LOGISTICS AND ENTERPRISE INFORMATION SYSTEMS
Introduction
The machine industry is mainly characterized by the help of a differentiated assortment of materials that are used. The analysis of material requirements by considering the management of materials in an enterprise incorporating various kinds of materials. Traditionally, the focus was mainly provided the price of the materials rather than the quality. In the contemporary world, planning as well as the determination of the supply with respect to the materials must be proceeded by various departments engaged in an enterprise. Thus, the study is confined to the planning of materials that are implemented for the production of equipment carried out in Farnray. Hence, the main aim of this study is developing a method after the process of estimating the cost for the designed product and further acceptance which would allow allowing further optimization of the production process.
Problem evident to Harish and calculating MRP
In Farnray Tools, Harish was a production planner responsible for making the calculation with respect to the requirements.
Problem 1:
As it can be seen that Peter Chan, as well as the Manufacturing team, required 200 units of a forged blade. Hence, if the materials are not present on the given period of time, then it would be difficult for Farnray Tool in delivering the product on the stipulated time.
Problem 2:
Peter Chan and its team should produce additional units of blade assemblies and deliver it by 28th week.
Problem 3:
In 23rd week, there is a need for 500 units of handles.
Calculation of MRP
| Level | Part Number | Description | Quantity | Order quantity | Lead time | On hand |
| 0 | 00289 | Spade | 1 | 500 | 1 | 300 |
| 1 | 10089 | Handle assembly | 1 | 1500 | 1 | 350 |
| 2 | 10278 | Handle | 1 | 500 | 2 | 800 |
| 2 | 10062 | Nail | 2 | 2000 | 1 | 0 |
| 1 | 10077 | Shaft | 1 | 400 | 1 | 50 |
| 1 | 10023 | Connector | 1 | 700 | 1 | 350 |
| 1 | 10062 | Nail | 4 | 2000 | 1 | 0 |
| 1 | 10045 | Rivet | 4 | 2000 | 1 | 400 |
| 1 | 10316 | Blade assembly | 1 | 200 | 1 | 0 |
| 2 | 10992 | Blade | 1 | 200 | 4 | 30 |
| 2 | 10045 | Rivet | 2 | 2000 | 1 | 400 |
Table 1: Requirements for Manufacturing spades
(Source: Created by researcher)
By considering the above table, MRP can be estimated as follows:
| LT- 1 Week For 500 units | Part number: 00289 | 21 | 22 | 23 | 24 | 25 | 26 | 27 | 28 | 29 | 30 |
| Requirement (gross) | 0 | 0 | 0 | 300 | 200 | 0 | 400 | 0 | 500 | 0 | |
| Receipts for schedule | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| And on inventory | 300 | 300 | 300 | 0 | 300 | 300 | 400 | 400 | 400 | 400 | |
| Release for planned order | 0 | 0 | 0 | 500 | 0 | 500 | 0 | 500 | 0 | 0 |
Table 2: MRP for part number 00289
(Source: Created by researcher)
| LT- 1 Week For 1500 units | Part number: 10089 | 21 | 22 | 23 | 24 | 25 | 26 | 27 | 28 | 29 | 30 |
| Requirement (gross) | 0 | 0 | 0 | 500 | 0 | 500 | 0 | 500 | 0 | 0 | |
| Receipts for schedule | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| And on inventory | 350 | 350 | 350 | 1350 | 1350 | 850 | 850 | 350 | 350 | 350 | |
| Release for planned order | 0 | 0 | 1500 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Table 3: MRP for part number 10089
(Source: Created by researcher)
| LT- 1 Week For 500 units | Part number: 10278 | 21 | 22 | 23 | 24 | 25 | 26 | 27 | 28 | 29 | 30 |
| Requirement (gross) | 0 | 0 | 1500 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Receipts for schedule | 0 | 0 | 500 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| And on inventory | 800 | 800 | 300 | 300 | 300 | 300 | 300 | 300 | 300 | 400 | |
| Release for planned order | 500 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Table 4: MRP for part number 10278
(Source: Created by researcher)
| LT- 1 Week For 2000 units | Part number: 10062 | 21 | 22 | 23 | 24 | 25 | 26 | 27 | 28 | 29 | 30 |
