Question

In this module we have seen how a company can be controlled with and MRP/ERP system of follow the Lean approach. What do you see as the advantages and disadvantages of each approach?

Answer 1

Advantages of MRP system:-

• . With the help of MRP, the organization can ensure the availability of all the raw material on time which will be required during the production of a product.
• This system has almost very few inventories and thus reducing the inventory cost
• With the help of MRP, the organizations can ensure the timely delivery of the finished products
• MRP enables the organization to ensure the optimal utilization of production resources.
• As this system has the least inventory level, thus the requirement of capital is reduced drastically.
• This system facilitates detailed date for having a comprehensive and detailed planning.

Disadvantages of MRP system:-

• Lack of data accuracy can create a lot of issues while production planning
• It is largely dependent on the input data received from various divisions and thus the chances of inaccuracy are quite high
• Proper training of end users is inevitable thus it incurs training cost
• It is a costly and time-consuming system to implement.

Advantages of ERP system:-

• ERP is able to fulfill all the requirements of a certain department in a one-all-inclusive format
• ERP has only one vendor thus management of vendor is quite easy and simple
• This facilitates centralized and computerized control of all the organizational processes
• Effective communication with all the members of the supply chain
• It helps in making the processes standardized and thus reducing the redundancies

Disadvantages of ERP system:-

• There is a requirement of huge capital investment
• There can be a license renewal fee charged by the vendor thus it incurs annual investments
• It is not easy to customize ERP