Integrating Your Supply Chain with MRP Software

A characteristic of MRP software is that unlike ERP software, which has a central core, MRP software is more of a stand-alone system. Other activities may include purchasing, manufacturing, supply chain management, finance and accounting, and human resources. These other departments or business units may have use proprietary of stand-alone applications or they are just run with spreadsheet type management. With this system, there is no end all-do all application for an entire enterprise. In an ERP system, these still exist, yet as instead of stand-alone applications, they are now integrated modules.

This means they are physically or virtually connected to the ERP core, giving access to common data. Along with the common data, the module may have non-related activities. If a company runs MRP software, it will need to have stand-alone applications for the support tasks.

In MRP software, the supply chain management function is a cooperative effort of
purchasing and quality. Logically driven by purchasing, but with input and assistance from quality and engineering. The goal of this function is to manage the resources and logistics required to meet the needs of an enterprise. In order to accomplish this a supply chain management system needs to be set up.

With increased globalization, it is important to rate suppliers to maintain the desired level of the organizations quality. The most logical way is to use Manufacturing software that either is or contains a supplier rating system. Contained within that system would be the supplier profile, the amount and date of receipts, and incident reporting.

Unlike the ERP software which contains supplier rating as a module, the supplier rating system would need to be administered and communicated by the quality and purchasing organizations. This group would collect, compile and analyzer the data, and the standard output is a suppler scorecard. A suppler scorecard would contain raw scoring data usually expressed as PPM, and may also include a vendor-to-vendor relative rating.

Supplying the vendor scorecard to the person administering the MRP system would then occur. This person would then remove the vendor for the preferred supplier list in the MRP software or it may remove them as a vendor altogether.

This will not only flag a particular rejected product, but also raises flags within the MRP software, preventing purchases of other materials or goods from the same vendor. The MRP software can also cross reference open orders of non-similar products, and ensure the materials get extra scrutiny upon, or before arrival.

This attribute improves the overall quality of an organization by providing purchasing control, and preventing a poor supplier from selling to the "other end" of a business. It does this with reduced labor as well.

In order for the supplier to be reactivated as a preferred supplier in the MRP software, the person administering the supplier rating system would send the adverse scorecard to the offending supplier. This supplier would then be required to submit an action plan, usually accompanied by some form of proof of improvement back to the administrator.

Upon acceptance, the supplier rating system administrator would inform purchasing, who would then reactivate the vendor in the MRP software, allowing them to come up as a selection for goods and services. While this vendor corrective action function is just a small part of the supply chain management, it does require resources to support it. This need for a supplier rating system with the MRP software paradigm is often reason for an organization to evaluate ERP software as an option or upgrade.