A cross plant comparison of an ERP/MRP system

In July 2007 Kemira Chemicals implemented a new ERP/MRP system in its North American Operations. The focus of this project is to compare inventory management practices at two Kemira plants both of which have long supply chains but elected to utilize the MRP system in different ways. The Prince George plant manages raw material inventories internally and the Bushy Park plant which is managed externally through the use of brokers. Due to the fact that forecasting is not customer order driven we can see considerable evidence of the bullwhip effect ...The four common bullwhipping behaviours: poor forecasting methods, order batching, price variations and the rationing game have all been observed in both supply chains throughout the research period ... Wherever possible visibility and control within the supply chain should be improved to mitigate risk ...The following recommendations should be implemented immediately. Bushy Park should fully employ all its purchasing activities in the ERP/MRP system. Communication should be improved between Kemira and its brokers to improve transparency of raw material inventory as it moves through the supply chain. A better methodology/discipline of forecasting should be executed immediately including a formal review process in cases where additional inventory is being ordered to take advantage of a price promotion. --P. 5.