Flashy Flashers supplies approximately 95 auto parts stores with automotive electrical components. The firm values customer service but has recently had a problem with late orders. Jobs are scheduled by earliest due date, but the due dates are not updated in the system to reflect unexpected events such as scrap losses, shortages, urgent customer requests or shipment problems. The MRP system also cannot recognize capacity issues. This is causing problems on the shop floor as people are forced to work overtime to meet scheduled order receipts or there is not enough scheduled work to utilize employees.
Review of the MRP explosion for headlamps and sidelamps, reveals that orders for 11 items will be released in week 1 (Char 1). Two of those orders must be expedited: flasher cable grommet and receptacle and flasher bulb each have 100 less in inventory than required for week 1. The planned receipt of subframe assemblies can be delayed until week 3.
The released order schedule shows a very uneven workload over the coming weeks. Any urgent customer orders or delays impacting week 1 will most likely result in overtime. The MRP system has been effective for monitoring inventory but has not improved the utilization of labor. The system must be updated to reflect changes in scheduled receipts. The system should also be updated to include capacity limits. The shopfloor should identify bottleneck items and utilize downtime to increase safety stock of those items so that productions can proceed smoothly.
Since customer service is a company priority, safety stock of popular end products should be increased so that backorders and stockouts do not occur and urgent orders can be accommodated.
Krajewski, L., Ritzman, L., & Malhotra, M. (2013).Operations management: Processes and supply chains. (Tenth ed.). Upper Saddle River, New Jersey: Prentice Hall.