BMW MRP Paper 3 - BMW MATERIAL REQUIREMENTS PLANNING(MRP...

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BMW MATERIAL REQUIREMENTS PLANNING (MRP) BMW Car Manufacturers Material Requirements Planning (MRP) NAME MGT5063 9 Nov 2016
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BMW MATERIAL REQUIREMENTS PLANNING (MRP) 2 BMW Material Requirements Planning (MRP) Inventory management is important in ensuring that an organization strikes a balance between the demand for goods by the consumers and an entity’s supply of finished products. It is essential in forecasting the ever-changing market environment (Shaikh, 2010). It is a science whose aim is to ensure that every enterprise maintains the optimum amount of each item of stock. Several inventory management strategies exist in the market today. One of them is the just-in-time (JIT), which helps a company avoid high inventory levels by ordering items only when it needs them. Another one is the material resource planning (MRP) that plans the ordering and delivery of materials based on sales forecasts. It is a holistic approach that deals with the entire supply chain and a company’s demand for raw materials, intermediate products, components, and everything required to produce the final goods and services. BMW’s MRP System BMW is one of the largest car manufacturers in the world, and the company runs manufacturing plants as well as service outlets globally. The nature of its operations places demands on the extensive system to manage the sourcing of the different items required in the car- making process. In 2008, the company made the unprecedented decision to contract third party logistics provider (3PL) firm DHL to handle the entire supply chain to all its production sites in Europe (Branch, 2009). Therefore, that implied that the company outsourced its entire logistics business to a single company as opposed to dealing with more than 200 different entities. Such decision is just part of the MRP system that BMW uses while performing its
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BMW MATERIAL REQUIREMENTS PLANNING (MRP) 3 operations. There are many other concepts of inventory that the company applies to ensure efficiency and minimization of inventory costs.
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