MRP Concepts In Vantage E9

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MRP Concepts

Material Requirements Planning (MRP) is a set of planning tools that lets you both estimate potential demand and propose the supply that will answer this demand. It does this by generating job, purchase, and transfer order suggestions. MRP is designed primarily for companies that manufacture make to stock quantities or mixed-mode manufacturers that run both custom and stock products. Regular use of MRP lets you anticipate the future demand for your company’s products, ensuring that materials are in the right place at the right time.

This functionality gives you the ability to forecast production and material demand. It also gives you a fast way to create suggestions that can be turned into job, transfer order, or purchase order records.

Before you use this functionality, you must have accurate methods of manufacturing designed for your part records, solid Engineering Change Order (ECO) control, accurate inventory records, thorough Lead Time values for purchased and transferred materials, and proven capacity estimates for resources and resource groups.

The MRP engine places demand against the above information to calculate the job, transfer order, and purchase suggestions. The source of the demand determines the part quantities needed to be either produced or purchased.

Supply and Demand Logic

The application logic resolves how the demand requirements placed against your manufacturing center can be satisfied through various methods for delivering supply. There are several ways that you can create supply to satisfy demand requirements. The following illustration shows you the different ways that are possible:

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•Demand requirements can come from sales orders and internal plants (transfer orders), jobs that need component parts (materials), sales forecasts, master production schedules, purchase contract requirements, and inventory needs for minimum and stock quantity levels.

•The Supply sources that can answer this demand are jobs that manufacture part quantities, purchase orders that satisfy material needs on part methods, and warehouses that contain the requested stock quantities. MRP supports many combinations of demand and supply relationships, which lets you set up the application to reflect how your production workflow handles supply and demand.

The following illustration shows the various directions supply sources can be moved to satisfy demand requirements. This illustration assumes that your manufacturing center is a multi-plant environment:

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The following list explains how each item satisfies supply:

•Job – The quantity manufactured through a job is the primary source of supply. If the manufactured quantity is for a part that is not saved within inventory (a non-stock part) this quantity is assigned directly to the sales order, transfer order, or another job. If the quantity is manufactured for a part that is stored within inventory (a stock part), this quantity is assigned to one or more warehouses.

•Purchase Order – The quantity supplied through a purchase order is received differently if the purchased part is a stock or non-stock item. If it is a stock part, this quantity is received by one or more warehouses. If it is a non-stock part, this quantity is received by the job that needs the material.

•Warehouses – Warehouses receive quantities from both jobs and purchase orders. These quantities are then either assigned to a job to satisfy a material requirement on the job method or assigned to a sales order or transfer order. Typically a purchased quantity is assigned to a job. A production quantity is assigned to a sales order, transfer order, or another job.

Base MRP Design

The MRP engine is a production tool that uses your company’s production flow to estimate the potential supply and demand needs for your manufacturing center. It measures the supply of each part or material within your manufacturing center, either for a specific working day or for a demand requirement due on a specific day. It then places the part or material demand required on the same working day and determines if the available supply quantities will meet the required demand quantities.

If the MRP engine discovers that there is not enough supply to meet demand on this specific working day, it generates manufacturing (job), transfer order, and purchase (PO) suggestions. You can review these job, transfer order, and PO suggestions to decide whether or not the suggestions should be turned into actual job, transfer order, and PO records. The MRP engine generates PO suggestions in the base inventory unit of measure defined for the part in the Primary UOMs - Inventory field in the Part Maintenance - Part - Detail sheet.

To allow flexibility, the new jobs can remain linked to the MRP engine. If you run the MRP engine again, these unfirm jobs are deleted and new jobs are created in their place. For PO’s, new purchase suggestions are generated against the original purchase order you created; you can then decide whether or not to update the original purchase order. Transfer orders function in the same way; new transfer order suggestions are generated against the orginal transfer order you created. This functionality allows you to try different supply plans against your potential demand.

Key Components

The MRP engine handles the supply and demand of material requirements through three main components – Calendars, Parts, and Plants. The purpose of each component is discussed here, but each component is explored in more detail later within the Primary Components section.

•Calendars – These records define the number of days available for production. Made up of working days and non-working days, the MRP engine uses calendars to determine if demand and supply can be placed on a specific working day.

•Plants –These records define the production areas within your manufacturing center. Each plant can contain several MRP values, like the Production Calendar, Production Preparation Time, and Finite Horizon. These values can be used as the default for any part quantity that will be manufactured at the plant.

•Parts – These records define much of the primary information required for the MRP engine. Each part record, whether it is for a manufactured or purchased material, can be linked to multiple plant details.

Each of these part-plant detail records can contain unique MRP values including Days of Supply, Production Prep Buffer, Reschedule Time In Delta, and so on. This allows the MRP engine to calculate suggestions based on how you manufacture each part within each plant.

