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Mrp At Wheeled Coach Essay

1830 words - 8 pages

Wheeled Coach is the world’s largest ambulance manufacturer. With multiple different products and around 3000 different raw materials there is huge potential for operating failures. In 1994 Wheeled Coach implemented a new MRP system called MAPICS. They hoped that by doing this that they would gain better control of their excess inventory that was becoming overwhelming.
Wheeled Coach is extremely successful in its industry, because of two main reasons. Firstly, the quality of the product that they produce is above any beyond any of their competitors. Secondly, Wheeled Coach is well known for its timely delivery. The combination of quality and timeliness has resulted in exceptional customer ...view middle of the document...

The operational strategy of wheeled coach is a dependant demand strategy. This is because they cannot make a product without all of the required parts and materials. For instance, it is useless to have the wheels delivered on time, if the structure of the ambulance is not completed yet. Due to this dependant demand structure, managers need to understand their master production schedule and they need to be aware of their bill of materials. On top of this they need to know at all times what inventory they have in stock, which inventory pieces have been ordered and are on their way, and also the lead times associated with each material. The new MRP system implemented at Wheeled Coach will help them to do all of these things. The new system will keep accurate inventory records, as well as track purchase orders and compare orders to the bill of materials.
There are multiple reasons why accurate inventory is important at Wheeled Coach. Firstly, accurate inventory is important because knowing exactly quantities of raw materials and parts on hand is vital to determine whether you are able to take a customer order. If inventory is not accurate, it may appear that you have all of the part required to make the product the customer desires, but when you go to collect the pieces they may not be in the warehouse. When this happens customers will be disappointed with your customer service. In the case of Wheeled Coach, if they did not have enough aluminum to complete the order for example, this would be a catastrophe. The lead time for the specialized aluminum that Wheeled Coach uses is six to nine months. This would mean that they would be unable to provide the customer with the product until six months from their order date, or may have to cancel the order entirely. Wheeled Coach uses many raw materials with lead time higher than the 17 days they say that it will take for them to get the product ready for shipping. Inaccurate inventory can lead to major issues when this is the case as they cannot rush their material orders enough to complete the order in 17 days, and so there is a high chance that orders will be delivered late.
As well as needing accurate inventory to build the products your customers need, it is important for inventory to be accurate for accounting purposes. If inventory is over 95% accurate Wheeled Coach will not be subjected to a physical count inventory. Physical inventories are costly and inefficient, and because of this companies would prefer it if they did not have to do one. If Wheeled Coach had to do a physical count they would have to stop production in order to get an accurate inventory level. This is not ideal in a manufacturing plant. One day of stopped production could be the difference between getting orders completed on time, and even getting orders in the first place.
Accurate inventory is also important because it prevents money being tied up in inventory. Businesses are able to use cash for multiple different things...

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