What is Bill-of-Materials

In the 1960s and 1970s, two major thinkers were actively changing the face of manufacturing for decades to come – In the West it was Joe Orlicky with the creation of his MRP concept, whilst to the East it was Taiichi Ohno and the development of Kanban. However, since the two approaches were independently developed for managing production and inventory control, both are often mistaken as mutually exclusive. This chapter addresses the developments in both fields, and through considering the shortcomings of each of the approaches, suggests how MRP logic and Kanban can be combined and integrated to enable a more effective, “hybrid” production and inventory management system that exploits the advantages of each of the techniques. A framework is presented for the integration of MRP and Kanban, which gives details of the purpose of the master production schedule, documents the two primary roles of inventory management considerations, and explains how Kanban operates in such a system in order to eliminate non-value-adding activities and to simplify the production management task. An illustrative case study is also presented in order to give insight to the reader as to how such a “hybrid” system operates in practice, offering practical examples regarding how techniques such as production leveling (Heijunka), net-requirements planning, backflushing, and cost-accounting operate in an integrated MRP-Kanban system.