J. Operations, Vol. 25, Issue. 2, A. 11.pdf

Journal of Operations Management 25 (2007) 346–356 www.elsevier.com/locate/jom

The early road to material requirements planning Vincent A. Mabert Kelley School of Business, Indiana University, Bloomington, IN 47405, United States Available online 24 May 2006

Abstract Material requirements planning (MRP) systems became a prominent approach to managing the flow of raw material and components on the factory floor in the late 20th century. Its adoption was not an over night phenomenon, but was a slow progression over many decades. This article chronicles many developments and events during the formative years of MRP, highlighting changes in computer technology and contributions by key early proponents of this approach for managing the flow of material on the factory floor. # 2006 Elsevier B.V. All rights reserved. Keywords: Material requirements planning; MRP Crusade

1. Introduction During the 20th century many individuals made significant contributions to the development and advancement of material planning and control systems. One of the earliest contributors was Ford W. Harris (1913), with the application of mathematics for setting manufacturing lot sizes. Harris’ basic economic order quantity (EOQ) model and numerous variations have been studied by dozens of researchers in the following decades. Additionally, the EOQ analysis, with many different variants, is a key component of any operations management text containing a chapter on inventory management. While Harris focused upon a world of certainty and constancy of demand, Wilson (1934) recognized the world is volatile and difficult to predict. In such an environment, an analysis found it useful to break the inventory control problem into two distinct parts that focus upon: (1) determining the amount of inventory to purchase or produce, and; (2) determining the reorder

E-mail address: [email protected]. 0272-6963/$ – see front matter # 2006 Elsevier B.V. All rights reserved. doi:10.1016/j.jom.2006.04.002

point or level of inventory that will trigger a replenishment order to purchase or produce material. However, the ‘‘when needed’’ question inherent in the MRP explosion process was not directly considered in this early period. This early work provided the foundation to the inventory management literature frequently referred to as independent demand management. It led to the development of numerous reorder order point (ROP) systems like base stock, continuous review, (S, s), periodic review, etc. Much of this work was done manually, using pencil and paper, a slide rule or a simple tabulating machine available during the 1930s and 1940s. The approaches normally focused upon single level stocking decisions, even though many companies were dealing with multi-echelon material flow on the factory floor. However, the development of improved computing technology was changing the way material planning occurred on the factory floor for many firms. By 1940 office machines were being produced by IBM, NCR and Burroughs that could sort, consolidate and summarize data coded on a punch card. For example, a tabulating machine (Fig. 1, left side) was capable of adding,

V.A. Mabert / Journal of Operations Management 25 (2007) 346–356

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Fig. 1. Early office machines—tabulator (left) and reproducing gang punch (right).

subtracting, and summarizing totals and printing tabulated reports. It used a control panel (Fig. 2) that had almost 5000 wireable plug holes as the primary processor for completing this task. The ‘‘Tab’’ machine, as it was frequently called, could be connected to the reproducing gangpunch machine (Fig. 1, right side) to punch summary cards that contained new information for use in subsequent steps. Even during World War II, the basics of material planning systems were being used, but the medium was a manual punched card approach versus computers with random access memory (RAM) and disk drives that are in use today. For example, the Ford Motor Company plant at Willow Run (Michigan) produced ten different models of B-24 bombers during the war. Using a modular design of 24 major subassemblies and batch scheduling of fabricated major components, the production rate peaked at 25 planes per day coming off the assembly line. To manage the production flow on

the shop floor, the material planning process used punched cards, tabulating machines, reproducers and sorters to determine requirements for the major items from the set of 30,000 components that were needed in the plane. The card’s punched data contained the order quantity, due date, department, work center, etc. for the order. Using pre-punched bills of materials, the keypunched order cards were processed through a series of steps as illustrated in Fig. 3. By collating, summarizing, gangpunching and sorting the requirements cards, a material plan was developed for the production horizon for the different B-24 models. A slow and time-consuming function, normally requiring many data processing operators to handle tens-ofthousands of punched cards for a routine single update. While the approach was very labor intensive, the general logic is the heart of an MRP system.

