After 19 years in Casa Sauza and approximately 15 years of experience with activities related to packaging, it is very frustrating when packaging lines are paused due to lack of materials. I know that no investor is willing to have his money saved (inventories) or workless staff (production lines stopped). Read on to find out how we have eradicated these problems at Casa Sauza!
What is MRP?
MRP (Material Requirement Planning) is a system that helps us control and efficiently supply materials. Implementing a clear MRP system has a positive impact on customer service, the packaging process, purchase and inventory costs.
What is MRP for?
For Casa Sauza, MRP calculates when and how many pieces of each component of a bottle of tequila we require for production.
Why should we implement MRP?
At present, the market is very dynamic and we must keep up with its fast-moving pace. For example:
I don’t know which of my friends will go to a bar this weekend instead of going to the movies, and I definitely don’t know which one of my friends that goes to the bar will drink tequila instead of beer, or whiskey. The company that responds fastest to my friend’s necessities is the company that can keep up.
The consumer does not carry around a manual in his pocket that tells him when or why to consume. The consumer follows his impulse, and in the moment that the consumer chooses to act on it––our product has to be the one easiest to choose.
How to administer MRP
You can begin administration in any way, from a simple excel sheet to a software developed by international companies. We have decided to use SAP––a software that allows us to monitor all areas of the company, and communicate with business units all over the world.
Benefits of administering MRP
Implementation of MRP allows us to make opportunistic decisions that ultimately impact business competition. It provides us with the following information:
- How much product should be package?
- What are our material needs?
- What materials do we have in our warehouses?
- When and what materials are about to arrive?
- Should we order more materials?
- Is it time for me to order?
What do I need to implement MRP?
In order to implement MRP, we have to identify the components that make up each product––this is also known as a material structure, or material bill. Material structures or bills not only delineate the materials needed for each component, but how much of each component each product requires.
It is also necessary to have the following information:
- The arrival date of each material: When should I order so that it arrives on time?
- The economic lot or minimum purchase amount: How much is the vendor willing to sell me? Can I buy in certain amounts so that I can be profitable, and not suffer inoperative purchase costs?
- Timely records in the receiving warehouse
Key parts of MRP
- Material master data
- Day and time of delivery
- Amount of time required for treatment or quarantine
- Minimum purchase amount
- List of materials necessary to production
- Production demand
- List of current products
- Date that product is needed
What has MRP helped us with?
Since we began implementing MRP, we have achieved 100% of our market and customer guarantee dates while sustaining healthy inventories. Here at Casa Sauza, we have developed an indicator called “Inventory Health,” that measures that the amount of components and the inventory value of packaging material is within our bounds. Our inventory health indicator has resulted in timely supply to production lines––avoiding work stoppages due to lack of materials––and ultimately reducing the cost of inventories. Everything arrives when it is required.
If you have questions regarding this article, you may comment below. I would very much enjoy interactive and understanding different perspectives.
Stay tuned for a future article regarding area involvement needs within the MRP process!
Come and visit Casa Sauza and see for yourself the modernization of our production processes, which deliver the purest tequila that you will find in the market.