| Requirement (gross) | 0 | 0 | 3000 | 2000 | 0 | 2000 | 0 | 2000 | 0 | 0 | |
| Receipts for schedule | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| And on inventory | 0 | 2000 | 1000 | 1000 | 1000 | 1000 | 1000 | 1000 | 1000 | 1000 | |
| Release for planned order | 2000 | 2000 | 2000 | 0 | 2000 | 0 | 2000 | 0 | 0 | 0 |
Table 5: MRP for part number 10062
(Source: Created by researcher)
| LT- 1 Week For 400 units | Part number: 10077 | 21 | 22 | 23 | 24 | 25 | 26 | 27 | 28 | 29 | 30 |
| Requirement (gross) | 0 | 0 | 0 | 500 | 0 | 500 | 0 | 500 | 0 | 0 | |
| Receipts for schedule | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| And on inventory | 50 | 50 | 450 | 350 | 350 | 250 | 250 | 150 | 150 | 150 | |
| Release for planned order | 0 | 400 | 400 | 0 | 400 | 0 | 400 | 0 | 0 | 0 |
Table 6: MRP for part number 10077
(Source: Created by researcher)
| LT- 1 Week For 700 units | Part number: 10023 | 21 | 22 | 23 | 24 | 25 | 26 | 27 | 28 | 29 | 30 |
| Requirement (gross) | 0 | 0 | 0 | 500 | 0 | 500 | 0 | 500 | 0 | 0 | |
| Receipts for schedule | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| And on inventory | 350 | 350 | 350 | 550 | 550 | 50 | 50 | 400 | 250 | 750 | |
| Release for planned order | 0 | 0 | 0 | 600 | 0 | 800 | 0 | 900 | 0 | 0 |
Table 7: MRP for part number 10023
(Source: Created by researcher)
| LT- 1 Week For 2000 units | Part number: 10045 | 21 | 22 | 23 | 24 | 25 | 26 | 27 | 28 | 29 | 30 |
| Requirement (gross) | 400 | 400 | 400 | 2400 | 400 | 2400 | 400 | 2000 | 0 | 0 | |
| Receipts for schedule | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| And on inventory | 400 | 1600 | 1200 | 800 | 400 | 0 | 1600 | 1600 | 1600 | 1600 | |
| Release for planned order | 2000 | 0 | 2000 | 0 | 2000 | 2000 | 2000 | 0 | 0 | 0 |
Table 8: MRP for part number 10045
(Source: Created by researcher)
| LT- 1 Week For 200 units | Part number: 10316 | 21 | 22 | 23 | 24 | 25 | 26 | 27 | 28 | 29 | 30 |
| Requirement (gross) | 0 | 0 | 0 | 500 | 0 | 500 | 0 | 500 | 0 | 0 | |
| Receipts for schedule | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 200 | 0 | 0 | |
| And on inventory | 0 | 200 | 400 | 100 | 300 | 0 | 200 | 100 | 100 | 100 | |
| Release for planned order | 200 | 200 | 200 | 200 | 200 | 200 | 200 | 0 | 0 | 0 |
Table 9: MRP for part number 10316
(Source: Created by researcher)
| LT- 1 Week For 200 units | Part number: 10992 | 21 | 22 | 23 | 24 | 25 | 26 | 27 | 28 | 29 | 30 |
| Requirement (gross) | 200 | 200 | 200 | 200 | 200 | 200 | 200 | 0 | 0 | 0 | |
| Receipts for schedule | 200 | 200 | 200 | 200 | 0 | 200 | 200 | 0 | 0 | 0 | |
| And on inventory | 30 | 30 | 30 | 30 | 30 | 30 | 30 | 30 | 230 | 230 | |
| Release for planned order | 200 | 0 | 0 | 0 | 200 | 0 | 0 | 0 | 0 | 0 |
Table 10: MRP for part number 10992
(Source: Created by researcher)
Recommended actions
Action for Problem 1:
Short term countermeasures
- Steve Barker and his team can significantly ask for the blade supplier already present there and Brierley Forgings is held responsible for delivering additional quantity from the existing stock (Stark, et al. 2017)
- There is a need for finding another supplier who will be capable enough to provide blades of the same quality at the same time
Long term Countermeasures
- Tony can hence expand the size of the batch for the blades to 1000 units at the same lead time by considering the capacity of Brierley Forgings (Rossi et al. 2017)
- Negotiation with the blade supplier by the marketing team and asking them for reducing the lead time without influencing the existing cost (Magdalena &Suli, 2019)
- Thus, it is strongly recommended for Farnray for implementing the MRP system working with the help of a computerized system as it can help them in enabling them for adjusting, updating, and preparing the orders in advance and also enhancing the decision-making process (Akande, 2019).