• The Epicor application always performs MRP calculations using the base UOM (Unit of Measure) code assigned to the part in the Primary UOMs - Inventory field in the Part Maintenance - Part - Details sheet. The base UOM usually the smallest UOM in which the a part is normally stocked, and is the default UOM for most inventory related transactions in the Epicor application.

• The Track Multiple UOMs check box in the Part - Plants - Detail sheet allows you to specify if inventory balances for a particular part should be stored in a single base unit of measure (for example, Each), or if inventory balances for the partthey should be stored and tracked in multiple units of measure (for example, Each, Feet, Inches). However, the Epicor application always uses the base UOM code assigned to the part in the Primary UOMs - Inventory field, regardless of the setting of the Track Multiple UOMs check box when tracking WIP inventory, calculating purchase order suggestions, or performing MRP calculations.

MRP Results

When the MRP engine finishes processing, it creates the following record types. You will handle each record type differently.

•Unfirm Job
– When the MRP engine discovers a demand requirement for a manufactured part that has an approved method of manufacturing, it will generate an unfirm job to satisfy this demand requirement. A method of manufacturing defines the assemblies, operations, and materials required to produce a quantity of a manufactured part.

Unfirm job records are displayed within the Job Entry program. While the job has the unfirm status, it can be changed by the MRP engine. If the demand requirement for an unfirm job changes, the MRP engine deletes the unfirm job and generates a new job record to replace it.

•Job Suggestion
– When the MRP engine discovers a demand requirement for a manufactured part that does not have an approved method of manufacturing, it will create a job suggestion. These are job shell records that you can turn into a job later on.

You can view job suggestions within the Job Manager program. This program lets you turn job shell records into unfirm jobs. Job suggestions can be removed or updated by the MRP engine.

•Purchase Suggestion
– When the MRP engine discovers a demand requirement for a purchased part, it generates a purchase suggestion. You can turn suggestions into a new purchase order or update an existing open purchase order.

You can view suggestions within the New PO Suggestions program. You can then run the Generate PO command (from the Actions menu) to turn them into a purchase order.

The open purchase orders appear within the PO Entry program. Each demand requirement is a specific PO Release detail within the purchase order record. If the demand requirements for this purchase order change, however, you can pull the new purchase suggestion into the PO record and update the PO Release detail.

•Transfer Order Suggestion
– When the MRP engine discovers a demand requirement for a transfer part, it generates a transfer order suggestion. You can turn suggestions into a new transfer order or update an existing open transfer order.

You view, edit, delete and accept transfer order suggestions within the Transfer Order Workbench program. This program is launched from within Transfer Order Entry using this program’s Actions menu.

There are a number of options within this program that you can select - Cancel, Expedite, Increase, Postpone, and Reduce. Use these options to create new transfer orders or make changes to existing transfer orders. You can then refine these selections within Transfer Order Entry.

MRP Engine Examples

At its base level, the MRP engine runs in two calculation modes – one for stock parts and the other for non-stock parts. If a part is defined as a non-stock item, it means that you do not store any significant quantities of this part within your inventory. To account for this, MRP only calculates the demand for this part based on the day it is required (the Required By Date) and typically does not use stock calculations.

If a part is defined as stock, however, the MRP engine always runs an additional layer of calculation.

Besides calculating the demand, MRP also estimates the supply of the parts that are available from inventory on the same working day. It then subtracts this amount from the demand quantity while it generates the suggestions.

You can define other MRP variables, specifically on part-plant detail records, that can further affect the suggestion results. To understand what these variables do, however, you should become familiar with how the base MRP engine runs by exploring different calculation examples. The following examples give you an overview of what occurs while the MRP engine calculates quantities for different basic part types.

The Main Scenario

This section details the part record and the method of manufacturing that will be used during the examples in this section.

You will run MRP in order to estimate the demand for Part Omega, a part that your company manufactures.

To calculate the demand for this part, you run the Process MRP program.

The Process MRP program begins its calculations using a specific date – the Scheduled Start Date. The engine then moves forward through each working day to see when quantities for Part Omega need to be produced by which dates. The MRP logic basically asks these questions:

•What quantities of Part Omega are coming in from different locations?

•If this is a stock part, what quantities of Part Omega are for inventory?

•What quantities of Part Omega are being manufactured?

•What quantities of Part Omega are needed each day?

Part Omega has a method of manufacturing that contains one assembly that requires two component materials – parts Alpha and Beta. Because these component materials need to be manufactured as separate part quantities, they will be manufactured on separate jobs. Then the Alpha and Beta material quantities will be sent to the assembly that combines the parts to create the Omega part.

Note: You could also engineer the Omega part method to include Alpha and Beta as subassemblies; in this case, the MRP engine will not create separate jobs for them. For the purpose of this example, however, the Omega part method is set up with Alpha and Beta as materials.