Implementing an MRP system will not only give you a better overview of your business – it gives you the the tools to improve your processes in a way that would be unimaginable without it.
As a small business owner, you’re always looking for ways to improve your manufacturing processes. That’s why you’ve been exploring the idea of adding manufacturing resource planning software (MRP) to integrate all of these processes under one system.
An MRP software solution could transform your business from ordinary to extraordinary by identifying wasted time and money. You’ll make better use of your people and equipment, turning your work into cash faster than you ever thought was possible.
Here are five manufacturing processes that will be vastly improved after you implement your new MRP software:
It all starts with planning, and your MRP system makes it easy for the production manager or even your salespeople to create a manufacturing order (MO). And by entering the number of products you need, you’ll get an estimate of their costs and lead times.
After the MO has been generated, your system immediately reserves the materials that are in stock and can make purchase orders (POs) for any items that must be purchased. The bill of materials (BOM), inventory requirements, and purchased items are all in the same system, so your team can plan production with complete accuracy before all of the material arrived or before they have even been procured.
Each new MO informs the system of all the operations that will be involved in that specific routing. You begin every new MO with proper automatic planning and a realistic production schedule. And before production starts, you can monitor late POs and MOs and take action on minimum stock alerts.
Read more about production planning.
There will be no more guessing if you have enough of an item in stock. You will always have instant access to your manufacturing inventory quantities, their movements, and any shipments. You will always be able to track stock lots and serial numbers since any transactions that are completed in other departments immediately update inventory figures.
Consider these advantages:
Also, keep in mind that an MRP system allows your sales staff to calculate production costs and lead times. They can then provide their customers with a pre-filled quote that reflects the current stock and pricing.
The procurement process includes selecting vendors, establishing payment terms, finding the best products, and purchasing them. MRP allows your business to manage those vendors, keep a record of purchase terms, and track procured items and materials — all in one place. More about procurement management.
By creating a purchase order — which includes a description of the item, the quantity, and a PO number — the system will automatically fill it out using the purchase terms that have already been established and saved.
The software can do a procurement forecast that is determined by your sales forecast, or it can show purchase requirements that are determined by your production plan. These features help your sales and production teams to stay connected to the availability of stock items and materials, and they give information on lead times and costs, which are invaluable for quoting and planning production schedules.
When purchased items are received, your receiving department can record the full receipt by merely typing in the arrival date. Those items will be added into stock automatically. Partially received items are marked similarly.
After production is scheduled, all of the manufacturing operations assigned to the workers on the shop floor are automatically populated. On most MRP systems, employees can use an internet kiosk that allows them to track and report their tasks in real-time using either a smartphone or a tablet. Their duties are clearly shown in the production plan.
Operators just hit the “Start” button to begin operation and “Finish” to end the operation and report the quantity of the completed products. Once the entire operation is done, all materials associated with the operation are automatically marked “consumed from stock,” or something similar to that, and the MO is automatically finalized and the finished products are entered into stock.
All departments and workers are managed in one place, typically in a human resources module. An hourly wage can be attached to each worker, thus making it possible to quickly calculate the cost of labor in completed jobs or work in process.
With MRP software, it’s easy to produce a BOM of just a few components, or you can upload a new one from engineering that is made up of hundreds of parts. And editing your bill of materials is simple.
You might also like – Bill of Materials – An Essential Guide for Manufacturers.
You can create a basic single-level BOM in which the products are manufactured directly from raw materials. Or you can opt for a multi-level BOM for sub-assemblies or your more complex products.
Your BOM can be used for planning, purchasing, and estimating the cost of new work. Workers in any department can check on the availability of materials in inventory and immediately find the expected delivery dates of purchased items.
Because everything is managed in one software package, you will know the cost of finished products instantly. The MRP software will automatically add up the manufacturing operations costs, labor charges, and material prices.
Your MRP software will improve all of your processes. It can help you shrink your overall manufacturing costs, prevent material shortages, reduce inventory, and control your purchasing costs. Accurate scheduling enhances your business’s productivity by decreasing lead times. And it enables you to provide your customers with a higher quality product and service, all of which will keep you competitive in the marketplace.
Implementing an MRP system can have immense benefits for processes throughout a company. Looking at the bigger picture, it helps integrate and centralize all business data, making it easily accessible and understandable. Going into details, however, a properly implemented MRP system will have direct positive consequences for various specific operations.
Generating a manufacturing order will prompt an MRP system to use the BOM of a product to unleash a chain of actions that allow you to automatically schedule, book, and procure everything you need to get the order fulfilled by the time specified. This eliminates much of the inefficiency of inter-departmental communication, providing your team with real-time data momentarily with new information coming in. As production rolls out, the system will use worker reports in order to measure the labor costs incurred with any particular order, and to generate meaningful statistics about your production efficiency, allowing you to detect bottlenecks and improve upon them.