Inventory

According to Gordon Minty(1998), in his book entitled, Production Planning and Controlling, the techniques developed in MRP to provide valid production schedules proved so successful that organizations became aware that with valid schedules other resources could be better planned and controlled. The areas of marketing, finance, and personnel were affected by the improvement in customer delivery commitments, cash flow projections, and personnel management projections. Minty went on to explain that MRP II "has not replaced MRP, nor is it an improved version of it. Rather, it represents an effort to expand the scope of production resource planning and to involve other functional areas of the firm in the planning process," such as marketing, finance, engineering, purchasing, and human resources. MRP II differs from MRP in that all of these functional areas have input into the master production schedule. From that point, MRP is used to generate material requirements and help production managers plan capacity. MRP II systems often include simulation capabilities so managers can evaluate various options. According to William James Sawaya(1992), in his book entitled, Industrial Management, the key to making MRP implementation work is to provide training and education for all affected employees. It is vital to identify whose power base will be affected by a new system. These persons must be converted or the system will fail. Key personnel must be convinced that they personally will be better served by the new system than by any other alternative. "One way to improve employee acceptance of MRP systems is to adjust reward systems to reflect production and inventory management goals. "People generally act in their own self-interest," Sawaya noted. "If the performance measures that are used in determining compensation and promotion do not adequately address materials management, then no system in the world can significantly improve the situation."