‘‘The farther back you look the further forward you see’’.—Winston Churchill (1874–1965).

Fig. 2. Plug board control panel.

The use of punched cards with machine summarizing and sorting continued into the 1950s. Robert W. Hall of Zero Inventories (Hall, 1983) fame worked in the production control department at Link Belt Corporation in Indianapolis during the mid-1950s. The card approach was the heart of the planning system for controlling the production flow of batched orders on the shop floor. Because of the sequential nature of data storage (cards or tape), the material requirements logic was regenerative in scope when a planning run was executed. This made an MRP update very time consuming, frequently requiring a whole weekend to complete. Constraints like this defined many of the structural characteristics of early

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Fig. 3. Requirements estimation process—card flow and machines (IBM office machines available in 1949).

MRP systems. For example, a 1-week time-bucket was the norm because of the typical weekly update cycle. But things were changing. The introduction of the IBM 650 Magnetic Drum in 1954 provided for accessing records in a non-sequential manner and reduced processing time. The 650 was followed by the IBM RAMAC 305 (random access memory accounting machine) disk-based system in 1956. It streamlined the manual sort effort of inventory cards every time there was a status change, and eliminated the need to maintain multiple cards on each part that filled large file cabinets and covered acres of floor space. In 1959, the Common Business Oriented Language (COBOL) was established using a simple English term-like command structure for programming applications. With the vast improvements in computing memory, processing speed and programming languages achieved by the early 1960s, time-phased replenishment planning could be done cost-effectively using the computer on the entire bill of material for the hundreds or thousands of items in the product catalog. Time-phased requirements planning enabled efficient processing not only at the gross requirement, or end item level, but also assigned a detailed schedule to the entire nested bill of material structure down to the lowest level. This moved much of the material planning from its traditional base

using single level historical data and the manual reorder point method of inventory stocking to a system based upon the multi-level bill of material processing. With the pervasive use of computing technology today, much is known and written about many of the technical developments that occurred over the last century for business computing. However, it is useful to put in perspective for the interested reader other aspects concerning timing and key personalities influencing the spread of MRP as a business tool. The remaining sections of this manuscript discuss three individuals, Joseph Orlicky, Oliver Wight and George Plossl (Fig. 4), who had a significant impact on the field and events that occurred during the early days of material requirements planning’s (MRP) development, frequently called the ‘‘MRP Crusade’’. A number of changes in both the practitioner and academic communities are discussed during this period. 2. The material requirements planning crusades Dr. Joe Orlicky while at J.I. Case in the early 1960s is generally credited as being the ‘‘father’’ of time-phased replenishment planning and hence, MRP (Orlicky, 1975). While the ‘father’ title would suggest that Orlicky initiated the first MRP system in 1961, such may not be the


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Fig. 4. The three knights of the MRP crusade. The biographical information in this exhibit provided by Ed Davis, The Oliver Wight Professor, Darden School, University of Virginia. Picture of Knights Templar, from http://www.mastermason.com/hiramdiscovered/knightstemplar2.html.

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case. There were earlier prototype installations reported. For example, Paul Bacigalupo, an IBM systems engineer working with American Bosch Armor in Springfield, Massachusetts, coordinated a net-change installation for his client in 1959, employing the IBM RAMAC 305 diskbased computer (Lilly and Smith, 2001). However, Joe Orlicky was a leading evangelist who went out unto the world of manufacturing to convert the pagan EOQ/ROP believers. To paraphrase Dan Ackroyd from ‘Blues Brothers’ movie, ‘‘on a mission from God’’.

