Aspects of Managing Operations
Materials Request Planning
The materials request planning (MRP) is a system that is used to determine the number of parts required to produce certain products based on a forecasted schedule. Two main systems are required to control production systems. The push system has its focus on the expected demand whereas the pull system has a basis on an actual order by consumers. MRP uses the push system of production as it depends on the forecast of sales. As such, the starting point for using MRP is the forecast data and bill of materials.
Enterprise Resource Planning (ERP)
Enterprise Resource Planning is an extension of MRP which enables customers and suppliers to be tied together. In this way, ERP uses multiple data inputs from various business processes to enable the production of information in real-time and coordinate supplier processes to customer needs. As such, all the data points in the production are interconnected (Lecture Video, 2020). As an advantage, there is reduced transaction costs and an increase in speed and accuracy of information. When using a just-in-time approach, the use of ERP can enable better inventory management by integrating the supply chain players. However, it is expensive and time-consuming to implement.
One of the ERP systems that I have encountered is the SAP system. The system was being implemented at an organization where my friend works. The organization has multiple locations across the US. From the interaction of the system, I realized that all departments of the organization used SAP ERP at some point in their operations. These include purchasing, quality management, finance department, and production control among others. One of the greatest advantages witnessed was the ease with which users could determine the status of various operations. In turn, they could control and prioritize their work for greater efficiency. One of the comments about the system that my friend made was the great difficulty that they had before the SAP ERP system due to single and unconnected systems.
In my opinion, some potential challenges are presented by ERP systems. To begin with, there are lots of systems that are available from various providers. As such, before implementing, an organization has to take an in-depth analysis of various systems to find the best fit. Another challenge that I foresee is the integration of the staff into the system using training and coaching. There is a great change engaging the employees in the shift from previous legacy systems to a more integrated system which may be challenging and costly. Despite the challenges, ERP systems are largely successful in the modern economic environment which requires a lean management system that utilizes just-in-time inventory management to ensure that there are minimum wastes in the production process.
Supply Chain Management
A supply chain is the collection of working spaces, the roles and responsibilities, and the actions associated with the production and delivery of products and services from suppliers to customers. From the video of the denim jeans, I was surprised by the extent to which the workers go to make the brand new jeans look rugged. This includes a thorough battering by washing the jeans with volcanic rock. Another thing that surprised me is the efficiency with which the cotton moves from farm to sorting, weaving, and the final branding and product. It all seems as if the process is being conducted by a single company from farm to customer. Finally, the location of the manufacturing processes from farm to finished product is all in Mexico which indicates the awareness of reducing the cost of manufacturing. From the video, I can see that they use a pull system since all the jeans that they produce are shipped immediately to businesses and stores in the US (Lecture Video, 2020b). As such, there are little costs to the storage and warehousing facilities. Additionally, there is the use of ERP systems since to be in use as the seamless management of inventory from farm to customer is enabled by effective communication of the various players.
The key performance indicators for supply-chain performance is an important aspect of managing supply chains. The inventory turnover is the ratio of goods that are sold at the price of cost to the aggregate value of inventory divided by the total inventory. The total value of inventory at cost is the unit value of the item times by the average inventory for the item. The days of supply is the ratio of the average aggregate value of inventory to the goods sold at the cost price over a 365-day period. The number of orders that a distribution or warehouse can fill in a certain time is the fill rate. The amount of assets committed to an inventory is the ratio of average inventory investment to total assets as a percentage. The weeks of supply is the ratio of average inventory investment to the cost of sold goods in 52 weeks (Lecture Video, 2020b). An important aspect is supply chain operations reference (SCOR) which is a tool used by managers to inquire, adapt, and develop a relationship between the management decisions of the supply chain to both suppliers and consumers. SCOR enables companies to determine their performance level compared to the general industry.
References
Lecture Video (2020). MRP and ERP.
Lecture Video (2020b). Supply Chain Management.