MRP II is manufacturing resource planning. MRP II provides planning for many areas of manufacturing companies which includes purchasing, inventory, material planning, shop floor scheduling, capacity planning, and accounting. MRP II allows for standardization and streamlines automation of business processes which leads to improvements in cost control and revenue.
The MRP system assists the manufacturing company by suggesting purchase orders to be placed and exactly when to place them so that the materials required for the specific task arrive on time. The MRP system also recommends a start date for each work task required to perform the job. By knowing the materials needed parts and the start dates of the work tasks means that it is possible to pinpoint material shortages before they occur so that they can be avoided rather than finding out when it’s too late.
MRP systems assists companies particularly manufacturing companies in various ways, the most important contribution that the MRP inventory system gives are in:
• On-time material ordering which reduces expediting and material shortages.
• Combining of material orders to suppliers which reduces order placement.
• Real time planning of work which reduces rescheduling and increase productivity.
• Makes company information more integrated and gives it the accessibility which improves task specific progress.
Advantages: MRP II helps to standardize business processes by providing the business with automated methods for many different areas of the business. This eventually leads to an overall standardization which will lead to repeated processes and create a platform for improving those processes. A company that implements MRP II for the very first time is going to experience problems initially controlling the increase in selling transactions, as well as the manufacturing and purchasing that is associated with the company’s growth. MRP II allows employees in those specified business areas to do more by having increased visibility of information that is needed to perform their jobs. This will greatly improve how their work gets done which will allow the company to be more competitive within its market.
Disadvantages: The implementation of MRP II requires information to be accurate. If inaccurate quantities are entered in the inventory area, errors in automated planning processes will occur. The MRP II utilizes length of time to purchase or manufacture products and for quantities usually purchased on a purchase order or manufactured on a work order. If there is significant changes in the actual lot sizes purchased or produced and the lead times then the MRP II will not produce plans that match. Inaccurate information and lack of understanding of the impact of lot sizes and lead times will cause implementation failure of MRP II and costly reimplementation.