Who Needs CRP?

WHO NEEDS CRP?

by
Brian Willcox CFPIM
of
Action MRPII

During the early stages of an MRPII system implementation, a question the project team often asks is, “although the outputs from the CRP module would be nice, do we really need to go to that effort?” The answer is usually: "Yes, if you want it, but let's work through the details and have a look at what is really needed to run the business". To make a realistic, practical answer to the question, we need to understand what the real function of capacity requirements planning (CRP) within an MRPII system is. First we need to consider the relationship of the various levels of capacity or resource checks carried out during the planning cycle. The role of CRP, and the need for it, then becomes much clearer. First we will look at each level of capacity management.

Resource Requirements Planning

At the start of the planning cycle, the company executive creates the sales and operation plan (also called the production plan). This is the plan by family group in time periods of months and quarters. The viability of the plan is checked by using resource requirements planning to verify if the plan will fit into the resources available. This allows the company executive to decide if additional resources will be required or if the plan has got to be made to fit what is available. Once a final agreed plan is produced and signed off by the executive, it is then handed over to the master scheduler for conversion into the master production schedule.

Rough Cut Capacity Planning

The master production schedule is created from the production plan by taking those monthly quantities and breaking each family group into finished products, and the monthly quantities broken down into weekly or daily quantities. The master scheduler's problem is not an overall capacity fit which was checked by resource requirements planning at the family group level, but a balance within the days or weeks within the month. Rough cut capacity planning, is as the name implies, a rough way of checking that balance. Load profiles are used to do this and they do not usually indicate any time phasing in the levels of manufacturing, thus it is a reasonable, but not perfect capacity check of the MPS to the resources available. Once the master scheduler has got the MPS balanced from a work load point of view across the time periods, then it can be released into MRP.

Capacity Requirements Planning

Material requirements planning (MRP) takes the requirement dates for each MPS item and calculates the quantities of each sub-assembly, manufactured component and purchased item required to meet that program. The logic of CRP is that it receives all planned orders, firm planned orders and scheduled receipts from MRP and then breaks each down into individual operations. For each operation, the order quantity is multiplied by the run time standard hours stated on the route sheet and added to the set-up time. This way, the number of standard hours required per work centre per operation can be calculated. This is done for each manufacturing order operation. The totals can then be calculated per work centre per time period. The final figure can then be compared to the capacity stated to be available in the work centre file. Capacity requirements planning is a comparison of the standard hours required to those stated to be available. This process can produce volumes of paper if each operation on each order is to be identified. Normally this information is taken in a summarised form, either as a histogram or as a percentage load report. The percentage load report shows diagrammatically the percentage loading for a work centre by time period.

The Start of MRPII

When we look back at the end of the sixties and early seventies, when MRP first started, it was initially created as an ordering system. It was then developed further being able to provide assistance where there were complex scheduling problems typically for the machine shop environment. The MPS provided the plan for rough cut capacity planning to balance the work across the time periods. CRP provides the means to get a finer balance across the work centres in the various time periods taking into account the lead time off-set per operation. For CRP to be possible, a full detailed routing for each product is required. The standard time for each operation run time and set up time must be entered into the routing file. To provide a quick and easy means to schedule the factory, but without obtaining control of the capacity, many people use the block scheduling approach which uses an elapse time per work centre. In other companies, especially the process type industries, the routing through the work centres are fixed for a whole group of products. There are one or two key critical work centres (bottle necks), but these can be identified at the master production schedule level with rough cut capacity planning.

Application of CRP

We find more and more that in many industries especially the process type of industries, if the MPS is controlled well then CRP does not provide any great benefits. This is especially true where the equipment is generally dedicated to a particular product line. The advantages of CRP are more beneficial where there is a complex scheduling problem as in a machine shop environment. It brings together the individual requirements of many products coming through a work centre. Generally the process industry does not have that problem. We found in some of the food and pharmaceutical industries, the only area where there was commonality was the packing function. With a little care at the MPS level, control can be provided thus negating the need and complexities of CRP. From a practical point of view, the simpler we can make our systems, the better

Other Points

Recently I found a company trying to master scheduler a tremendous number of finished products (like 50 000), and due to the batching rules used, they permanently had a capacity problem and excess stock of manufactured components. What was found was that if they master scheduled at a "typical" level and built to customers orders using the final assembly schedule approach with shorter lead times. The problem of capacity completely fell away. Some companies initially say they need finite capacity planning. Again, it is usually the problem of trying to control the work at the factory floor level, instead of controlling the volume at the MPS level. From my experience, CRP is not always necessary if the MPS and rough cut capacity planning is used correctly. Ask yourself a question. Do you really control your volumes at the MPS level with realistic time fences? If you are one of the few who can honestly answer yes to that question, then I'm sure that you know if you would gain by CRP. If the answer is no, then the first job is to get your MPS under control before you start trying to implement CRP. CRP is a tremendous tool in certain applications, but not necessary everywhere.

May 1997

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