Good Essay About Material Requirements Planning (MRP) Inventory AND Customer Service

The aim of this paper is to explore the interrelation between decreasing a company’s inventory and improving its customer service while using the MRP system.
Initially, the MRP system defines what quantities of finished items a company has to produce according to customer’s demand. Then, a company’s task is to plan its time and decide what quantities of material resources it has to allocate in order to fulfill the objective. The data base of the company keeps all the information about the resources of the company and can identify a critical moment when the resources are nearly finished and thereby have to be supplemented. This way, the company can always monitor the availability of raw materials required by the production, and minimize its inventories since the MRP system will help to prepare the most economical way of purchasing, allocating and stocking resources needed for the manufacturing. At the same time the MRP system greatly improves customer service as long as it manages to finish all the orders on time, increases efficiency and productivity and helps to react promptly to ever-changing market conditions and customers’ demand.
I took British Airways for the real-life example of MRP. Its passengers consume more than 50 million servings of food a year. The airline prepares some of the products itself and also settles problems with tableware, beverages, dry foodstuffs, cutlery etc. When it decided to implement MRP strategy, passengers’ tickets were chosen to be a source of information for the main plan of MRP. The comparison between supply and demand allowed the company to decrease its inventories, warehouses, timing etc. while showing greater quality and service. Thanks to the new system British Airways is now saving about 4 million pounds a year.