Action for Problem 2:
Countermeasures- for short period of time
- Using extra manpower which was earlier available for catering the extra demand and producing in the line of secondary assembly to the space available in the facility
- This management can substantially outsource the process of Blade assembly for a shorter period of time to the outside supplier (Díaz-Madroñero et al. 2017). Payment can be made on the basis of piece
Countermeasures- for long period of time
- By increasing the batch size for the Blade assembly to 700 units at the same lead time, with the help of allocation of more assembly line with the staffs who are trained, the problem can be solved (Rizkya, et al. 2018)
Action for Problem 3:
Short term countermeasures
- Asking the number of suppliers with respect to timber for delivering additional quantity from the stock which is available earlier
- Negotiation can also help them a lot. In such case, negotiation with the national firm for delivering the additional quantity at same price with same quantity as the lead time is of 2 weeks (Andres et al. 2017)
Long term countermeasures
- Increasing batch size of the handles to 1000 units at same lead time and splitting the order into two suppliers can be effective (Khikmawati et al. 2017)
Difficulties faced by Farnray by using existing calculation system
At the time of making calculation with respect to the raw materials, Farnray Tools can have following problems:
Inventory management system manually with the help of Bin Cards
Harish was responsible for manually updating the inventory with respect to each item with the help of making references to the relevant bin cards weekly. But when the demand is increasing, then it becomes to handle this process (Więcek et al. 2020). Thus, on the basis of the category of the products, the quantity as well as type of the product vary and it often leads to error in the process of calculation and stock out situations.
Stock safety
It was evident from the case study that the safety stock with respect to each item was not properly defined. There is no availability of nail and blade assemblies even if the company has claimed that they are maintaining adequate safety stock. Blade is considered to have the longest lead tie and small order quantity as compared to the other products, there were only 30 units left in the stock. Thus, it is important for them to define the stock accurately and proper maintenance is must for the level of stock (ZACHARIAH GEORGE et al. 2020).
Lack of proper communication and updating of manufacturing data
In order to have new products, Tony has created BOM and Manufacturing data. But he missed to consider the new capacity of the existing supplier and could not identify the capabilities of the suppliers who were new to the Sales and marketing department (Pramono, 2018). Thus, there is no proper flow of information which hence affects the accuracy for MRP and manufacturing data BOM.
Calculation of lot size
Considering an example, for producing 500 units of spades, there is a requirement for 500 units of hand assemblies, but the optimum order for that is 1500 units. Thus, for its accomplishment, there is a need for lots of order placing, transportation, maintenance of inventory level and so on (Torunoglu et al. 2017). This as a result helps in adding extra cost for the company in case the level of demand is low.
Conclusion
From the entire study, it is hence found that the problems were associated with the documentary and manual system which was pre-existing. Therefore, Farnray Tools can overcome this, with the help of both short- and long-term alternatives which have been suggested in the study. Furthermore, the problems can also be solved with the help of computerized system. Thus, it is strongly recommended to implement MRP system based on the computerized system for the elimination of various problems linked with the planning and control of production process. On implementation of this system, it is possible for reducing the flow of cash and hence increasing the level of profitability. This MRP system has the ability to provide pro-active means rather than re-active for managing the levels of inventory and the flow of materials. MRP system is quite beneficial for Farnray Tools as it can reduce the level of inventory, strategies associated with component, improving the service related to customers, simplifying and providing accuracy to scheduling process and many others. It can also help the company in achieving competitive advantage.
References
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