June 1996 € Volume 6 € Number 6

What Gives Manufacturing Resource Planning Its Staying Power?

By Donald H. Sheldon, Jr., CFPIM, CIRM

The first time I was certified CPIM was in 1979, when MRP was material requirements planning to most people. I remember thinking as I studied for the APICS exams that I was getting sick of hearing about MRP, and I believed MRP II was simply material requirements planning sprinkled with a little capacity planning. Then came JIT, TQM, CIM, several other acronyms, and "world-class."

Were these new concepts invented to keep the consulting world alive?

There was a time when I might have said yes. I think not today, and (this is a key piece of information) my thinking started long before I became a consultant. What is the magic that keeps manufacturing resource planning as the business system foundation in most high-performance companies today?

The measurements are key
Manufacturing resource planning (MRP II) starts with business planning and an infrastructure that measures performance against the planning process. It is this measurement system that provides the needed feedback for quick response changes to the business strategy. MRP II is unique in that manner. There are many high-performance companies in the world today that, if you walked through them, you might believe they were mostly utilizing JIT philosophy in their execution. But when we look deeper, we see the MRP II measurements in place: business plan, sales plan, production plan, etc.

A melting pot of innovation
That's what's so great about this grand old friend MRP II. It is not restrictive in its approach; in fact, there are almost no applications of MRP II without the use of Just-in-Time techniques and total quality approaches in successful companies today. These surgically implanted process improvements do not in any way conflict with the structure of MRP II, in fact, they simply enhance it.

There is a factory in Brantford, Ontario, that is one of the most advanced world-class manufacturing facilities in North America. They have squares painted on the floor to limit components being moved to the next adjacent operation (about two hours' worth). There is sophisticated yet flexible manufacturing tooling, limiting labor content and creating flexibility in customization and setup reduction. They turn their inventory more than 100 times per year. Yet under all this professionalism is old reliable MRP II. The measurements are continued to keep a baseline barometer. MRP II is alive and well!

There are no applications of pure MRP II as it was introduced in the '70s and '80s being implemented today. Competition has forced new streamlined methods and improved communication approaches. Tough markets have also influenced sales departments in these companies to realize the importance of forecasting. In fact, the standards for forecast accuracy have been tightened. I think of it like the genetically altered tomatoes that cropped up in the news last year. Research proponents stated that it is much more efficient to alter the tomato biologically than to wait through the maturing of five plant generations as gene changes are bred into them. Most companies cannot move through the entire evolution of business improvement approaches one at a time if they want to leapfrog the competition. Time is too precious. It must be much faster and efficient.

Still the system of choice
High-performance companies today are still working the basics of MRP II performance measurement, but have integrated many new streamlined process approaches into the fold. Some companies are even reengineering their businesses to implement MRP II for the first time!

It was a long time ago when I took those first APICS exams. I would not have guessed then that 16 years later I would still be studying the applications of it. MRP II has a good future.

Donald H. Sheldon, Jr., CFPIM, CIRM, is vice president of Buker, Inc., an international business education and consulting firm. He is the co-author, with Michael Tincher, of The Road to Class A Manufacturing Resource Planning (MRP II), published by Buker in 1995. A past president of the APICS chapter in Binghamton, N.Y., Sheldon is a frequent speaker at APICS functions.

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