Step Three—Manufacturing Resource Planning (MRP II)

The next step in this evolution is called Manufacturing Resource
Planning or MRP II (to distinguish it from Material Requirements
Planning, MRP). A direct outgrowth and extension of closed-loop
MRP, it involves three additional elements:
1. Sales & Operations Planning—a powerful process to balance
demand and supply at the volume level, thereby providing top
management with far greater control over operational aspects
of the business.
2. Financial interface—the ability to translate the operating
plan (in pieces, pounds, gallons, or other units) into financial
terms (dollars).
3. Simulation—the ability to ask “what-if ” questions and to obtain
actionable answers—in both units and dollars. Initially
Enterprise Resource Planning 9
Figure 1-4
CLOSED-LOOP MRP
DEMAND SUPPLY
PRODUCTION
PLANNING
MASTER
SCHEDULING
MATERIAL
REQUIREMENTS
PLANNING
PLANT &
SUPPLIER
SCHEDULING
EXECUTION
DEMAND MANAGEMENT
CAPACITY PLANNING
this was done only on an aggregate, “rough-cut” basis, but today’s
advanced planning systems (APS) enable effective simulation
at very detailed levels.
Now it’s time to define Manufacturing Resource Planning. This
definition, and the one to follow, come from APICS—The Educational
Society for Resource Management. APICS is the leading professional
society in this field, and its dictionary has set the standard
for terminology over the years.
MANUFACTURING RESOURCE PLANNING (MRP II)—
A method for the effective planning of all resources of a manufacturing
company. Ideally, it addresses operational planning in
units, financial planning in dollars, and has a simulation capability
to answer “what-if ” questions. It is made up of a variety of
functions, each linked together: business planning, sales and operations
planning, production planning, master scheduling, material
requirements planning, capacity requirements planning, and
the execution support systems for capacity and material. Output
from these systems is integrated with financial reports such as the
business plan, purchase commitment report, shipping budget, and
inventory projections in dollars. Manufacturing resource planning
is a direct outgrowth and extension of closed-loop MRP.iii