Editing Material requirements planning (section)

== Problems with MRP systems ==
*Integrity of the data. If there are any errors in the inventory data, the [[bill of materials]] (commonly referred to as 'BOM') data, or the [[master production schedule]], then the output data will also be incorrect ("GIGO": [[garbage in, garbage out]]). Data integrity is also affected by inaccurate [[cycle count]] adjustments, mistakes in receiving input and shipping output, scrap not reported, waste, damage, box count errors, supplier container count errors, production reporting errors, and system issues. Many of these type of errors can be minimized by implementing [[Push–pull strategy|pull]] systems and using [[bar code]] scanning. Most vendors in this type of system recommend at least 99% data integrity for the system to give useful results.
*Systems require that the user specify how long it will take for a factory to make a product from its component parts (assuming they are all available).  Additionally, the system design also assumes that this "lead time" in manufacturing will be the same each time the item is made, without regard to quantity being made, or other items being made simultaneously in the factory, or any "learning curve" reductions in lead time.
*A manufacturer may have factories in different cities or even countries.  It is not good for an MRP system to say that we do not need to order some material, because we have plenty of it thousands of miles away although, when properly implemented, this problem is totally avoided.  The overall [[Enterprise resource planning|enterprise resource planning (ERP)]] system needs to be able to organize inventory and needs by individual factory and inter-communicate the needs in order to enable each factory to redistribute components to serve the overall enterprise. This means that other systems in the enterprise need to work to maximum potential, both before implementing an MRP system and in the future. For example, systems like variety reduction and engineering, which makes sure that product comes out right first time (without defects), must be in place.
*Production may be in progress for some part, whose design gets changed, with customer orders in the system for both the old design, and the new one, concurrently. The overall [[Enterprise resource planning|ERP]] system needs to have a system of coding parts such that the MRP will correctly calculate needs and tracking for both versions. Parts must be booked into and out of stores more regularly than the MRP calculations take place. Note, these other systems can well be manual systems, but must interface to the MRP. For example, a 'walk around' stock intake done just prior to the MRP calculations can be a practical solution for a small inventory (especially if it is an "open store"). Good MRP system, however, recognize supercessions, driven by date or by stock run-down, to handle this effectively and efficiently.
*The other major drawback of MRP is that it fails to account for capacity in its calculations. This means it will give results that are impossible to implement due to [[manpower]], machine or supplier capacity constraints. However this is largely dealt with by [[Manufacturing resource planning|MRP II]]. Generally, MRP II refers to a system with integrated financials. An MRP II system can include finite or infinite capacity planning. But, to be considered a true MRP II system must also include financials. In the [[Manufacturing resource planning|MRP II]] (or MRP2) concept, fluctuations in forecast data are taken into account by including simulation of the master production schedule, thus creating a long-term control.<ref>{{cite book |last = Waldner  |first = Jean-Baptiste | author-link = Jean-Baptiste Waldner |title = CIM: Principles of Computer Integrated Manufacturing |publisher = John Wiley & Sons |place = Chichester | year = 1992| page = 46 |isbn = 0-471-93450-X}}</ref> A more general feature of MRP2 is its extension to purchasing, to marketing and to finance (integration of all the functions of the company), ERP has been the next step.

===Solutions to data integrity issues===
Source:<ref name="Ptak, Carol 2011" />

*Bill of material – The best practice is to physically verify the bill of material either at the production site or by disassembling the product.
*Cycle count – The best practice is to determine why a cycle count that increases or decreases inventory has occurred. Find the root cause and correct the problem from occurring again.
*Scrap reporting – This can be the most difficult area to maintain with any integrity. Start with isolating the scrap by providing scrap bins at the production site and then record the scrap from the bins on a daily basis. One benefit of reviewing the scrap on site is that preventive action can be taken by the engineering group.
*Receiving errors – Manual systems of recording what has been received are error prone. The best practice is to implement the system of receiving by ASN from the supplier. The supplier sends an ASN ([[Advance ship notice|advanced shipping notification]]). When the components are received into the facility, the ASN is processed and then company labels are created for each line item. The labels are affixed to each container and then scanned into the MRP system. Extra labels reveal a shortage from the shipment and too few labels reveal an over shipment. Some companies pay for ASN by reducing the time in processing accounts payable.
*Shipping errors – The container labels are printed from the shipper. The labels are affixed to the containers in a staging area or when they are loaded on the transport.
*Production reporting – The best practice is to use bar code scanning to enter production into inventory. A product that is rejected should be moved to an MRB (material review board) location. Containers that require sorting need to be received in reverse.
*Replenishment – The best replenishment practice is replacement using bar code scanning, or via pull system. Depending upon the complexity of the product, planners can actually order materials using scanning with a min-max system.