International Journal of Operations & Production Management

A Model for Material Requirements Planning Implementation

Thomas E. Callerman, Jeff E. Heyl,
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Thomas E. Callerman, Jeff E. Heyl, (1986) "A Model for Material Requirements Planning
Implementation", International Journal of Operations & Production Management, Vol. 6 Issue: 5,
pp.30-37, https://doi.org/10.1108/eb054778
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 30

A Model for Material Requirements

P l a n n i n g Implementation
by T h o m a s E. Callerman a n d Jeff E. Heyl
Arizona State University and University of Colorado at Denver, USA
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Much has been written about the relative success of MRP implementation. Most of
the articles have focused on the technical aspects of such an implementation and have
only touched upon the people aspects of implementation. This article focuses on the
shortcomings of ignoring the people aspects and we propose a theorectical model for
MRP implementation which includes the important human variable.

Introduction
Perhaps the most significant improvements in the productivity of American
manufacturers in the past decade have come through the implementation of
sophisticated planning and control systems[l-3]. While newer systems such as Just-
In-Time management (JIT) have contributed much to our ability effectively to plan
and control our processes, it may be argued that the basic Material Requirements
Planning (MRP) system and its enhancements such as Manufacturing Resources
Planning (MRP II), have provided the foundation upon which many of the newer
systems have been built. Though much has been written about MRP and how it should
be introduced to an organisation[2,4,5], the low overall success rate of organisations
attempting implementation speaks poorly for the level of understanding and control
of the actual implementation process itself[6]. The purpose of this paper is to present
a theoretical model for the implementation of MRP and the results than can be
expected from successful implementation. We start with a brief discussion of the basic
MRP system and its derivatives, discuss the need for and development of our model
for implementation, and conclude with a discussion of the expected outcomes of
succesful implementation.

The Basic MRP System

MRP is, at its foundations, a time-phased order release system that under ideal
circumstances schedules the order releases for needed dependent demand inventory
items so that the items arrive just as they are required. The inputs to the system are
the Master Production Schedule (MPS), the Bill-of-Materials File (BOMPF), and the
Inventory Status File (ISF). The MPS contains the detailed period by period
requirements for the end items of the operation. This information is typically derived
from forecasts and actual customer orders. The BOMF contains the specific
descriptions of the component parts required for each end item and their relationships
 MRP Implementation Model 31

to the end item and each other. BOMF information is generally provided by the
engineering function in an organisation. The ISF contains the amounts of all items
in the BOMF and MPS that are in stock, available, and expected during the planning
period. The maintenance of the ISF is the responsibility of the production/inventory
control area of an organisation.
The MRP processor, the heart of an MRP system operates in the following manner.
The available inventory of end items is subtracted from the requirements as given in
the MPS. This is referred to as the Gross-to-Net calculation. The net requirement is
then offset by the necessary lead time for acquisition, the Time Phase operation. The
resulting planned order releases provide the gross requirements for the next level of
products in the BOMF. This is identified as the Linking operation. The process repeats
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itself for all items in the BOMF. While this description provides the basics of an MRP
system, the richness of the possible enhancements to this process is not captured. For
a more complete discussion see Orlicky[7] and Vollmann, Berry and Whybark[2].
The outputs from the basic MRP system are planned order releases for all component
parts of the end items scheduled so that their quantity and arrival coincides with the
actual need for the parts. These planned order releases include the acquisition of parts
from outside the organisation, purchase orders, and the creation of parts internally,
work orders. In cases where the ability to achieve the requirements is impaired,
exception reports identify the problem areas and call for management intervention.
While it is possible and even helpful to operate an MRP system at this rudimentary
level, the most significant benefits to an organisation will not be realised. By making
an MRP system the heart of an organisation-wide operations-based information
system, there can be considerable improvements to the efficiency and effectiveness
of an organisation. This concept is embodied in Manufacturing Resource Planning
systems, or MRP II as it is commonly known. The basic idea behind MRP II is that
the proper way to develop information about the functioning of a manufacturing
organisation is from the actual schedules and outputs of the manufacturing component
of the organisation. A well designed and properly functioning MRP II system can
provide the information to drive essentially all the functional areas of manufacturing
organisation[3].
Many of the newer enhancements to the general topic of material planning and
control systems are logical outgrowths of the MRP concepts. Such systems as JIT,
Stockless Production, Zero Inventories, Kanban and others, share critical elements
in common with basic MRP. While proponents of each of these systems will point
out how they differ, for the purposes of this paper references to MRP may be assumed
to apply in part to these other systems and wholly to the enhanced MRP II concept.

