim is to achieve end-to-end planning - from the business plan to the sales plan to the production plan (Wight 1995, p. 57).

Goals of MRP II

The goals of MRP II are the minimization of storage times, idle times and set-up times as well as the maximization of the capacity utilization of resources (especially machines and manpower). MRP II aims to achieve end-to-end planning - from the business plan to the sales plan to the production plan (Wight 1995, p. 143).

Framework of MRP II

We speak of MRP II when we talk about an integrated planning of the business process of service provision with the steps

1. Planning and forecasting of medium-term sales
2. Medium-term material requirements planning on the basis of parts lists
3. medium-term rough planning or master planning with order dates and capacities
4. short-term demand forecast, parts requirements calculation, production, capacity and inventory planning and optimization,
5. Production control
6. Controlling

First, the production program is planned on the basis of long-term sales and operations planning. For this purpose, the expected sales quantities are forecast in a demand planning process, taking into account customer orders (Demand Management), and the capacity requirements and available capacity are roughly compared at a high level of aggregation (Rough-cut Capacity Planning). Production program planning can comprise two levels, one at the product group level (Aggregate Production Planning) and the other at the finished product level (Master Production Scheduling). The production program is the starting point for Material Requirements Planning, which determines the required quantities of assemblies, individual parts and raw materials. The required and the available capacities are compared within the framework of capacity requirements planning. The last stage of MRP II includes the execution of the plans within the framework of controlling. It is responsible for releasing and executing the production orders shortly before the planned start date (Higgins, Le Roy, Tierney 1996, p.29)

Requirements for MRP II

MRP II assumes that essential planning parameters such as capacities, order throughput times and processing times can be predicted with a high degree of certainty. Production bottlenecks must always be overcome by capacity adjustments. Above all, however, it must be possible to predict the production program with sufficient accuracy, which in turn requires a reliable sales forecast or planning. Ideally, these requirements are most likely to be met in mass or large-scale production (Kurbel 2016, p. 133).

Examples of MRP II

1. ERP (Enterprise Resource Planning): ERP is a software system that is used to plan, manage and optimize the internal and external resources of an organization. It includes various modules such as sales and marketing, manufacturing, supply chain management, finance, accounting, human resources, and customer relationship management.
2. APS (Advanced Planning and Scheduling): APS is a software system that is used to automate the process of planning and scheduling production, inventory and resources. It helps to reduce production costs and improve overall efficiency.
3. MES (Manufacturing Execution System): MES is a system used to track production processes in real-time and to provide detailed data about the production process. It helps to improve traceability and visibility of production processes.
4. SCM (Supply Chain Management): SCM is a system used to manage and optimize the flow of information, materials, and services from suppliers to customers. It helps to reduce costs and increase efficiency of the supply chain.

Advantages of MRP II

MRP II has several advantages that make it a powerful tool for production planning and control:

• It provides a comprehensive overview of production, inventory, and sales data, allowing users to make informed decisions.
• It allows for better forecasting, enabling users to plan ahead and make more accurate projections.
• It integrates with other systems, such as ERP and supply chain management, to provide a holistic view of the production process.
• It allows for real-time monitoring of inventory and production, enabling users to make timely decisions.
• It enables users to improve communication and collaboration between departments, reducing inefficiencies and improving operations.
• It allows for efficient planning and scheduling of activities, ensuring that all tasks are completed on time and within budget.
• It provides a detailed view of costs associated with the production process, allowing users to control costs and manage budgets.

Limitations of MRP II

MRP II is a powerful tool for production planning and control, but there are some limitations to consider. These include:

• Complexity of the system - MRP II is a complex system requiring specialized knowledge and training to use. This can lead to costly mistakes and errors if not implemented correctly.
• Cost of implementation - MRP II is an expensive system to implement, as it requires specialized hardware and software. This can be a barrier for small and medium-sized businesses.
• Inaccuracies of forecasts - MRP II relies on accurate forecasts of demand and supply. If these forecasts are inaccurate, then the production planning will be incorrect.
• Difficulty of changing plans - MRP II is not designed to easily accommodate changes in plans or strategies. This can lead to production delays and inefficiencies.
• Lack of flexibility - MRP II plans are highly structured and inflexible, making it difficult to adapt to unexpected changes in demand and supply.
• Difficulty of integrating with other systems - MRP II can be difficult to integrate with other systems, such as enterprise resource planning (ERP) systems. This can limit the functionality of the system.

Other approaches related to MRP II

MRP II is just one of the many approaches that can be used to manage production resources. Other approaches related to MRP II include:

• Just-in-Time (JIT) Manufacturing is a production model where inventory is minimized and production is based on customer demand. JIT requires a high level of coordination between different departments, as well as close collaboration with suppliers.
• Flexible Manufacturing System (FMS) is a system that uses automated machines to produce custom products, allowing for quick changes in production processes. FMS requires a high level of capital investment, as well as sophisticated software and hardware.
• Supply Chain Management (SCM) is a system that coordinates the flow of materials and information between different suppliers, manufacturers and customers. SCM allows for more efficient production and delivery of goods, as well as better customer service.
• Lean Manufacturing is a system that focuses on eliminating waste, streamlining production processes and improving efficiency. Lean manufacturing relies on continuous improvement and process optimization to increase customer satisfaction and reduce costs.

In summary, there are a variety of approaches related to MRP II, such as JIT Manufacturing, FMS, SCM and Lean Manufacturing, that can be used to manage production resources. Each of these approaches has its own advantages and disadvantages, and the best choice will depend on the specific needs and goals of the organization.

MRP II — recommended articles

Production logistics subsystem — Dependent demand — IT systems in production management — Material stream — Departmental planning — Master production schedule — Planning and control — Interdepartmental planning — Management by the numbers

References

• Higgins, P., Le Roy, P., & Tierney, L. (1996). Manufacturing planning and control: Beyond MRP II. Springer Science & Business Media.
• Kurbel, K. (2016). Enterprise Resource Planning und Supply Chain Management in der Industrie: Von MRP bis Industrie 4.0. Walter de Gruyter GmbH & Co KG.
• Wight, O. (1995). Manufacturing resource planning: MRP II: unlocking America's productivity potential. John Wiley & Sons.

Author: Tom Alende