Develop Better Customer Understanding

Published Date: 02 Nov 2017

Manufacturing Organizations used re-order point system till 1960 to control their stocks. Whenever the stock fells to a specific quantity they were reordered resulting large number of inventory.

During sixties customers become more demanding, competition between the organization and the rate of interest increases. The increase in interest rate was serious financial problem for organization because large amount of money tied up in inventory. This made organizations understand to improve their system to satisfy the demands of customer and to control inventory level.

The two main difficulties faced by supply chain management in past were scheduling of product and distinction between dependent and independent demand (a demand which is not based on the demand of other is independent demand while a demand which is based on the demand of other item is dependent demand) resulting the higher level of inventories which was increasing the cost of organization.

MATERIAL REQUIREMENT PROGRAM (MRP)

In order to differentiate these two types of demand and timely supply of goods MRP (MATERIAL REQUIREMENT PROGRAM) was formed.

MRP is used to control timely delivery of the components and the raw material required in the production of the final good.

The main function of MRP system is

1. Inventory control

2. Bill materials processing

3. Elementary scheduling

MRP will answer what, when and how much will be needed for manufacturing the final product.

Many small companies are using Microsoft excel to control their manufacturing process instead of MRP software which are designed to perform such tasks.

Manufacturing, purchasing, delivering are also maintained by MRP application.

ADVANTAGES:

1. Raw material inventory and component inventory are reduced by using MRP system. Lower level of inventory reduces the inventory carrying cost.

2. Purchasing become more effective by using MRP. It determines the actual raw material or component material needed to purchase for final product.

3. Production planning will improve by using MRP system. It identifies the shortage in inventory so the manufacturer changes the production assets to the production of other items which are on hand.

4. It reduces the cost of production so the organization competitively prices their products.

PROBLEMS IN MRP:

1. MRP system is highly costly and there are many technical complexities in implementing it.

2. It is very time consuming.

3. Considerable inputs are required for data entry and file maintenance.

4. Forecasted values can be misleading.

5. Late deliveries from supplier as a result late deliveries to customers resulting large number of complains.

MANUFACTURING RESOURCE PLANNING (MRPII)

In material requirement program it is not possible to get feedback from buyers or production personnel only plans are sent to them as a result it was not possible to adjust the plan to keep the schedule valid, it was assumed that infinite capacity was available and suppliers always delivered raw material on time and correct for example

Time for good may be differ because of problem in machine or late delivery from supplier, goods are damage etc

Manufacturing resource planning is an extended version of MRP that includes strategic, manufacturing and business processes such as

1. Material requirement planning.

2. Accounting and distribution.

3. Ordering

4. Tracking of inventory.

5. Ensuring the capacity.

6. Forecasting the demand.

7. Tracking the quality.

8. Employees attendance recording.

9. Contribution and productivity of labor.

10. Balancing demand and supply.

MRP II has greater impact then MRP on business processes and peoples. Manufacturing resource planning goes several steps further then material requirement program. Through the manufacturing process to the shipping of good are incorporated in MRP II.

ADVANTAGES:

Inventory is control to greater extent than earlier.

It increases the productivity.

Performance of supplier increases.

Reduce purchase cost, stress and expediting.

Timely delivery of good improves the satisfaction of customer and reputation of organization.

DISADVANTAGES

MRP II is complicated and requires correct data implementation.

Lot of time and effort is require to set a successful MRP II.

If any unpredicted variation occurs planning procedure may alsobe started again from beginning.

Its require commitment at all level of organization.

ENTERPRISE RESOURCE PLANNING

Enterprise resource planning (ERP) systems mix external and internal management facts and figures across complete organization including accounting, manufacturing, finance, sales and service, customer relationship management, etc.

The object of ERP is to enable the flow of information between all business functions internally as well as externally.

In today’s global market rising demand of customer has dramatically reduced margins of manufacturer. In order to meet the demands of customer manufacturer need information on everything from supply chain inventories, shop floor scheduling, planning of production, data on customer demographics and interest. It is now become a requirement for global supply chain management to collect, analyze and share this information for a manufacturer.

In order to provide visibility to customers and to achieve efficient and effective use of manufacturing assets an integrated enterprise resource planning is very helpful. Managing internal business processes through ERP gives competitive advantage to manufacturers.

It is a fast path for manufacturer to reduced cost, increase the speed of work and improve trans parency that increase profitability and customer satisfaction.

To compete global market it is an operating platform for every manufacturer

DEVELOP BETTER CUSTOMER UNDERSTANDING:

In today’s global world to build a long term and strong relationship with customer you will need to understand them means you should have complete knowledge of customer. To build long-term relationships with customers today, you need to listen to and understand them. This requires that you maintain a holistic view of those customers.

ERP system enable manufactures to look strategic order fulfillment and have a better understanding of customer wishes for modified products and services. It will help the company to increase their profits and its offering.

It can also answers to questions such as:

What are the purchasing patterns?

Are orders being driven larger to customers?

Are we seeing demand increases or downturns that we must react to?

Attain global visibility in a demand-driven supply chain:

To provide excellent customer service and optimize in inventory investment in an age of tough cost management for manufacturers is very critical. It is also important to provide customer with visibility into inventory and availability of product. To develop best plan for production and re-supply in critical condition it is very important to know when and where inventory is needed. To do so, they should have complete information of inventory throughout supply chain which is information an ERP system can provide.

Lean manufacturing, universal sourcing, and supplier integration

Now a days it is very important for a manufacturer to manage the lowest possible cost to gain competitive advantage , by using ERP system manufacturer can efficiently manage their manufacturing cost.

Locating the best supplier is also very important for business practice it requires a complete supplier database that enables a manufacturer to recognize where ne opportunities exist for lower costs. The current generation of ERP makes it possible it includes all real time production dat exchange with suppliers and processes that ensure lean operation.

Managing for advanced performance:

Today integrated ERP system s include business analytics that allow management to standardize metrics across the organization and supervise production and profitability. ERP systems can provide actionable information to employees at all level of organization and it make accessible through their familiar desktop tools, bringing speed and quality to their decision making.