Material Resource Planning (MRP) software is a powerful tool for manufacturers and suppliers. Vital production and shipping information, once requiring complex spreadsheets and endless routing, is now automated and available at a click.
MRP's intelligent data can alert your procurement team about how to handle inventory based on various factors. It can analyze demand, sales, available inventory, allotted inventory, estimated quantities, and open purchase orders. The data gathered triggers MRP to make suggestions for strategic inventory management.
A challenge comes with keeping suppliers up to date. Generally, an ERP does not allow buyers to collaborate with suppliers on POs, and it's difficult to guarantee that the critical supplier data that feeds the MRP is accurate and up to date. Buyers have had to rely on updating suppliers through email, phone calls, or shared spreadsheets when changes are made to the PO. Updates must be manually entered into the ERP line-by-line for each change. If the changes are not made, the resulting data will be faulty.
Are you wondering if PO data changes are common? Yes, they are, especially with recent disruptive supply chains worldwide. Everyday disruptions like late shipments, missed emails, and miscommunications cause 50% of direct spend PO lines to change. During times of major disruption, this number goes even higher.
Delivery dates and quantities are difficult to guarantee in the current climate. Half of all POs will need to be adjusted, and some of these will require numerous or repeated adjustments. With lead times getting longer, a single PO line may need to be revised many times.
All these changes, especially with manual entry, present the risk of error. And if half of your POs require changes, what percentage of those changes actually make it back into your ERP? Half? If that's the case, 25% of all your POs have inaccurate data. You may be spending a lot of time and resources setting up an MRP, but it's no good if your data is a mess. Can you afford to make business decisions based on inaccurate, outdated information.?
Don't fuel your MRP with wrong data
Relying on manual processes for data entry and correspondence does not make good business sense. You need an
With supply chain disruption, partial shipments are now common. But many companies accept partial quantities as they come in yet work with the original full-quantity PO.
With MRP automation, suppliers provide delivery schedules for partial shipments. The solution automatically splits those lines by quantities and dates, so both buyer and supplier know when the inventory will actually arrive. With 100% accurate data in your ERP and MRP, you can make informed business decisions every time.
As for communication, buyers have relied on email and phone calls to get the information they need from suppliers. The questions may be legion: Is follow-up scheduled? When was the latest supplier update sent? Did the update make its way into the ERP, the MRP, and the schedule? Do other team members have access to those updates?
In many instances, MRP intelligence on PO adjustments is not relayed to suppliers because of tedious communication methods. But you can opt for a platform that makes it simple to action pull-ins, pull-outs, and cancellations all in one place. Communications are logged and attached to individual POs, changes are visible in real-time, and buyers no longer have to spend time chasing down updated information
MRP is an incredibly powerful tool, but only if you keep it updated. Bad data will lead to poor recommendations and forecasting.
If you already use an MRP but still rely on manual data entry or disparate communications, you're almost certainly not getting the most out of your system.
MRP with a difference