Problem Areas in MRP Implementation

The published success rates for MRP implementation are quite low. Failure rates of
up to 50% have been reported[6]. It is well known that the technical aspects of the
system are not mysterious or difficult to master. Specifically, experts from both
academic and practitioner communities have concluded that the problems with MRP
implementation are people-related, not technical, in nature[3,6,7-9]. Fundamentally,
the issue rests with an important component of the implementation process. In an
 32 IJOPM 6,5

MRP implementation there is a stated need to change the way the organisation views
its processes, responsibilities, employees and relations with the external environment.
The basic conscience of the organisation must change in this process. The most
important issue in a successful implementation is the success with which this
reorientation is accomplished[3,7,10-12]. The proper functioning of a technical system
of any kind does not necessarily imply that the desired outcomes will follow. It is
clear that true success will occur only after the people who must use the newly
implemented technical system accept that the system improves their environment.
It is contended that the major reason for the failure to understand and manage
the people-related problems in MRP implementation is the failure to develop a valid
model of the process that includes the appropriate dimensions set forth by the theorists
in the field. These dimensions[3-7,13,14] are typically described as:
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• support of management;
• involvement of the users;
• education;
• planning and control;
• sound design.
While there have been significant attempts at model development, critical elements
have always been lacking. As an example, the most popular model of the MRP
implementation process was proposed by Wight [3]. This model concentrates heavily
on the completion of key tasks such as improving the accuracy of Bill of Materials
and Inventory records and installing the necessary hardware and software. Clearly
the fous is technical in nature and not on the people-related problems that present
the real obstacles. The absence of these people-related issues from the model makes
analysis and understanding problematic.
In another attempt to define the issues, White[13] suggested that the Lewin-Schein
Theory of Change could provide a basis for successful MRP implementation. While
clearly recognising the role of people in the implementation process, the concept is
incompletely developed. Further, there are no available instruments with which to test
the model and the proposed techniques.
Cox, Zmud, and Clark[14] set forth a limited model of the MRP implementation
process based on the MIS literature and described the theoretical dimensions related
to the model. This model represents a serious effort to include the people-related
dimensions in an implementation model. Multi-item, multi-dimensional scales were
offered to measure the proposed people-related dimensions. Unfortunately, the scales,
as described in Clark, Cox, Jesse and Zmud[15], have been shown to have questionable
validity and reliability[16,17].
As a whole, then, research on MRP implementation has been plagued by a lack
of satisfactory theoretical development on the people-related issues of implementation.
The proposed models either lack sufficient attention to these people-related problems,
remain unvalidated, or, most often, both. The lack of validation of these models is
critical since there can be no confidence in the results of the application of a non-
validated model, technique, or measuring instrument[18-20]. The model proposed in
this paper for MRP implementation is an attempt to overcome the problems with
previous models. This model is presented in Figure 1.
 MRP Implementation Model 33
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Theoretical Model for MRP Implementation

The model presented in Figure 1 clearly has at its heart the relationship between people
and the technical system. The major influence is that of education on the user,
management and the MIS staff. The purpose of this education, stated very simply
in Lewin-Schein terms, is to "unfreeze" the current culture of the organisation so that
is will be ready for the implementation of the new technical system. As mentioned
earlier, management support is critical to the successful implementation of MRP, and
it is through a change in attitude and understanding, brought about by the proper
breadth and depth of education, that this support can be gained.
Almost as important as management support, if not more so, is the support of the
user of the system. Here, we define support as willingness on the part of the user
 34 IJOPM 6,5

