For most of the manufacturing customers of Dassault Systèmes, ERP systems are delivering MRP (Material Requirements Planning) functionality to support the material availability for the production or even for the whole company (from complex components, via nuts and bolts, even up to stickers and paper clips). In this post, I would like to elaborate on the MRP part that caters for the material in the context of the production, and how planning tools can improve the MRP from the ERP system to a next level. Some examples of ERP systems are: SAP, Oracle ERP, Infor, Microsoft Dynamics, JD Edwards.
It is beyond the scope of this post to elaborate on the concepts and specifics of MRP, but in case you need some background on MRP, there are excellent information sources to be found online.
MRP in manufacturing environments
MRP functionality takes care of balancing demand and supply. Demands can be customer orders, internal orders, dependent demands, etc., and supplies can be inventory pieces, production orders, purchase orders, etc. The goal of MRP is to make sure that all relevant demands are serviced with appropriate supplies. For that, the MRP needs master data to understand how products can be produced (product routings, including BOM), where products can be bought (supplier information), etc.
MRP in ERP
ERP systems typically include MRP functionality. An MRP-run does the balancing of demands and supplies, an creates new production orders and purchase orders in the process, taking into account lead times, supplier quotas, and other kinds of rules. For new production orders, it will expand the BOM, and also create supplies for the dependent demands (from required input materials from the BOM).
But typically one element is not included in this MRP-run, and that is the capacity usage. ERP systems are not real planning systems, thus there is no proper notion of capacity. This limits the options of the MRP significantly, because things like make-or-buy decisions and alternative product routings only can be evaluated if there is a capacity constraint taken into account. If not, the MRP-run essentially can only choose the cheapest routing.
MRP and planning systems
The MPS level in the planning landscape typically takes care of the production planning for the next months, and deals with product-level demands such as customer orders or other external product demands. It uses relevant machines, and takes the relevant production orders and plans them on the allowed machines, taking into account finite capacity of the machines. The detail of the planning is not necessarily an actual sequence of operations on a specific machine, but more a set of production order steps to be executed in a defined period, for instance in a day. The result is a plan that should approximately be feasible to be executed, and that gives an overview of which products or orders can be produced on time, which will need to be pre-produced, and which will run the risk of being late. And next to that, the plan gives a good overview of the capacity usage and the input material needs.
So the MPS level knows about production capacity and about material needs, therefore it is the best place to position an “advanced MRP” functionality to improve the ERP functions. And that is also exactly what the DELMIA Quintiq MPS solutions can deliver.
“Advanced MRP” in the DELMIA Quintiq MPS solution
As mentioned before, MRP in ERP can cater for all material requirements in a company, and it is good at it for many areas. But for the real production related materials it is less suitable, mainly because of the capacity shortcoming. For that reason, our MPS solution is extended with MRP functionality to take care of this part in a more advanced way. We call that replenishment, and it can take care of creating production order proposals and purchase order proposals, that make sure to service all customer/external demands, while making sure to not overload any relevant machines. It will do that also for any dependent demands, and build up a full plan including new production orders and purchase orders.
If there are any alternative sourcing options, such as make-or-buy decisions or subcontracting steps, these can be evaluated by having multiple routings for the same product. Based on routing costs, the system will choose the best way to produce and buy materials, without overloading machines or overasking suppliers.
The DELMIA Quintiq solution supports this by using best-in-class optimization techniques, and the solution takes both replenishment and capacity into consideration in a single step, for the full supply chain that is fed into the system.
The ERP system will still be responsible for all materials that are not produced inside the company, or that have multiple sourcing options. The MPS planning solution will deliver the production order proposals and purchase order proposals back into the ERP and there the MRP-run can take these as input and generate the remaining material requirements.
To conclude, here is a tabular overview of the MRP capabilities between ERP and MPS, which can be helpful in the understanding of the value of the advanced MRP in DELMIA Quintiq MPS solutions.
