The case illustrates Franklin Fan’s flawed implementation of a Material Requirements Planning system creating incorrect order processes leading to shortages, delays, and inefficiency. The system was suggested by the organization’s vice president of supply chain and operations, Kathryn Marley (Week 5 MRP Case, 2013). The suggestion followed rising popularity of the company’s products: personal fan (PF032) and ceiling fan (CF151) as an initial step toward a full-fledged ERP process. Although the MRP system is fairly functioning, it needs improvement as it currently leads to shortages, delays, and functional inefficiencies. Improving the system will ascertain timely deliveries, minimize shortages and unnecessary costs, and increase overall profitability.
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Review of Manual MRP
The manual MRP explosion highlights production projections within a six weeks’ timeline. The projection addresses each product’s forecast, booked orders, projected on-hand inventory, MPS quantity, MPS start, and ATP. The system projects 954 of the 954 CF151 each week. The projection reveals decreased customer booking with time when projected from week 1. However, the MPS quantity is within the projected forecast, implying that the new system can significantly address quantity and priority issues. Equally, the forecasted quantities for PF032 are slightly above the MPS quantity for weeks 4, 4, and 5 except for week 1, 2, and 6 which do not have any orders.
Thus, the MRP explosion for CF151 occurs throughout the estimated period except Pd 6, while that of BF032 occurs within Pd 1, Pd 2, and Pd 3 with exceptions in Pd 4 to Pd 6. The findings illustrate a need for improvements of the MRP systems to incorporate such a projection system to address capacity and prioritization issues to enhance production and customer satisfaction.
Identification of Good and Bad Points of MRP
The MRP has facilitated accurate creation, storage, maintenance, and retrieval of BOM files and inventory records. Hence, inventory transactions are accurate after removal or replenishment of inventory from stockroom. In other words, the system has enhanced credibility of the current on-hands balances. The MRP also experiences an explosion each week providing new material requirements plan, which is vital for the identification of new orders for launching (Week 5 MRP Case, 2013). The system also allows material search to identify scheduled receipts to expedite and those to delay through pushing their due dates to create room for urgent tasks.
The main shortcoming of the MRP system is that it does not address capacity and priority issues. The system lacks a formal system to prioritize orders. The shop workloads are unlevelled as some weeks are busy while some weeks lack activity (Krajewski et al., 2016). The problem leads to an influx of orders with short fuses leading to overworking. This implies that although the system has allowed order planning, it lacks a prioritization system to avoid inconsistencies.
Improvement of the Resource Planning Process
The main improvements needed include capacity and prioritization functioning. They should begin with employee training to adequately adjust the ordering and prioritization plans. Orders with a shorter lead time should not be recorded in the system to avoid delayed deliveries and bottlenecks. Efficient coordination of manufactured and purchased items is necessary to match the production needs. Essentially, an implementation of a prioritization system will help in adjusting and aligning orders according to projected deadlines to meet customer demands. Prioritization will also allow facilitate setting of priorities hence increase customer satisfaction. Employees will also work considerably avoiding overworking and underworking, which may affect their ultimate productivity. The improved system should minimize overrides which create additional costs.
|Master Production Schedule|
|Item name: CF151 Ceiling Fan||FOQ: 400|
|Lead Time: 1 week|
|Quantity on Hand:||(102)||Wk. 1||Wk. 2||Wk. 3||Wk. 4||Wk. 5||Wk. 6|
|Customer Orders (Booked)||102||811||717||476||242||96||10|
|Projected on-hand inventory||(102)||944||390||236||82||328||174|
|Item name: PF032 Personal Fan||FOQ: 1,197|
|Lead Time: 2 weeks|
|Quantity on Hand:||2,243||Wk. 1||Wk. 2||Wk. 3||Wk. 4||Wk. 5||Wk. 6|
|Customer Orders (Booked)||0||896||758||515||237||101||11|
|Projected on-hand inventory||2,243||1,262||285||509||737||969||9|
Krajewski, L. J., Malhotra, M. K., Ritzman, L. P. (2013) Operations management processes and supply chain, (11th ed.). Pearson.
Week 5 MRP Case. (2013). Franklin fan company (Cont’s).