MRP is a predominant methodology in organizing inventory, production planning and manufacturing management. It has its own benefits and drawbacks.
Advantages:
- On time availability of right materials required for production.
- Increase in timely delivery of manufactured goods to customers.
- Decrease in capital costs due to decreased inventory levels and optimal use of production resources.
- Utilizing business data for analysis and better planning.
- Optimal use of manufacturing resources.
Considerations to avoid failure:
- MRP give benefits when applied under appropriate circumstances and is mostly suitable for make-to-stock manufacturers. Make-to-order and mixed mode manufacturers also benefit from MRP, but only to extent that their production lots are medium to large and products don’t vary much. In case of project based manufacturer, it may be enough to use the approach of ordering and manufacturing what is needed and MRP gives just a framework of how to not miss important pieces.
- With MRP, we need to keep stock and store production records. For production planning to be correct, it’s important to record finished operations and manufacturing orders as soon as production gets completed.
Alternatives:
- Theory of Constraints
- Lean/Six Sigma.
Both address same problem from different angles and do not change basic requirement of keeping records.
Refrence : http://www.erpnews.com/importance-choosing-erp-wisely/