Week 2: Sales and Operations Planning
Achieving and maintaining an acceptable balance between supply and demand requires constant vigilance on the part of all functional areas in an organization. Sales and Operations Planning involves a number of processes that align the marketing, sales, and distribution activities, which generate demand with the manufacturing and service activities that generate supply. Companies must ensure they have enough products on hand to meet customer demand; however, inventory costs make excess products a concern, especially if a product is seasonal or is changed yearly (e.g., cell phones). A company may produce too little product and lose potential sales and alienate their customer, or they may produce too many products that cannot be sold.
Material Requirements Planning (MRP) is used to direct material ordering and releasing activities in the organization. Based on the concept of dependent demand, where a lower-level item is needed when a higher-level item is pulled from inventory and placed into the production or service process, MRP works to link all activity within the material planning and material control areas in a logical, efficient, and transparent way. This system allows for effective product planning to meet goals without creating excess waste.
Closely related to MRP is the Enterprise Resource Planning (ERP) system that works behind the scenes with MRP to potentially integrate all value-added activities in the functional areas of the organization. This week’s assignment will focus on the relationship of MRP to this key component of Operations Management.
Be sure to review this week’s resources carefully. You are expected to apply the information from these resources when you prepare your assignments.
Wilson, J. M. (2016). The origin of material requirements planning in Frederick W. Taylor’s planning office. International Journal of Production Research, 54(5), 1535-1553. doi:10.1080/00207543.2015.1092616
McCrea, B. (2016). 2016 State of ERP: Gaining Speed. Modern Materials Handling, 71(8), 70-76. Retrieved from https://www.mmh.com
Kaipia, R., Holmström, J., Småros, J., & Rajala, R. (2017). Information sharing for sales and operations planning: Contextualized solutions and mechanisms. Journal of Operations Management, 52, 15-29. doi:10.1016/j.jom.2017.04.001
Week 2 – Assignment: Implement Effective Material Requirements Planning Activities (10 Points)
As a consultant working in the area of business analysis, you are expected to make recommendations to clients regarding the optimization of business operations, including production, material control, quality, and delivery. In order to convey a sense of professionalism, self-efficacy, and value to the client, you have decided to create a detailed report that outlines the key components of MRP to recommend or caution against the installation of an MRP system.
Since your services are rewarded primarily by the effective launch of MRP within the client’s organization, you want to define certain business characteristics that are likely to undermine or block the effective application of MRP so that you will recognize and avoid consulting agreements that carry a high risk of failure. Knowing in advance what these undesirable characteristics are can put you in a position to adjust your promise to deliver accurately or withdraw your name from the list of potential vendors for the client.
Include the following in your report:
- A list of business operating characteristics that are best aligned with MRP (where MRP is most effective).
- A list of operating characteristics that render MRP ineffective or undesirable (when should a client not implement MRP).
- Benefits of implementing or improving MRP in an organization (list at least 15 key areas of expected improvements, such as reduced lead times).
- Five selected items from your list of 15 expected improvements, along with descriptions about how a companion ERP (Enterprise Resource Planning) system might be used to link certain functional areas or operational activities to achieve and maximize each expected improvement effectively. This requires, for each of the five items, a minimum of two paragraphs that:
- Identify the functional area(s) that are favorably affected by the benefit.
- Describe ERP data elements (types of information) that serve as inputs and outputs of the ERP and MRP systems.
- Provide a real-world example that clearly reveals how the chosen improvement item influenced each functional area in one or more of these five key scorecard categories: Safety, Quality, Delivery, Cost, and Employee Morale.
- A summary of your thoughts on MRP.
5-7 pages (excluding the cover sheet, title page, and references), including all itemized topics with an introduction and summary.
Ensure that you incorporate each topic in a paper form instead of a question and answer assignment. Use the topic section headings for each criterion listed above.
Include a minimum of five scholarly resources within the last 5 years covering MRO, ERP, and scorecard use, as well as other relevant topics. The majority should be from peer-reviewed journals.
Your detailed report should demonstrate thoughtful consideration of the ideas and concepts presented in the course and provide new thoughts and insights relating directly to this topic. Your response should reflect scholarly writing and current APA standards. Be sure to adhere to Northcentral University’s Academic Integrity Policy.
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Learning Outcomes: 3
- Optimize Material Requirements Planning activities for proper alignment with key operating characteristics.