MRP: Push and Pull Strategies

The traditional belief is that Material Requirements Planning (MRP) systems serve an important function in many organizations. The system helps to monitor the supply of materials but cannot be expected to solve lead time problems.

QRM Principle #5

Use MRP to plan and coordinate materials. Restructure the manufacturing organization into simpler product-oriented cells. Complement this with a new material control method that combines the best of push and pull strategies.

• In the redesigned organization of product-oriented cells, the MRP system's function is to provide a higher level of planning and authorization, but not for micromanaging work centers.

• When the cell teams are given simple tools to manage their capacity and continually improve their responsiveness, they are able to run their own cells.

• A novel material control strategy called POLCA (Paired-cell Overlapping Loops of Cards with Authorization) combines the best of push and pull methods to limit congestion while at the same time providing a high degree of flexibility, enabling even custom-engineered products to be made.

Physical Effects of MRP Dynamics

1. Inflated lead times are used in an attempt to correct for inaccuracy of load prediction.
2. WIP increases due to inflated lead times.
3. Last-minute solutions are needed due to inaccuracies, including expediting, overtime, and eleventh-hour subcontracting.
4. The system becomes unstable, with large changes in schedule resulting from small changes in requirements.

Organizational Effects of MRP Dynamics

1. MRP-generated schedules are ignored; everyone knows there is a lot of slack in the schedule.
2. A "hot job mentality" results, since the only way to know if a part is really needed is if someone has a demand for it.
3. Unacceptably long lead times result in management loading in special orders in less than planned lead time. These orders are past due even before the first department can work on them.
4. Past due soon has little to do with a given department's efforts and becomes a meaningless performance measure.
5. Employees develop apathy. They feel they can't contribute to improvements because they are given impossible schedules and are judged by meaningless performance measures.