Northrop Grumman acquires new enterprise software and makes some major changes in the way it works with suppliers to get timely and accurate parts to the line. MRP manager Mark Betancourt tells how it was done.
The job of material requirements planning (MRP) in aerospace can be brutally complex. The biggest challenge of all, says Betancourt, lies in "the analysis that goes along with understanding the scope of material requirements." It's much more than a matter of reacting to a demand signal, pushing a button and generating a purchase order to the supplier. Errors in size, cut or quantity can crop up easily, forcing the company to order twice. Betancourt says Northrop Grumman has been laboring to increase its understanding of the analytical processes involved in MRP. The switch to a new enterprise resource planning revealed a number of errors that the company hadn't detected before. MRP analysts began looking at requirements "in a completely different way."
Dirty data was a problem, and some of the supposed requirements weren't legitimate. To solve the problem, the company transitioned from "soft-pegging," where a buyer simply picks a part and updates the purchase record, to "hard-pegging," where the order is matched to a network number, which corresponds to a line item on the purchase order.
Northrop Grumman also had to deal with glitches in its bills of materials, through collaboration among systems experts, manufacturing, engineering and the advance planning group. "We had a good stretch of time where we did a lot of complex analysis," Betancourt says. "In the future, that is going to be a key understanding for MRP."
Many of the biggest changes occurred on the manufacturing engineering side. Engineers' plans had to be put into a "manufacturable" bill of materials. It became essential to assess the requirements of each part as it came down the line, so that all components were properly sequenced.
The new ERP system allows for daily instead of weekly changes in procurement requirements. Suppliers must be equally flexible. Having an integration team in the field to help unify processes has saved Northrop Grumman a substantial amount of money, while leading to an unprecedented level of collaboration, Betancourt says.
