Frugal innovation and MRP
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Frugal innovation, or frugal engineering, focuses on simplifying products and reducing their production costs, often aimed at developing countries where durability and unconventional distribution are key. Despite offering low-cost solutions, challenges include maintaining quality, high servicing costs, and competition from cheaper Chinese products. Material Requirement Planning (MRP) is a systematic approach to planning material needs for production, emphasizing the need for accurate data and software to manage inventory efficiently.
Frugal innovation and MRP
- 1. Frugal innovation Necessity is the mother of all inventions. Frugal innovation or frugal engineering is the process of reducing the complexity and cost of goods and its production. Removing nonessential features from adurable good
- 2. Frugal innovation Designing products for developing countries may also call for an increase in durability and, when selling the products, reliance on unconventional distribution channels. Globalization and rising incomes in developing countries may also drive frugal innovation. Such services and products need not be of inferior quality but must be provided cheaply.
- 3. Frugal innovation "Frugal engineering" was coined by Carlos Ghosn, then joint chief of Renault and Nissan,, who stated, "frugal engineering is achieving more with fewer resources." In India, the words "Gandhian" or "jugaad", At times this no frills approach can be a kind of disruptive innovation
- 8. Frugal innovation- washing-cum- exercise machine
- 10. Limitations of Frugal innovation Low cost but not long lasting The company has to bear a high cost to keep the customers. Mr Mittal said the extra cost of servicing rural customers, and their low usage levels, had made things unprofitable. India's low-cost telecoms revolution has, it seems, reached its limit. Some blame Tata's marketing, but other carmakers say they cannot achieve such a low price without compromising on quality, and that customers are wary.
- 11. Limitations of Frugal innovation In air travel, insurance, consumer finance and satellite TV, companies have cut prices to build their customer bases over the past five years but could not reduce costs enough to compensate, and compromised on quality. Consumer-goods firms are often keen to move away from cheap products, where Chinese rivals pose the greatest threat.
- 13. Material Requirement planning Materials Requirement Planning is a special technique to plan the requirements of materials for production. Dependent demand items Independent demand items EOQ answers How much and when? Average taken over a year JAN Feb AprMar May Jun Jul Aug Sep Quantityrequired TIME
- 14. WEEK NO. 1 2 3 4 5 6 7 8 50 0 30 20 0 0 70 20 Master Schedule, Table (desks) MRP –Desk- Top),Lead time =3, order quantity=100 Requirements 50 0 30 20 0 0 70 20 Schedule receipts 100 On Hand 60 10 110 80 60 60 60 -10 -30 Planned Oder Release 100 MRP –Plywood sheets for desk-tops ),Lead time =5, order quantity=250 Requirements 40 100 90 Schedule receipts On Hand 160 160 120 120 20 20 20 -70 -70 Planned Oder Release 250
- 15. Material Requirement planning MRP is a computer program that translates finished product requirements into time- phased requirements for each dependent demand items. The Bill of Materials(BOM) one of the three primary inputs of MRP, is useful because it is a list of all the assemblies, sub-assemblies, parts, and raw materials that are needed to produce one unit of a finished product.
- 16. MRP Input MASTER SCHEDULE • Relates to product demand and timeline. • What end items need to be produced • When they are needed • How much are needed. BILL-OF- MATERIALS FILE • Relates to product composition. • Lists all of the raw materials, parts, sub-assemblies and assemblies required to manufacture one item AN INVENTORY RECORDS FILE • Relate to inventory. • Consist of status information on an item sorted by time period. • Status information consists of gross requirements, scheduled receipts and expected amount on hand.
- 17. MRP Output PRIMARY REPORTS • Include production and inventory planning and control • Planned orders - a schedule indicating the amount and timing of future orders • Order releases - authorizing the execution of planned orders • Changes to planned orders - revisions of due dates or order quantities/ cancellation of orders. SECONDARY REPORTS • Include performance control, planning, and exceptions • Performance-control reports - measure deviations from plans such as deliveries and stockouts, as well as providing info that can be used to assess cost performance. • Planning reports - predict future inventories, procurement contracts and data for future assessment of material requirements. • Exception reports - recognizes inconsistencies within the report such as errors in overdue or late orders, etc. pg 661
- 18. Material Requirement planning Requirements The benefits of MRP primarily depend on the ability to maintain up-to-date and accurate information. In order to implement and operate an effective MRP system, it is necessary to have: 1) a computer and the necessary software programs to handle computations and maintain records 2) Accurate and up-to date master schedules, Bills of materials, Inventory records 3) Integrity of file data.
- 22. MRP BENEFITS AND REQUIREMENTS OF MRP MRP enables managers to: Determine the quantities for a given order size, know when to release orders for each component, and to be alerted when items need attention. Other benefits of MRP include: 1) Low levels of in process inventories 2) The Ability to keep track of material requirements 3) The ability to evaluate capacity requirements generated by a given master schedule 4) A means of allocating production time 5) The ability to easily determine inventory usage by backflushing.
- 23. MRP BENEFITS AND REQUIREMENTS OF MRP Backflushing is a procedure in which an end item's bill of materials (BOM) is periodically exploded to determine the quantities of the various components that were used to make the item. The people who are typical users of a MRP system in a typical manufacturing company are production managers, purchasing managers, inventory managers, and customer representatives. The benefits of MRP depend primarily on the use of computer to maintain up-to-date information on material requirement.
- 24. Thank you!