I cannot call to mind a single instance where I have ever been irreverent, except toward the things which were sacred to other people.—Mark Twain (1835–1910), ‘‘Is Shakespeare Dead?’’ Joe Orlicky moved on from J.I. Case to IBM in 1962. His role was to educate senior executives at IBM client sites to the benefits of applying computer technology to managing inventory and production control. One of the people he encountered in his work as an educator and promoter of the emerging discipline was Oliver Wight, who was then working at The Stanley Works in New Britain, Connecticut. Wight joined IBM in 1965, where he remained until 1968, when he left the company to work with George Plossl, with whom Wight had worked at The Stanley Works. Plossl and Wight operated an education and consulting firm until they separated to pursue individual paths in 1969. But their partnership left an important contribution through their co-authoring of Production and Inventory Control: Principles and Techniques (Plossl and Wight, 1967). This book was looked upon by some as a bible to production and inventory control practitioners, industry analysts, consultants, and anyone otherwise interested in the subject. Ideas divergent from those in the book were often viewed as heresy and may have held back other contributions to the field (Lilly and Smith, 2001). George Plossl, Joe Orlicky, and Ollie Wight (sometimes referred to by the shortened ‘POW’ handle) shared a common vision of educating the world to the usefulness of MRP, but they had very different personalities. Joe Orlicky was thought of more as a ‘techie’, while Ollie Wight was viewed as having a ‘marketer’ quality. On the other hand, George Plossl had a ‘professional’ style that exhibited a philosopher quality. With his wonderful wife Marion frequently at his side, he contributed to the field for over 4 decades. The three were part of a select group that helped ignite the MRP Crusade.

From the Foreword of Plossl’s Orlicky’s Material Requirements Planning (1995), here is George Plossl’s description of the origins of MRP1: ‘‘In 1966, Joe Orlicky, Oliver Wight, and I met in an American Production and Inventory Control Society (APICS) conference. We found that we had all been working on material requirements planning (MRP) programs, Joe at J.I. Case Company and IBM, Oliver and I at The Stanley Works. We continued to meet and compare notes on MRP and other topics. In the early 1970s we organized the APICS MRP Crusade, using the resources of the Society and the knowledge of a few ‘Crusaders’ to spread the word on MRP among APICS members and others interested. All but a few APICS chapters participated.’’ 2.1. The first crusade Robertson et al. (2002) indicate that the ‘MRP Crusade’ was the outgrowth of a heated debate that occurred during the 14th American Production and Inventory Control Society (APICS) conference held in St. Louis in October 1971. The debate occurred around the benefits of a traditional ROP approach for material planning versus the use of MRP. Joseph Orlicky gave a paper at the conference entitled ‘MRP – A hope for the future or a present reality – a case study’ in which he referred to MRP as the ‘Cinderella’ of inventory planning and control. His co-presenter was Jim Burlingame from Twin Disc, who provided practitioner support for the claim that MRP was far more efficient than traditional ROP methods. Attendees challenged many of the ideas. While the debate did occur in the fall of 1971, the planning to launch the MRP Crusade was well on its for many months prior to that time. For example, a letter dated June 29, 1971 from Oliver Wight to Henry Sander (Executive Director, APICS) proposed the ‘Material Requirements Planning Educational Crusade’ be sponsored by APICS. At the September 9, 1971 planning meeting in Boston, the key disciples (Joe Orlicky, Romey Everdell, George Plossl, Ernie Theisen, Jim Burlingame, Ollie Wight and Walt Goddard) committed their energy and time to speak and write about the value of MRP, using the APICS organization as the primary delivery mechanism (Clark and Newell, 1993). The ‘MRP Crusade’ employed a variety of promotional tools. For example, 11 video films, produced by Orlicky, Plossl and Wight, and sponsored by IBM, 1

This quote suggested by Ed Davis.


