3E - Material Strategies Flashcards
(4 cards)
Forecasting
Is a materials planning tool that predicts customer demand for an upcoming period using past data and market trends
Add:
- Ensures the business has the right amount of materials on hand so production can continue without needing to wait for materials to arrive. This improves effectiveness as the business can meet customer demands
- Can help to prevent overstocking materials which can improve efficiency in the business as materials aren’t idle for long periods of time. This can reduce wastage as perishable or damaged items don’t need to be discarded
Diss:
- Often unforeseen changes in market demand can render the forecasts useless. An unexpected spike in demand or an unexpected drop in demand can cause the business to over or under-produce, reducing efficiency
- Forecasting is a prediction.. While it uses past data, it is still a human prediction which can make it inaccurate
Master Production Schedule
MPS is a plan that outlines what a business intends to produce, in specific quantities, within a set period of time
Add:
- The business can determine its ideal level of materials that are required to meet the customer demand
- A clear plan on how many employees will be required and on which days provided
- Can assist with ensuring there are no ‘out of stock’ periods
Diss:
- Using software for master production scheduling can come at a significant cost to the business
- The number of products required to be produced in the MPR is often forecast which can be inaccurate and not as flexible to unexpected demand changes
Materials Requirement Planning
MRP is a process that itemises the types and quantities of materials required to meet production targets set out in the master production schedule
Add:
- Ensures there are enough materials on hand to meet the production numbers in MPS
- Leads to a continuous flow in production to ensure that there are no steps to wait for materials to arrive
- If software is used for MRP, it can often track the materials through the supply chain to improve production planning
Diss:
- There is a heavy reliance on accurate data to ensure the correct materials are available
- Lacks flexibility to meet a large spike or drop in customer demand
- The initial cost can be high
Just In Time
JIT is an inventory control approach that delivers the correct type and quantity of materials as soon as they’re needed for production
Add:
- Minimises the amount of idle inventory, reducing the amount of money tied up in materials
- Results in less wastage from materials perishing, becoming obsolete or damaged while being stored
- If materials are perishable, the materials are fresher than they are if being stored for longer period, improving quality
Diss:
- Can be difficult to meet an unexpected spike in demand as there is not enough buffer in materials on hand
- There can be unforeseen delays on the supplier’s end which can delay the delivery of materials
- Increased transportation costs as materials are arriving more frequently
