WHY DOES MRP FAIL?

by
Brian Willcox CFPIM
of 
Action MRPII
Perhaps the first question to ask is; what is a success and what is a failure? My stock answer to that is, is it doing what it was introduced to do? If it is, then it is a success no matter what the experts think about it. A different point is, is the company getting all the benefits it could be getting? Usually the answer to that is no.
MRPII is a tool to manage the whole business with, not just a system for the production control people to play with. Meeting managers from all sorts of companies in the course of earning my daily bread makes me only too aware of the various beliefs that different companies have of MRPII, and that is separate to the thinking of how to implement such a system. 

When we get called in to assist a company who say their system is not helping them, we find a variety of reasons such as; no management involvement, a total lack of discipline, little understanding of the basic principles, an overloaded MPS, a low priority status for the implementation and my old favourite low inventory accuracy. You may think I'm trotting out all the standard quotes, perhaps I am , but unfortunately we find them all too regularly. 
Having got that little lot off my chest, how can a company prevent it happening to them. How can they ensure that after spending a tremendous amount of cash they have a system that works and gives them the return and benefits they budgeted for.
I'm afraid there is no magic wand to ensure success, but there is most definitely a well proven approach to follow. In simple terms, it is to do it properly the first time and that is most definitely cheaper than having to do it a second time.
There are ten essential steps to follow in a set sequence, but they on their own will not be enough. What is also needed is, the commitment of the whole company for the implementation. If the determination and drive of the executive is not there, at best you might get a good ordering and scheduling system if the production control manager and his staff are determined to succeed.
TO MANAGE THE PROJECT
Two levels of management are required, the executive steering committee and the project team. The steering committee usually consists of the key members of the executive, chaired by the managing director. Their job is to have overall control of the project, ensuring that the right things happen when they were planned to. But further, they are responsible to provide the funds, staff and facilities to support the needs of the project. Just as important though is that they must be seen to be supporting the project with all their might and enthusiasm, not just paying lip service and the bills! 

The project team consists of the department heads; the boss men of the doers,chaired by the project manager.It is important that this team is representative of the departments who will be affected by the decisions made by this group. It is their job to establish how the company will operate using the new software. One thing is certain, the existing methods and procedures will alter therefore it must be the person responsible for a department who decides how that department will operate in the future. It is this team who have to make the biggest commitment in time. They will be needed several; hours a day to match the software to the way the company operates. It usually means they have to off load some of their routine work to their right hand assistant. 


THE TEN STEPS
Step 1 First Cut Education
It is essential that the executive group fully understand what they are letting themselves in for and what their responsibilities are to the project. The two day executive course brings the group to a common understanding and enables them to make an informed logical decision when it comes to approve the software to purchase.
 
Step 2 Project Team Training
This team goes through the five day MRP course so that they understand the principles in more detail.It is this group who have to define what the system must do and how it will do it and choose the software that can best meet the company’s needs.
 
Step 3 Statement of User Requirements
It is essential that the company establish the real needs of the business and do not try to computerise their old bad habits. This is usually carried out jointly by the project team and outsiders who are not restricted by the company politics or existing practices.
 
Step 4 System Selection 
This is the job of finding a package to meet the needs of the company as established in the statement of user requirements. It is only at this point that hardware is considered to run the software on. 
 
Step 5 Match Company to the System
This is the biggest task of the implementation. It requires the project team to establish exactly how each part of the system is to be used and how your existing practices are to be accommodated or replaced. This process can take several months of hard work.
 
Step 6 Module Training
Once it is established how the new software is to be used then the job of training all the users can be started. Unfortunately there is no standard training material available which covers the way you are going to use the system. The normal approach to follow is to create "train the trainer" courses for your own managers to train their own staff. They should include basic principles and the details of how it has been agreed the system should be used. They should also be totally customised to use your own products, terms and part numbers.
 
Step 7 Simulation Training
Once the classroom education provided by the customised module courses is complete then it is time to practice how to use the system. The concept of simulation training is to create a copy of the system and to load one or two actual products. The simulation system is then run for an hour a day just like a real company. The major difference is that it is controlled from behind the scenes, introducing simple activities to start with and gradually getting more like the real world each day. After six weeks the participants from each discipline in the company are capable of handling the problems that arise in the real world as they occur. When the live system is turned on they will be capable of working through the various transactions and using the logic required to manage their job competently.
 
Step 8 Pilot Run
A small part of the company is put on to the new system to prove out all the decisions and methods of working are acceptable. If trouble is encountered then all the company resources can be put on that 10% to sort it out. Ideally the pilot products should where possible, be able to be separated from the rest of the company.
 
Step 9 Full Conversion
Once the pilot run has been successful for a few weeks and a month end has been accomplished, then it is time to implement the rest of the products. Usually a phased, module by module approach is used when possible but so much depends on how computerised the existing systems are.
 
Step 10 Post Implementation Audit
The last task of the project team is to establish if the benefits that justified the system those many months before have actually been obtained. If the answer is no, then their job has not finished as it is up to them to find out what has gone wrong and correct the situation.
THE LESSONS LEARNED
  1. If after the initial training the senior and middle managers are not enthusiastic, cut your losses and forget MRPII.
     
  2. If the project is not the most important activity in the company except for staying profitable, it will never be successful. 
     
  3. If the steering committee cuts the education and training budget as they think it is unnecessary, plan for disaster.
     
  4. If all of the above apply, look for another job! You may think I'm being flippant, well perhaps your are right, but the facts of many failures support me.
     
  5. If none of the above apply, go for it and I wish you all the luck in the world. You will need it anyway. 
April 1997

Articles coming soon in this series......
May 1997
Who needs CRP?
June 1997
Customer Service
July 1997
How often MRP?
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