explained the underlying philosophy of MRP and illustrated its application and beneficial effects. The series was publicized by APICS and made available to members for use. APICS’s Production and Inventory Management journal published articles, IBM white papers and COPICS (Communications Oriented Production Information and Control System) manuals, also published by IBM, codified the field and number of pioneering books were written to demonstration the superiority and benefits of MRP to the practicing community. Also, seminars and presentations by great public speakers like Oliver Wight and Walt Goddard were conducted at APICS national and chapter meetings extolling the virtues of MRP. Similarly, highly respected individuals like Joe Orlicky and Jim Burlingame made a number of presentations at academic conferences. For example, Romeyn Everdell conducted a master scheduling tutorial at the fall 1976 American Institute for Decision Sciences (AIDS)2 national meeting (Everdell, 1976). Of all the MRP disciples, Wight may have been the best front man. ‘‘Oliver Wight was gregarious and outgoing and was gifted with the flair of a raconteur. Known as ‘‘Red’’ by intimates, and simply Ollie by everyone else, Wight was red-haired, good looking, and broad shouldered, and rarely, if ever, did he meet a fellow he couldn’t warm with his easy manner and quick smile. Wight commanded a room as did few others, and before an audience of a half-dozen or several thousand, he knew how to capture the interest and generate a sense of shared commonality such that it was always a pleasure to be in his company.’’ (Lilly and Smith, 2001) His quick mind was legendary and his college degree in English frequently resulted in humorous pieces, as illustrated in Appendix A. This dynamic, personal and engaging style was very effective as he built his worldwide consulting practice know as Oliver Wight Associates. By the early 1980’s there were numerous discussions and articles written about America’s ‘rust belt’ industries and failing manufacturing performance. This spawned searches for corrective action from many directions. At this time, Oliver Wight was considered one of the world’s leading experts in the field of manufacturing management (Ralston, 1996). He endorsed the need for integrating production with the planning and control of other resources associated with manufacturing such as finance and distribution. During a meeting at Wight’s home attended by Jim Burlingame, Walt Goddard and others,

2

The American Institute for Decision Sciences (AIDS) changed the organization’s name to Decision Sciences Institute (DSI) in 1986.

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Oliver coined the title Manufacturing Resource Planning or MRPII (Lilly and Smith, 2001). With MRPII (Wight, 1984) supported by standardized software applications that integrated different functions, the beginnings of Enterprise Resource Planning (ERP) was established, from which manufacturing firms could more effectively utilize their resources. Additionally, Oliver Wight proposed a methodology for MRPII implementation – the ‘Proven Path’ – as well as a standardized ‘Class A–D’ checklist against which companies seeking to become ‘Class A’ could audit their MRPII implementation process (Robertson et al., 2002). The checklist has been revised many times in the past two decades and today the ‘Oliver Wight ABCD Checklist for Operational Excellence’ includes the following areas: strategic planning, people/team systems, total quality, continuous improvement, new product development, and planning and control. It reflects the integrated nature the field has matured to in the 21st Century. By primarily using the APICS organization, the three knights (Joe Orlicky, George Plossl and Oliver Wight) were able to educate and influence the way production planning and control was implemented in the manufacturing sector. However, there was also a desire to influence future managers in the coming decades. 2.2. The second crusade While there was a clear and highly visible focus on reaching and re-educating both APICS and non-APICS members in manufacturing firms during the MRP Crusade initiated through APICS, there was also an interest to change how the academic world described and taught approaches to material planning and control. It was important to expose and inform future managers and business leaders that MRP was an appropriate approach for planning and controlling material flows. Why was this second crusade necessary in the early 1970s? An examination of Fig. 5, which lists the college level textbooks for the field from 1965 to 1975, highlights the answer to the question. A review of the content of these books indicates that MRP was absent from all prior to 1973. An exception was the special report entitled ‘Material Requirements Planning by Computer’ prepared by Plossl and Wight and published by APICS in 1971. The operations research, modeling, systems analysis, etc. approach were common themes in use by textbook authors, describing various lot sizing procedures and reactive inventory systems like reorder point. The first American academic oriented textbook identified by this writer to discuss MRP was authored by Thomas Vollmann (pp. 577–582, 1973). The presenta-

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Fig. 5. (a) Operations management textbooks, 1965–1975. (b) Production planning and inventory control textbooks, 1965–1975.

tion was rudimentary and more descriptive in nature, discussing data inputs and information outputs. Also published in 1973 in Great Britain was a book by Colin New, entitled Requirements Planning. The next American sighting of a MRP presentation was by James Greene (1974). He discussed the general systems design of MRP and presented an elaborate

