MRP in OnRamp

Author: admin in: Tutorials

MRP in OnRamp

May 26, 2021

What is MRP

Material Resource Planning, or MRP, is the process of translating a production schedule for an end product to a set of time-based requirements for all of the sub-assemblies and parts needed to make that set of finished goods. MRP should be used as a decision support system that provides suggested orders. Planners make any required modifications to the suggested orders and then finalize them. I.e., MRP is used to suggest a schedule of what parts should be available, and when, to satisfy part demand.

MRP Factors

MRP calculates material requirements and schedules based on the following factors. The two simplest factors are supply, what you have, and demand, what you need. After that, it gets more complicated:

  • Part Lead Time – the time it takes to convert the materiel into the product in Demand.
  • Safety Lead Time – a buffer, measured in days, that is required between the planned supply deliveries and the demand.
  • Order Lot Size Horizon or Order Period – the number of days forward that MRP uses to calculate materiel requirements.
  • Order Multiplier – every order must be a multiple of this number; MRP will use this number when calculating how much to order.
  • Order Minimum – the minimum number of parts to order.
  • Safety Stock – the minimum amount of inventory to keep available to minimize risk.

Calculating Projected Inventory

MRP calculates the projected inventory by looking at what’s currently in stock (Inventory), any vendor purchase orders or work orders (Supply), minus sales orders (Demand). Or, as a formula: Projected Inventory = Inventory + Supply – Demand. Often, this is done manually on an MRP table:

Calculating Projected Inventory

With this, based on upcoming demand, you can calculate when you will need to increase supply to ensure that you meet client demand.

For a single purchased part, like a screw, with clearly indicated values, creating an MRP chart is easy as seen in the following example:

Simple Purchased Part Example

Screw A has the following characteristics:

·     Inventory: There are 35 in inventory today

·     Demand: There is an upcoming order for 50 pars to be shipped in 5 days

Based on these values, the MRP will suggest that you have 15 parts supplied to inventory within 5 days. Here it is on an MRP table:

Simple Purchased Part Example

However, for manufactured parts with multiple levels, each one with differing lead times, safety stocks, and order multipliers, automated systems will simplify the process and ensure that you do not run out of parts as seen in the following example:

Manufactured Part Example

Part A10001 has the following characteristics:

  • BOM: To make one Part A10001, you need:
    • 3 Part H2000 (Inventory = 15, Safety Lead Time = 3, Order Minimum = 25, Order Multiplier = 25, Safety Stock = 15)
    • 3 Part H3000 (Inventory = 20, Safety Lead Time = 1, Order Minimum = 25, Order Multiplier = 25, Safety Stock = 10)
    • 3 Part H4000 (Inventory = 14, Safety Lead Time = 0, Order Minimum = 20, Order Multiplier = 20, Safety Stock = 10)
    • 1 Part PC1001 (Inventory = 0, Safety Lead Time = 2, Order Minimum = 2, Order Multiplier = 2, Safety Stock = 0)
    • 1 Part PC1002 (Inventory = 0, Safety Lead Time = 3, Order Minimum = 2, Order Multiplier = 2, Safety Stock = 0)
    • 3 Part SP1000 (Inventory = 0, Safety Lead Time = 4, Order Minimum = 4, Order Multiplier = 4, Safety Stock = 0)
  • Inventory: There are 0 in inventory today
  • Demand: There is an upcoming order for 12 pars to be shipped in 8 days
  • Safety Lead Time: To ensure there are no delays, orders should be ready for shipment 1 day ahead of the customer requested delivery date
  • Order Multiplier: The part is ready in groups of 1
  • Order Minimum: The minimum order quantity is 1
  • Safety Stock: Due to the nature of the part, there should be 0 in inventory if there are no upcoming orders

Based on these values, you will need 6 MRP charts. One for each part on the BOM. In the MRP table below, the parts have been added with the order amount placed on the latest possible order dates:

Manufactured Part Example

 

Notes

  • Part H2000, H3000 and H4000: Because of the order multiplier, the supply was higher than the demand to ensure the supply meets or exceeds the demand.
  • Part H4000: Since there were 14 parts in inventory, with a safety stock requirement of 10, 40 parts were manufactured to meet or exceed the safety stock.
  • Part SP1000: The part is required 5 days before Part A10001 demand date, i.e. 3 days from now.

Now, it is up to the planner to sort the supply quantities based on the plant capabilities. For example, it may be more reasonable to spread the supply values more evenly across the week.

As complicated as this is for one part with 5 component parts, imagine the same for all the parts you produce, plus reused component parts (like a screw that is used on 2 or more assembled parts).

Manually performing this process for every part on your shop floor can be difficult and lead to human error. OnRamp comes with a built-in MRP module that will calculate your upcoming supply needs based on inputted demand.

MRP in OnRamp

The part factors are set up in the following screens:

Demand

Demand is registered to MRP when you create a customer sales order. Running MRP creates work orders, which also create demand for the BOM sub-components of a part.

Sales Orders are added on multiple screens, including Sales Order by Customer Ship To [S1085].

Supply

Supply is registered to MRP when you create a work or purchase order.

Purchase orders are added on multiple screens, including Production Purchase Order Maintenance [S1725].

Part Master Setup Factors

Part Lead Time, Safety Lead Time, Order Lot Size Horizon / Order Period, Order Multiplier, and, Order Minimum are setup on the Part Master [S1009] > Planning tab.

Note: Lead Time and Order Minimum can also be set on the vendor part record for purchased parts.

Safety Stock

Safety Stock is setup on Safety Stock [S1914].

Running MRP

Running MRP

Use Review MRP Schedule by Part [S1214] to:

  • Run the MRP for all the parts in OnRamp
  • View the MRP schedule for each part
  • View the MRP schedule for each part in the parent part bill of materials
  • View the part settings relevant to schedule planning
  • View the part inventory
  • View and part sales orders

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