Mark Edmondson from Lean Affiliates and Mark Graban have been hammering away at the latest whiz bang variation of MRP, calling it another "siren song" for manufacturing. For those a little light on their Greek literature, the sirens were a devious bunch of women with beautiful singing voices, and they would lure passing sailors to venture closer to hear the music, only to find that they had been suckered into steering the ship right into the rocks, where it would crash and sink. To see the boys over at Lean Manufacturing Blog’s sarcastic, cynical comments (imagine someone writing in such a tone in a serious manufacturing blog!), drop down the page to "First the V-Pill; Now Its the V-Chain".
They are right, of course. Joe Orlicky and Ollie Wight lured American manufacturing onto the rocks with MRP in 1961, and we have been foundering on them ever since. Originally, MRP stood for ‘Material Requirements Planning’. A few years after Orlicky put the first system into a JI Case plant in Moline, Illinois, the system was tweaked to add capacity planning, and it has remained unchanged since. Later on, the whole system was tied into cost accounting, and renamed MRPII, and the initials now stand for Manufacturing Resource Planning. Finally, the tentacles grew deeper into the company and the whole mess was renamed ERP – Enterprise Resource Planning. Through it all, though, the heart of the system has remained unchanged since Joe and Ollie laid it all out during the early days of the Kennedy administration.
In order to understand MRP, conjure up all of the core principles of lean manufacturing in your mind – then picture the opposite. You will have a good grasp of MRP logic. Taichi Ohno used the analogy of manufacturing being like a river full of rocks. The water level in the river represents inventory and the rocks represent manufacturing waste. The aim of the Toyota Production System, says Ohno, is to continually drop the water level and expose the rocks, so they can be eliminated. The rocks of poor quality, long set up times, poor factory layout and so forth all must be eliminated to turn the factory into a smooth, rapidly flowing stream of production.
MRP, on the other hand, is designed to make it easy for factories to plug in the size and location of each rock, then turn it over to the system to assure that there is always enough water to keep every rock covered. It is built around lot sizes that assure set up times and costs are spread out over so many units they become insignificant cost elements; the user inputs yield percentages to generate enough extra production to assure that lousy quality doesn’t get in the way of shipping; it helps to assure that there is enough inventory everywhere in the process to keep all of the manufacturing waste hidden from view.
While the sophisticated systems peddled today as ‘necessary’ for every serious manufacturer have whistles and bells Orlicky and Wight could not have imagined, they still drive manufacturing exactly to their 1961 vision. The enhancements to MRP have been in hardware, not software. Joe and Ollie would be flabbergasted to see desktop machines running MRP. The original was run on a computer the size of a comfortable home called an IBM RAMAC 305. (Check out this cat running an IBM RAMAC machine and you will have a good idea just how state of the art MRP is) For that matter, RAMAC stood for Random Access Method of Accounting and Control. The factory people had to know nothing good could come from introducing more ‘accounting and control’ into the factories. At any rate, once the MRP crusaders got over their amazement at hardware, however, they would feel right at home with the logic.
MRP was useful – even necessary – under the manufacturing philosophy of the day. Trying to become lean using a 45 year old manufacturing tool won’t work, however. It is a lot like a world class, Olympic sprinter who breaks her leg. Sure, she is going to need crutches until her leg heals. But she better get rid of the crutches eventually if she thinks she is going to get to the Olympics. MRP was a great crutch for factories bloated with inventory, cranking out dismal quality products in the 1960’s. Nobody is going to keep up with Toyota using MRP, however.
As info, Toyota uses MRP for planning – it still does a great job there, especially for capacity planning. But there is no sign of MRP in their factories. You have to go to an American plant to see the relics of Orlicky’s thinking in serious action.
Computer systems are great tools – not panaceas. The siren singing of a system that does it all sounds almost as sweet to American manufacturers as the siren singing Chinese love songs. The manufacturers that follow all end up on the rocks, however. I read somewhere that American manufacturers can be expected to compound the waste in their factories with over a billion dollars of additional waste in the next year for MRP systems. I wish them all good luck as they head off to battle with the truly lean manufacturers armed with their half century old arsenal.
Blogger’s Note: It pains the author to have to admit that I am an APICS certified MRP wizard and have led a number of companies down the road to ruin with MRP, and induced many more to self-destruct as a result of my lectures and articles in various APICS forums. I have fully recovered from my addiction to MRP and I can only beg forgiveness for all the harm I did early in my career.
An Even Better Note: Mark Edmondson has submitted a couple of links to two great articles on this topic in the Lean Executive Newsletter. As a former peddler of this stuff, he is an even worse sinner than I am. His observations are worth checking out.