Material Requirements Planning (MRP) is a production planning and inventory control system used to manage manufacturing processes. The new Fapco MRP system is software-based, and seamlessly integrated as just one module of its Enterprise Resource Planning systems.
An MRP system, in the realm of contract packaging, is intended to simultaneously meet three objectives to better serve the Fapco customer:
- Ensure materials and parts are available for assembly, production and packaging for delivery to customers
- Lower customer costs by maintaining the lowest possible level of inventory needed
- Improve forecast and plan for manufacturing activities, receivables, delivery schedules and purchasing activities to accelerate getting product into the distribution system
“MRP systems are very complex because by nature the system must have its fingers into every aspect of the company,” says Materials Manager Jo Ann Pressey. “It begins when the customer order enters the system. It populates the choices of raw materials for our buyers to have on hand and acquire, and it lets production know what is due and when to meet the customer’s demand.”
Pressey explained that MRP is all about customer satisfaction. MRP is driven off the sales order. If the customer changes the quantity, the date of delivery, or materials, the system automatically recalculates everything to better meet the demands of the delivery.
“When the customer does change the quantity or the delivery date, and we can no longer support the delivery, the system notifies the purchasing department to expedite the order,” states Pressey.
In laymen’s terms, an MRP system is like having a constant “Plan B” always ready to react to customer changes and demands. With Fapco’s MRP system, the scenarios are programmed into the system to respond in real time to expedite and problem solve.
Pressey explained that MRP “schedules backwards.” MRP systems look at when the customer wants it, how long it takes to build it, when will the parts arrive for part kitting or packaging, how long it takes to order and receive the parts and all the material specifications and cost surrounding the order.
“For example,” Pressey says as she points to his computer screen, “when the delivery date gets moved up, it used to really throw a wrench into the works. Take this part here. This part was ordered to arrive on 5/13. But they now changed the date to 3/29. So immediately, the system reports to our purchasing team so they can go back to their sources and expedite the entire process.”
She expounds that the principle of having a plan in place from which to modify and react to better serve a customer, is at the foundation of the MRP system.
MRP systems are common in manufacturing but not so prevalent in contract packaging. Fapco’s ability to partner with OEMs to purchase parts and become part of the supply chain drove the move to expand its MRP systems.
“As we move from a pure consignment house packaging parts, to a full-service contract packager actually purchasing parts for the OEMs as a supply chain partner, we found it essential to enhance our MRP capabilities. Now that we have become more inline with our automotive Tier One partners, taking in parts and converting them, we have essentially taken on many aspects of a manufacturer,” concludes Pressey.