BOM explosion example using matrix algebra (pp. 253–267) as the basic tool. While elegant, the approach ignored lead times and intermediate part inventory levels in estimating requirements. About this time (1973–1974) Joseph Orlicky had discussions with Thomas Vollmann. Tom Vollmann encouraged Joseph Orlicky to begin working with and


educate academic faculty in the logical underpinnings of MRP. Some of the ‘second crusade’ planning began at the 1973 DSI Annual meeting under Vollmann’s leadership. Orlicky invited small groups of willing academics, later labeled his ‘‘MRP Mafia’’, to MRP focused seminars. Sponsored by IBM and located at the IBM Executive Training Center in Poughkeepsie (NY), two seminars were held in 1974 and 1975. Figs. 6 and 7 list the academic attendees from North American institutions, two industry practitioners (Jay Ross and John Ruhl) and instructors (Joseph Orlicky and James Clark). Joseph Orlicky was the primary presenter during the seminars and frequently the faculty would do their best to challenge and stump him. He was unflappable at all times, countering every disputed point put forward. He wanted this group of academics to be believers and disciples of MRP. He drew upon an analogy using a famous Polish astronomer/scientist named Nicolas Copernicus (1473–1543), said to be the founder of modern astronomy. In 1530, Copernicus completed his work entitled De Revolutionibus, which asserted that the earth rotated on its axis once daily and traveled around the sun once yearly; a daring concept for the times. Up to the time of Copernicus the thinkers of the western world believed in the Ptolemiac theory that the universe was a closed space bounded by a spherical envelope beyond which there was nothing. Copernicus’s propositions went

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against the philosophical and religious beliefs that held during the medieval times. Two Italian scientists of the time, Galileo and Giordano Bruno, embraced the Copernican theory unreservedly and were reprimanded by powerful church inquisitors. Drawing a parallel, Orlicky suggested with some humor that his efforts to re-educate the academic community to the reality and superiority of MRP versus conventional EOQ/ROP thinking was like Copernicus changing current thinking about the world around mankind in the 1500s. (Note the name Copernicus on all the T-shirts worn by seminar attendees in Fig. 6.) He had the zeal, commitment and drive to be the lightning rod for change. He wanted to re-direct (convert) the way inventory management was taught in the classroom and even researched. His efforts, as well as others like George Plossl and Oliver Wight, in the early to mid-1970s were rewarded. Awareness and discussion fosters investigation and dissemination in both journal publication and textbook writing by academics. There are always front runners like Berry (1972) and Thurston (1972) who published ideas that many others built upon in the coming years. In the 1970s Elwood Buffa was the most popular author of operations management textbooks used by faculty in the United States. While he wrote many different flavors of textbook to appeal to the various faculty preferences, his 1976 edition of

Fig. 6. Academic faculty members’ seminar on MRP, February 17–20, 1974.

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Fig. 7. Advanced MRP seminar June 29–July 3, 1975.

Operations Management: The Management of Productive Systems (Buffa, 1976) was the first to contain a chapter on MRP, demonstrating the explosion, netting and lead-time off-set procedures. Other academic authors quickly followed with similar approaches, which is now the standard in most books. While the three knights of the MRP crusade were driving forces, many of the MRP Mafia (Figs. 6 and 7) were also involved in spreading the gospel among academics in the late 1970s and early 1980s. For

example, APICS sponsored a collection of MRP-related cases written by university professors (see Fig. 8 for author and content list) for use in the academic arena (Davis, 1977). Also, local APICS chapters routinely had monthly meetings and annual educational seminars, utilizing academic presenters to cover current MRP topics and issues of interest. Some of the garden spots visited were to Jasper (Indiana), Cherry Hill (New Jersey), Bluebell (Pennsylvania), plus many more. What fond memories of the early road traveled by many of us!

Fig. 8. Cases and authors in studies in materials requirements planning: a collection of company case studies.


