Page 188 - DMGT525_MATERIALS_MANAGEMENT

Unit 14: Computers in Materials Management

by each executive had been reduced but the scope of work of each executive had become Notes
large and more integrated. For a given group of materials, a single executive would
prepare the production schedule and work directly with suppliers to make it function
properly.
All the systems in M/s Indiana Electronics are computerised. Whenever a new executive
is hired, he or she is required to develop and manage the plan for one or two items,
Manually. The idea is to teach the newcomer how the system works.

Source: Narayan.P, Subramanian.Jaya (2008). "Inventory Management: Principles and Practices". Excel Books Pvt. Ltd.
MRP 2

This was followed in the 1970’s by Manufacturing Resources Planning (MRP2) (“Manufacturing
Resource Planning: MRP 2 Unlocking America’s Productivity Potential”: Oliver Wight) which
combined MRP 1 and capacity planning together with a control system. Whilst widely
implemented, the faulty implementation of MRP systems became a scandal with little regard
for data accuracy, ownership, and accompanying (new) management processes.
However MRP is still the dominant technique used by most computer “ERP” software
commercially available today. Whilst the concept of MRP 2 is sound, the advent of “Just in
Time” (JIT) and its control system “Kanban” created an attractive and significantly simpler
mechanism. This for a while in the early 1980’s seemed to provide an alternative to the concept
of MRP, to an extent where the leading gurus of the time predicted the demise of MRP, in favor
of the more pragmatic approach. Even “I” and “T” and “V” type product production require a
forward view to provide a planning ability. This led the computer software suppliers to attempt
to integrate the two approaches with so called “Electronic Kanbans” (a replenishment signaling
mechanism sent electronically). Although rarely needed for internal company signaling, this
mechanism has found later usage in the intercompany replenishment signaling involved with
“agile” communications.

14.1.1 Advantages of Computer in Materials Management

Following are the various advantages of using computers in materials management:
1. Visual Control Systems: In visual control systems, the control of stock is now becoming
genuinely achievable through “eyeball control”, rather than sophisticated computer
systems and heavy reliance on Perpetual Inventory checking.
2. Bar coding/RFID: Stock recording and stock movement recording has been greatly
simplified and improved by the automation of the data entry by bar coding. If used as a
common identifier between sales outlet and first tier manufacturer this becomes a significant
element of “Agile” manufacturing. Radio Frequency Identification (RFID) has now made
an entrance into this arena.

Did u know? RFID is capable of identifying an item at radio frequency distances, as
opposed to bar code scanning. However this may be distracting us from the
simplification of stock control which can be achieved by visible control systems,
and Kanban replenishment systems.
3. Electronic Data Interchange: The use of computers to communicate demands between
organizations has grown significantly from the introduction of faxes which were used to
send schedules then Kanbans to the use of electronic buying via the internet and electronic

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