Operations Department: MRP Implementation (Essay Sample)

Project Management
Student’s Name
Institution
Date
Abstract
This paper comprises of three internal memos to various managers; detailing on various operational and procurement issues at the workplace. Memo 1 details on the process of acquiring an effective MRP system and the accuracy of inventory and bill records. Memo 2 outlines the pros and cons of a single source procurement system vis a vis a multiple source one. Memo 3 advises on the importance of a chase demand strategy as compared to a level capacity strategy.
INTERNAL MEMO
DATE: 13.09.2019
TO: Mr. Felix Young
FROM: Operations Department
SUBJECT: MRP Implementation
In response to your queries on the MRP system, kindly note that we are in the final stages of configuration and end-to-end encryption. We estimate that the system that be fully operational in the next two weeks. It has taken almost a year to complete everything owing to the complexity of the components that were to be installed to make it all-inclusive. There had also been a temporary halt to operations last month owing to the minor changes that were made to the vendor-customer contract; that need to be first accepted.
The department included an allowance for potentially inaccurate bill of materials and inventory records. This is because after the failure of the first MRP system, we had to manually record all entries in the inventory and bills of materials. Given the high turnover of processes we have, coupled by the shortage of staff currently in place, it was a tall task to keep an accurate inventory. A company like ours that uses tons of materials and incurs several bills needs a proper automated system to adequately account for everything (Shteren & Avrahami, 2017).
The company has however been operating adequately despite allowance for recent inaccuracies. Before that, the previous system had assisted to keep data that was accurate, up-to-date and verifiable. It is only records for the month of August that were manual hence the allowance for human error. In addition, there had not been shortage of staff before August as the two resignations in Administration had not taken place. Further, the company’s books had been audited in the previous quarter and an unqualified report given.
INTERNAL MEMO
DATE: 13.09.2019
TO: Mrs. Jane Furman
FROM: Procurement Department
SUBJECT: Changes in Supplies
I write this in response to your decision to have the company switch from eight suppliers to one supplier, who only handles orders on a fixed interval basis.
The move to a single supplier is bound to result in decreased costs in the prices of goods as compared to when they were multiple sourced. The sole supplier will increase their economies of scale; leading him to factor the savings in the pricing (Constantino & Peregrino, 2010). The elimination of competition when dealing with a sole supplier may however be a motivation for them to increase pricing arbitrarily. In the absence of alternative contracted suppliers, any interruptions in supply in the future will mean additional costs and inconveniences.
With better negotiation on the company’s part however, cost factors may decrease if a viable partnership is established with the new supplier. The promise of a long standing relationship based on mutual understanding and commitment might result in discounted pricing model for the company. Further, a sole supplier removes the potential for opportunistic tendering commonly seen in multiple sourcing settings. Single sourcing may also reduce costs owing to the reduction in the number of orders, calls and records.
Abandoning a multiple sourcing model on the other hand equally spells some negative cost factors. Single sourcing puts an end to the flexibility present in multiple sourcing, to react to unpredictable events. The provision of goods on a fixed interval basis further worsens the rigidity and might mean additional costs when emergency supplies are needed.
INTERNAL MEMO
DATE: 13.09.2019
TO: Mrs. Rhonda Waters
FROM: Procurement Department
SUBJECT: Chase Demand Strategy versus Level Capacity Strategy
In response to your query on the suitability of switching the company from a chase demand strategy to a level capacity one, I wish to caution against making the move.
Our company just like any other, experiences fluctuating demand for our products. The chase demand strategy has enabled us stay at per with the market; producing reduced quantities when demand is low and raising production when demand spikes. This has fostered a just-in-time system