3. Epilogue The two crusades clearly had an impact on the practice and education for the discipline. For manufacturing firms, there were over 60,000 MRP installations worldwide by the early 1990s (AMR, 1995). Some of these systems were designed and developed in-house while others were procured from third party software vendors like IBM, Fourth Shift and Quad. From the 1980s to today, enhancements were made that moved capability from simple MRP for BOM explosion, to MRPII that integrated with both capacity planning and due-date scheduling logic, to integrated ERP systems from vendors such as SAP and J.D. Edwards. Billions of dollars are spent annually in implementing and maintaining these systems. While some researchers have suggested that the benefits of MRP systems have been limited (Hopp and Spearman, Chapter 5, 2001), its ubiquitous presence suggests it will remain an important planning tool for many enterprises far into the future. There was also a significant swing in the way inventory management was presented in academic writings and how it has influenced future generations of managers. From 1975 to current times, all OM and PPIC textbook publications contain chapters dedicated to describing MRP, plus MRPII/DRP/ERP variants, and demonstrating the basic MRP calculations including lead-time offset and parent/component explosion. The straightforward logic of the process helps a student comprehend the fundamental logic of the shop floor environment, its requirements timing and material dependency. While other developments like lean manufacturing and JIT concepts have enriched and provided an opportunity to debate the benefits of push versus pull systems for material management, MRP basics and its contribution to the business and material planning functions should continue to be a fundamental part of the operations management body of knowledge for many years into the future.

All truths are easy to understand once they are discovered; the point is to discover them. —Galileo Galilei (1564–1642)

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production planning and control procedures of the 1940s and 1950s was eye opening, even for one in the field for over three decades. I want to thank Ted Weston for noting some important omissions and Ed Davis for providing useful biographical information for Joe Orlicky, George Plossl and Oliver Wight. Finally, I want to express my appreciation to Linda Sprague for her thoughtful comments and encouragement on this archival study.

Appendix A A.1. The production control experts (with apologies to ‘‘The Blind Men and the Elephant’’ by John Godfrey Saxe) It was six men of management To learning much inclined Who discoursed on production control And the answers they did find -from experience, and the lessons That reward an inquiring mind. ‘‘Order to mins and maximums,’’ The first was heard to stay, ‘‘You’ll have neither too much nor too little When production’s controlled this way.’’ ‘‘But the answer lies in a forecast,’’ Said the second man in line, ‘‘Just anticipate your sales, And everything will be fine.’’ ‘‘I doubt it’’ said the third one, ‘‘You’ve forgotten the EOQ. With balanced setups and inventories, What problems can ensue?’’ The fourth one said: ‘‘Use order points To get the desired control. When you order materials soon enough, You’ll never be ’in the hole.’’’ ‘‘But you really need a computer.’’ Said the fifth-‘‘P.C ’s a dream With loads run from last week’s payroll cards And exception reports by the ream.’’ Said the sixth, ‘‘Materials management Is a concept to which I’m devotedInstead of learning production control, I’ve escaped by getting promoted!’’ So study each book and seminar, Attend every one you can, sir! You’ll find a thousand experts -each with PART of the answer. Oliver. W. Wight

Acknowledgements As one ages, we have senior moments that limit the accuracy of memories and many of my colleagues helped fill the gaps for this work. Robert Hall’s recall of

References AMR, 1995. A Brief History of Manufacturing Systems. Advanced Manufacturing Research, Boston, MA, pp. 10–14.

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Berry, W., 1972. Lot sizing procedures for requirements planning systems: a framework for analysis. Production and Inventory Management 13 (2), 19–34. Buffa, E.S., 1976. Operations Management: The Management of Productive Systems. John Wiley & Sons, Inc, New York. Clark, P., Newell, S., 1993. Societal embedding of production and inventory control systems: American and Japanese influences on adaptive implementation in Britain. International Journal of Human Factors in Manufacturing 3, 69–80. Davis, E. (Ed.), 1977. Studies in Materials Requirements Planning: A Collection of Company Case Studies. APICS, Falls Church, VA. Everdell, R., 1976. Master Production Scheduling. In: American Institute for Decision Sciences Conference Proceedings, November 10–12, San Francisco, p. 125. Greene, J., 1974. Production and Inventory Control: Systems and Decisions. Richard D. Irwin, Inc., Homewood, Illinois. Hall, R.W., 1983. Zero Inventories. Dow Jones-Irwin, Homewood, Illinois. Harris, F.W., 1915. Operations and Cost (Factory Management Series). A. W. Shaw Company, Chicago (Chapter IV). Hopp, J.W., Spearman, M.L., 2001. Factory Physics, 2nd ed. McGraw-Hill Publishing, Boston.

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