The Master Production Schedule (MPS)
- The formal link between production planning and actual production
- The basis for the calculation of resources needed
- The driving force behind the material requirements plan
- The primary priority plan for manufacturing (low-level codes)
- This scheduling is usually done in 2 steps: 1) preliminary MPS and 2) finalised MPS
Inputs to the MPS
- Production Plan data (Aggregate Plan input)
- Forecasts at a more detailed level than were required for the PPL (before: product families, now:end items)
- Actual customer orders – takes priority over forecasted demand
- Inventory levels – Projected available balance (PAB)
- Capacity constraints – as per the Rough-cut capacity plan
Objectives of the MPS
- Maintain good customer service
- Make effective use of resources
- Maintain effective levels of inventory
Steps in developing the MPS
- Developing a preliminary MPS
- Checking MPS against capacity and resources (rough-cut capacity plan)
- Reconciling any differences
Connection between MPS and MRP
Information from MPS will be transferred to MRP as gross requirements where individual parts gets exploded and offset as per lead times and product tree
Netting
Calculating net requirements of materials by considering the gross requirements, on-hand inventory and scheduled receipts
Exploding
Breaking down the production requirements of an item into its components to determine the quantities of these
Offsetting
The process of placing the exploded requirements in their proper periods based on lead time
When a planned order receipt in one time period requires the release of that order in an earlier time period based on the lead time for the item
The Material Requirements Planning (MRP)
- Determine requirements - calculated to meet product requirements defined in the MPS:
o What to order?
o How much to order?
o When to order?
o When to schedule delivery? - Keep priorities current - reorganise priorities to keep plans current (add and delete, expedite, delay, and change orders)
Independent- and dependent demand:
* The parent is independent demand based on forecasts
* The components are dependent demand which are calculated, since these depend on how many of the parents are forecasted
Inputs to the MRP
- Master Production Schedule quantities and timing
- Bill of materials for MPS items
- Inventory records of all items to be planned
- Planning factors such as lead times, order quantities, and safety stock
- Current status of each item
- Capacity constraints - as per the Capacity requirements planning (CRP)
Forecasting in relation to the MPC
Independent demand (forecasted):
- BUS: Qualitative based on personal insight, market survey, historical analogy, and Delphi method.
- PPL: Extrinsic quantitative - external indicators and causal factors
- MPS: Intrinsic quantitative - internal indicators and historical data
Dependent demand (calculated): MRP
Procurement
The over-arching concept/terminology for the company culture and values regarding spend. It sets the governance and guidelines for how the comapny source and purchase
The end-to-end perspective on purchasing/sourcing, including rules, organising, portfolio management, stakeholder management and relations, as well as linking to corporate strategy and agendas
Sourcing
Relational
Focus: establishing and maintaining fruitful and constructive long-term relationships with qualified vendors/suppliers
Purchasing
Transactional
Focus: only on the purchasing transactions rather than supplier relationships
Linear Procurement Process
Internal customer
Individuals/departments within the organisation
Determining specification
Determining the procurement needs – Quality and quantity specifications
Selecting supplier
Set up supplier criteria and routines to select the best suppliers
Contracting
Decided what type of contract to issue (long-term vs. short-term). Issue the contract
Ordering
Place the order - PO and order follow up
Expediting and evaluation
Follow-up on PO - monitorisation and communication with the supplier to secure supply and ensure on-time delivery, and control of compliance with agreements
Assess the received goods or services
Follow-up and evaluation
Ensure proper payment and review supplier performance
Supplier
