Why Isn't My MRP Telling Me to Order That?

Your MRP isn't stubborn. Get to know it better.

frustrated businessman at computer
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As we’ve noted previously, MRP's come in all shapes and sizes.

Get to Know Your MRP

MRP commonly means "material requirements planning" and you can pay hundreds upon hundreds of thousands of dollars for the right MRP (or ERP - "enterprise resource planning") or you can go cheap and calculate your material requirement needs by hand.

But if your purchasing department is regularly buying more than ten parts, it may be time to stop calculating your material requirement needs by hand.

 

Of course, to interpret what an MRP system is trying to tell you can be a little like trying to sort through those fluorescent green squiggles in The Matrix.  If you don’t know how to correctly cull through all that data, you might find yourself trying to rescue Morpheus (AKA your on-time delivery) from Agent Smith (AKA your lack of process controls) while bending over backward to dodge real-time bullets (AKA what your next S&OP meeting will feel like). 

Much like The Matrix, your MRP is simply a machine.  Unlike The Matrix, however, your MRP isn’t trying to keep you in a lifelong stupor while using your body as a battery (although SAP is in beta with that bolt-on feature).  No, your MRP wants to help you.  It’s trying to optimize your supply chain and the messages are telling you how to do that. 

Then why, you ask, did your manufacturing director just stand on top of your desk asking you why you didn’t order component Z when he needs 1,000 eaches of component Z because he is line down?

After checking your MRP, you see that your MRP didn’t send you a “buy” message for component Z.  If your MRP only wants to help, why didn’t it tell you to order component Z? 

Your MRP takes into account demand, safety stock, lead times, open purchase orders and other factors when determining when you should place new purchase orders.

  Those safety stock levels and lead times need to be reviewed frequently to ensure they are still accurate in your current environment.

So why wouldn’t your MRP tell you to order component Z when your manufacturing director has clearly told you that he is line down because he doesn’t have component Z?

The first place to look would be any location that you might think are non-nettable, but might actually be nettable.  What does that mean?  Well, let’s say you have 1,000 eaches of component Z under quarantine (probably in an MRB, i.e. material review board, location) because of a quality issue – you and everyone in operations know you can’t use that 1,000 eaches. 

But your MRP might be set up to account for parts in MRB when it calculates potential “buy” messages.  If your MRB location is “nettable” and there are 1,000 eaches there (even though they’re under quarantine) – your MRP might not tell you to order more.  The solution here is to make sure your MRB locations are non-nettable. Same with any “scrap” locations that might exist in your MRP.

Another reason that your MRP might not think you need to order 1,000 eaches of component Z is that they may be in receiving, but not put away yet.

  Check to see if you can find a recently received purchase order and then track it to find out if it was inspected and put in stock.  Depending on the bandwidth of your team in the warehouse, that step can take anywhere from 15 minutes to 72 hours. 

You might also have a supplier who’s late.  If you have a PO in your MRP for component Z, but that PO is late – your MRP might not see the need to order more. Look for “expedite” or other “WTF” messages from your MRP telling you to get your suppliers on the ball. 

And the last place you might want to look is in your warehouse.  Is your inventory accurate?  When was the last time you cycle counted component Z?  Maybe your manufacturing director believes you are out of component Z because your MRP is telling him that you are out of component Z.  But what if it’s just feet away, sitting on a pallet, waiting for him?

  A robust cycle count and physical inventory program will help ensure 100% inventory accuracy. 

By understanding the inner workings of your MRP, you'll see that all your MRP is doing is trying to help you get your customers what they wantwhen they want it - and spend as little money as possible getting that done.  It is your friend.