By Mike Hart
In my last post, I wrote about the inefficiencies involved in using shortage lists for job and PO planning.
If you operate with a general accounting software package, you do not have an MRP capability and must use shortage lists out of necessity.
Ironically, many planners who operate with a manufacturing software package persist in using shortage lists, even though an MRP capability is available. This is due to habit, meaning that it’s always been done that way, and mistrust of MRP due to not fully understanding how it actually works.
In my last post, I wrote about the inefficiencies involved in using shortage lists for job and PO planning.
If you operate with a general accounting software package, you do not have an MRP capability and must use shortage lists out of necessity.
Ironically, many planners who operate with a manufacturing software package persist in using shortage lists, even though an MRP capability is available. This is due to habit, meaning that it’s always been done that way, and mistrust of MRP due to not fully understanding how it actually works.
A helpful way to understand how MRP works is to think of it as a time-phased shortage list.
Shortage lists lack the dimension of time
Planning within non-MRP systems relies upon shortage lists, BOM explosions, job chaining, and other workaround tools to compensate for the lack of MRP functionality. Because non-MRP systems do not include jobs with start and finish dates, they lack any dimension of time.
Without the dimension of time, it is difficult to avoid shortages caused by timing issues. For example, a subassembly item’s total demand may be covered by a pending supply job, in which case the item fails to get listed on the shortage report. However, if the item is needed immediately by other jobs and the pending supply job won’t be completed until several days from now, an actual shortage exists which prevents those jobs from being started.
It is also difficult to avoid over-stocking due to timing issues. Total demand for an item may exceed incoming supply, in which case the item gets listed on the shortage report, which dictates creating a new job. But if some of that demand has a later requirement date that can be supplied by a future job, making the full quantity now results in an over-supply.
MRP is a time-phased shortage list
MRP is a special type of shortage list – one that is time-phased, which solves all the timing issues that are endemic to traditional shortage lists. Each MRP run generates a shortage list that is limited just to the items that need jobs now to meet future required dates. Tomorrow and each succeeding day, another set of required dates will fall into item planning periods and another shortage list will be generated.
So if you are accustomed to creating jobs from a shortage list, that is precisely what you will be doing using MRP. The difference is that you are working from a much smaller list that is confined just to items that need jobs and POs today.
So if you are comfortable with shortage lists, but uncomfortable with the idea of using MRP, think of it as just another shortage list and it becomes easier to understand and accept.
The difference is that the MRP shortage list is associated with a narrow slice of time, which makes it much smaller and easier to assess. Moreover, all the dates are coordinated for you and the suggested jobs and POs can be generated automatically instead of having to be entered by hand.
That sounds like the ultimate shortage list to me.
Mike Hart is the co-founder and President of DBA Software Inc., a leading provider of manufacturing software for small businesses.
Shortage lists lack the dimension of time
Planning within non-MRP systems relies upon shortage lists, BOM explosions, job chaining, and other workaround tools to compensate for the lack of MRP functionality. Because non-MRP systems do not include jobs with start and finish dates, they lack any dimension of time.
Without the dimension of time, it is difficult to avoid shortages caused by timing issues. For example, a subassembly item’s total demand may be covered by a pending supply job, in which case the item fails to get listed on the shortage report. However, if the item is needed immediately by other jobs and the pending supply job won’t be completed until several days from now, an actual shortage exists which prevents those jobs from being started.
It is also difficult to avoid over-stocking due to timing issues. Total demand for an item may exceed incoming supply, in which case the item gets listed on the shortage report, which dictates creating a new job. But if some of that demand has a later requirement date that can be supplied by a future job, making the full quantity now results in an over-supply.
MRP is a time-phased shortage list
MRP is a special type of shortage list – one that is time-phased, which solves all the timing issues that are endemic to traditional shortage lists. Each MRP run generates a shortage list that is limited just to the items that need jobs now to meet future required dates. Tomorrow and each succeeding day, another set of required dates will fall into item planning periods and another shortage list will be generated.
So if you are accustomed to creating jobs from a shortage list, that is precisely what you will be doing using MRP. The difference is that you are working from a much smaller list that is confined just to items that need jobs and POs today.
So if you are comfortable with shortage lists, but uncomfortable with the idea of using MRP, think of it as just another shortage list and it becomes easier to understand and accept.
The difference is that the MRP shortage list is associated with a narrow slice of time, which makes it much smaller and easier to assess. Moreover, all the dates are coordinated for you and the suggested jobs and POs can be generated automatically instead of having to be entered by hand.
That sounds like the ultimate shortage list to me.
Mike Hart is the co-founder and President of DBA Software Inc., a leading provider of manufacturing software for small businesses.
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