In this task you and all users who will interact with MRP, including buyers, will review the following chapters in the MRP Guide to gain a conceptual understanding of MRP issues before proceeding with MRP setup.
Link:
Time to Shipment MRP Screenshot Series
DBA Key Concept
Standard time allocations and order policies are assigned to lower level items and combine to calculate top level item Time to Shipment targets for sales order required dates. Item settings are refined as needed until Time to Shipment targets reflect your marketing objectives.
The "Big 3" MRP Settings
In our experience, the majority of companies that are struggling with MRP can remedy their problems by focusing on the Big 3 MRP settings: 1). Reasonable Job Days on 100% of their manufactured items 2). Reasonable lead days on 100% of their purchased items, and 3). A clear cut order policy decision of Demand Driven or To Order. If the Big 3 settings are not done, you must make an immediate commitment to get these settings done completely as the highest priority. Once the Big 3 are in place, the entire system will fall in line with your objectives.
1. Maintain a Job Days allocation against all M items
A Job Days allocation, along with a Run Size that represents a typical large-size job quantity, must be maintained against all your M (manufactured) items. The Job Days is the number of shop days allocated by MRP for manufacturing the item.
2. Maintain a Lead Days allocation against all P items
A Lead Days allocation must be maintained against all your P (purchased) items. The Lead Days is the number of calendar days allocated by MRP for procuring the item. Make sure sufficient days are allocated to cover the entire procurement process, including potential variations in supplier delivery time and receipt processing time. Among items assigned to the same default supplier, apply consistent allocations to achieve uniform due dates on multi-line POs.
3. Use item Order Policies to plan a strategic inventory
“Strategic inventory” is a plan for reducing times to shipment using the least amount of inventory to do so. Strategic inventory is achieved by applying a Demand Driven order policy against any item you wish to have on hand to meet a high probability of your demand scenarios, accompanied by a Monthly Potential Demand value and Supply Days target.
DBA auto-calculates the following:
Pre-Job Lead Days for your manufactured items
The pre-Job Lead Days for each M item is calculated based on the longest Lead Days + Jobs Days among its To Order policy components. Pre-Job Lead Days set the job Planned Start date for Jobs to ensure that you have time to produce To Order subassembly Jobs and procure To Order purchased components.
A Time to Shipment target for your for-sale manufactured items
A Time to Shipment target for your top level for-sale manufactured items is calculated based on the item's own pre-Job Lead Days + Job Days + SO Default Extra Days.. The Time to Shipment target is used to establish SO line Required Dates that drive the MRP system demand, priorities, and material allocations.
MRP Replenishment Time Action Windows
The MRP “action window” refers to each item’s planning period replenishment time. For Manufactured items, replenish time is comprised of the item’s pre-Job Lead Days + Job Days allocations (+ MRP Interval + Non-Shop Days + Extra Shop Days). For Purchased items, replenish time is comprised of the item’s Lead Days allocation (+ MRP Interval + Non-Shop Days + Extra Shop Days). MRP only reacts to demand within the action window, which is firm demand. Any demand outside the action window is tentative demand that is incomplete and highly likely to change as it firms over time. Any requirements outside the action window will be responded to in a future MRP run.
System wide settings: The MRP Interval reflects the typical number of shop days between MRP sessions specified in MRP Defaults The Non-Shop Days accounts for non-shop days such as weekends when the shop is not in production specified in the Shop Calendar. The Extra Shop Days are extra planning period shop days specified in MRP Defaults.
Replenishment Time Reorder Points
For items that you choose to stock using the Demand Driven order policy, a Monthly Potential Demand rate is translated to daily rate and it is multiplied to by the Item's Replenishment Time to come up with a dynamically calculated Reorder Point. The basic principle of Demand Driven stocking is that you trigger an order with enough time to replenish the stock before you run out. This aligns your inventory with your firm demand.
DBA Innovation - Dynamic Calculations
When you change any one of the Big 3 MRP Settings, or if you make system wide changes to your MRP Interval, MRP Defaults Extra Days or change your Shop Calendar work days, the system will automatically perform calculations for all items through all levels of production via system triggers. This is an incredibly powerful innovation that is unique to the DBA system.
For example, if you change a long lead day purchased item order policy from To Order to Demand Driven stocking it would remove that component as a lead day contributor in all places it is used. Now imagine that item was used in 100 different bills of material at several different BOM levels. The trigger automatically applies changes from lowest level BOM order to top level manufactured items. There would be an immediate change in M item Lead Days, Time to Shipment targets, Replenishment Times, and Reorder Points for all impacted items.
