Theory of Constraints Handbook - James Cox Iii [222]
A Brief History of MRP
The invention of MRP in the 1950s was nothing short of a revolution for manufacturing. For the first time, companies could plan for needed materials based on an overall master schedule exploded through a bill of materials (BOM). The manual single- and double-order point systems were no match for the proliferation of products coming to market after World War II. The world was in the age of marketing! We found that we could no longer live without things that did not exist 10 years earlier. Class “A” MRP implementations yielded significantly reduced inventory and improved on-time deliveries. APICS—the American Production and Inventory Control Society—was founded in 1957 in Ohio to disseminate the education necessary to effectively use the tools that were quickly being developed. In 1976, the APICS CPIM certification was introduced and quickly became a standard worldwide of the mastery of the production and inventory control techniques of the day including inventory management, MRP, production activity control, and master planning. Driven by this available APICS education through the 1970s and with the APICS MRP Crusade, MRP quickly became the number one tool that inventory-related management personnel relied upon to ensure that material was available to meet manufacturing and market requirements.
Even in these simpler, more predictable times, MRP was successful as measured by significant bottom-line results including dramatic inventory reduction in only a small percentage of companies that implemented the tool. The early adopters showed significant results, but as MRP came into more widespread use, the same results were not achieved. This significant failure rate of MRP was a major point of discussion in the APICS meetings at the time. One big reason was that MRP was intended to do only that—plan material. APICS professionals at the time knew that capacity was a critical consideration. However, the computer power at the time was limited and even if the capacity algorithms were available, it was just not possible to calculate both at the same time. Remember that the first MRP systems were written in only 8K of memory! However, computers quickly became more powerful and closed-loop MRP was developed to answer the problems of the day. The APICS Dictionary (Blackstone, 2008, 21) defines Closed-loop MRP as:
A system built around material requirements planning that includes the additional planning processes of production planning (sales and operations planning), master production scheduling, and capacity requirements planning. Once this planning phase is complete and the plans have been accepted as realistic and attainable, the execution processes come into play. These processes include the manufacturing control processes of input-output (capacity) measurement, detailed scheduling and dispatching, as well as anticipated delay reports from both the plant and suppliers, supplier scheduling, and so on. The term closed loop implies not only that each of these processes is included in the overall system, but also that feedback is provided by the execution processes so that the planning can be kept valid at all times. (© APICS 2008, used by permission, all rights reserved.)
Closed-loop MRP was the next evolution and allowed the planning of both material and capacity. Still, the development and implementation of an MRP system was far from a guarantee of success. The tool was far more sophisticated and the available APICS education provided people who understood how the tools worked, but still the implementation was not a guarantee of success.
Technology became more powerful and the client-server age was upon us. In the 1980s, MRP II (manufacturing resources planning) was developed to provide further integration to the core business system by incorporating the financial analysis and accounting functions. MRP II in the APICS Dictionary (Blackstone, 2008, 78) is defined as:
A method for the effective planning of all resources of a manufacturing company. Ideally,