I find that many GP manufacturing users do not use MRP effectively, or at all, because the release and due dates never seem to make sense. I realize that managing dates and then trusting the release and due dates from an MRP run can be a daunting task. That should not be a good excuse for not using a very powerful and effective tool.
Many users just use the default dates when creating documents that affect inventory and the manufacturing process because it is “too much work” to enter and manage the dates in Purchase Order Processing, Sales Order Processing and Manufacturing. I would argue that it costs users more in time and costs to not manage the dates up front and throughout the purchasing, sales and manufacturing.
How many times have you, as a user, had to track down a shortage, reallocate items to more urgent orders and correct errors? It is my belief as a former Controller and a current GP implementation consultant, that it cost you and your organization much more on the back end to deal with incorrect release and due dates than it does to enter and maintain meaningful dates in GP manufacturing. In fact, I feel so strongly about it, that I believe the savings would more than pay for an additional head or heads that may be required in your organization to maintain accurate dates.
When dates are used and managed effectively, issues that affect manufacturing and eventually shipping are identified quickly during an MRP run and MRP will even make suggestions on how to deal with the issues. MRP will include suggestions on moving orders in or out and cancelling orders that are oversupplied. Why should you study inventory levels via GP inquiries, reports and SmartLists when MRP will do it for you? Seems like a great time saver to me.
So where does MRP get the data to suggest release and due dates?
The due date is the date an order is due in house to meet the demand that created it. Due dates come from many sources including MO’s, MRP suggested MO’s, Sales Documents, Sales Forecasts, etc. The release dates suggested by MRP start with the due date of the document or MRP suggestion the item fulfills and works backwards, based on lead times and calendar down days.
MRP-Planned Manufacturing Orders
Let’s look at MRP-Planned manufacturing orders first. MRP looks at the lead times in the Item Resource Planning windows. The lead times can be entered here manually or generated from routers using the Calculate Mfg Lead Times utility. MRP will look to the item-site combination in Item Resource Planning. Since MRP suggests manufacturing orders for make item only, enter the lead times in days or fractions of days in either the Mfg Fixed Lead Time field or the Mfg Variable Lead Time field or both. MRP uses these fields differently as you might suspect.
- Mfg Fixed Lead Time – does just that, adds a fixed number of days to the MO when calculating the release date. The formula is Due Date – Mfg Fixed Lead Time. For example, if your forecast shows a suggested MO with a due date of 8/1/2010, the release date would be 5 days earlier or 7/27/2010 as long as 7/27/2010 is not a down day on your work center calendar.
- Mfg Variable Lead Time – is variable based on the quantity suggested. The formula is Mfg Variable Lead Time * quantity, rounded up to the next whole day. For example, if I have a Mfg Variable Lead Time = .01 and a quantity of 500, my lead time is 5 days.
- Total Manufacturing Lead Time for a make item is Mfg Fixed Lead Time + Mfg Variable Lead Time, rounded up to the next whole day. Mfg Fixed Lead Time & Mfg Variable Lead Time in Item Resource Planning.
MRP-Planned Purchase Orders
If the item does not have a default site set in Item Quantities Maintenance, MRP will use the Purchasing Lead Time from the Item-Site combination in Item Resource Planning.
If the item has a default site set in Item Quantities Maintenance, MRP has two choices to select from.
- No Primary vendor selected for the default site – Purchasing Lead Time is from the specified default site in Item Resource Planning Maintenance window.
- Primary vendor has been selected for the default site – Purchasing Lead Time is selected from the item and vendor in the Item Vendors Maintenance window (Planning Lead Time).
I hope that this takes some of the mystery out of the MRP release dates and due dates.
This post originally created by my former colleague, Steve Johnston.