to actually use the new system on a day to day basis in decision-making and the reoutine
operation of the business. Again, it is felt that the proper education will change the
user's attitude and understanding about how formal systems in general, and MRP
specifically, can make life on the job much simpler. Only with the changed attitude
will the user support the actual implementation of MRP. This, in turn will lead to
the involvement of the user in the actual implementation of MRP, which will create
a feeling of "ownership" of the system — this in turn theoretically leading to a more
successful implementation. It seems obvious that the degree of management support
for the MRP implementation will affect the attitude of the user and the amount of
support the user will be willing to give to implementation. In effect, perceived
management support should act as a "change agent" and should amplify the degree
of user support and involvement in the implementation itself.
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The third area of involvement is that of the MIS staff. It is suggested by the literature
that computer-based systems are more successfully implemented when the user is
involved in the development of specifications for that system. Therefore, we define
MIS staff support as willingness by MIS staff to involve the user of MRP in the design
of the system. Once again, it is important for MIS staff to be properly educated about
the importance of involving the user. Once MIS understand this then MIS support
should lead to a more successful implementation.
As implementation proceeds it is essential that management, user, and MIS staff
support are sustained. The three groups must be reminded continually that the MRP
system is important. This can be done through repeated education, but in our model
it is recognised that the feedback stage by stage of success with the implementation
also provides reinforcement. It is one thing to talk about the expected success of the
MRP implementation, it is another to show how the MRP system is in fact aiding
the organisation. It is through this continuous feedback of successes and support that
the Lewin-Schein concept of "refreezing" can be accomplished. Without the feedback,
the tendency would be to revert to the use of the old, informal system. We suggest
that the lack of recognition of this relationship may be one major reason for the
reported high failure rate of MRP installation.
Theoretical Benefits of MRP
The benefits to an organistion that might be derived from the creation and operation
of an MRP system may be considerable. The types of benefits typically cited are
reduced inventory, increased inventory turns (a measure of efficiency), improved
customer service level, and enhanced quality of work life[6]. By developing accurate
planned order releases that schedule parts in the quantity and at the time they are
needed, the total inventory needed for production may be significantly reduced. Given
the high cost of inventory and the recently realised importance of keeping inventory
to a minimum, such reductions can result in significant dollar savings for an
organisation[10]. Reduction in the amount of inventory on hand results in increased
inventory turnover ratios, i.e. the velocity of change in inventory over the year. This
common efficiency measure gives a good representation of changes in inventory
efficiency for a particular firm over time. MRP systems have been shown to increase
the inventory turnover ratio impressively for firms attempting implementation[6].
The impact of an MRP system, as demonstrated by the internal measures described
above, can have a significant beneficial effect on the cost structure of a firm. The
 MRP Implementation Model 35

external effects, however, can be just as significant in terms of the profitability of

the firm. For those organisations who responded to their survey, White et al. [7] found
significant improvement in the customer service levels of the firms. Each firm's ability
successfully to satisfy the demand of its customers was improved by the implementation
of an MRP system. The improved service level is revealed in reduced back orders,
reduced lead times for customers, improved percentages of promised deliveries kept,
and reduction in the failures to maintain schedules. Increased customer satisfaction
is generally felt to significantly improve an organisation's overall competitive position
and long-term ability to survive[3,7,10-12].
A less commonly recognised outcome of implementing an MRP system is improved
quality of work life in an organisation[6]. An MRP system requires strict adherence
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to the procedures and process of the system if it is to operate effectively. The net result
is an increase in the amount of formality and creation of routines in the workplace.
On the surface this might seem undesirable in terms of current thinking on work
design[21]. However, clarification of tasks and reduced role ambiguity[22] coupled
with the improved quality of information about the processes of the firm do seem
to overcome these potential problems. The net result of MRP implementation is an
improved quality of work life for the employees affected by the system[3]. Figure 2
shows the benefits and the expected changes resulting from successful implementation.
the + and - symbols indicate the hypothetical direction of change in a successful
implementation.

Summary and Recommendations for Research

We have presented a theoretical model for MRP implementation but this model could
possibly also be applied, with modifications, to other organisation-wide systems such
as Just-in-Time manufacturing. Therefore, it is proposed that the model presented here
is potentially a generic model for the implementation of organisational changes which
involve technical systems, regardless of the name given to such a system.
The validity of the model is untested. It is simply a theoretical model based upon
the relationships reported in the literature. Therefore, the logical research is to test
the validity of this model.
• Are the relationships valid?
• Are the linkages between components of the model correct descriptions of the
true relationships among user, management, MIS staff support, and successful
implementation of MRP?
• Are the theoretical measures of MRP success the actual results that can be
expected if MRP is implemented properly?
• Are the directions of the outcome measures the proper ones?
These and several other research questions need to be answered through empirical
methods before the validity of the model can be accepted. However, we feel that the
presentation of this theoretical model for MRP implementation is a necessary step
toward fully undertanding the success of MRP.
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36
IJOPM 6,5
 MRP Implementation Model 37

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