It’s safe to say that without the brilliant mind of Joseph Orlicky, we might never have developed the modern ERP system. Until Orlicky developed the netting algorithm and laid down the core principles of Material Requirements Planning (MRP), even the largest and best-managed companies relied on variations of statistical or reorder point methods—and lots and lots of safety stock.
Joseph Orlicky was born on December 31, 1922 and died in December 1986. During much of his life, he lived in Stamford, Connecticut, within easy commuting distance of his job at IBM’s local offices. He led a quiet and very private life, but his principles on how to improve manufacturing supply chains and inventory management enabled him to stand out among his peers and colleagues.
Orlicky was an engineer at IBM when he first constructed the principles of MRP in 1964. Interestingly, he studied the Toyota Production System (TPS) as part of his research. TPS later became the basis of lean manufacturing, and although many lean practitioners decry MRP, both methodologies sprang from a common root and even the strictest lean environments rely on MRP for long-range material planning. Black and Decker was the first company to use the fledgling concepts in production in the late 1960s and early 1970s.
Orlicky’s first book, “The Successful Computer System: Its Planning, Development, and Management in a Business Enterprise,” was published by McGraw Hill in 1969. However, when his second book, “Material Requirements Planning: The New Way of Life in Production and Inventory Management,” was published by McGraw Hill in 1975, it electrified the manufacturing industry. The first edition of “Material Requirements Planning: The New Way of Life in Production and Inventory Management” sold more than 140,000 copies and was the blueprint for the development of standardized MRP systems.
At the time of the book’s publication, about 700 companies had adopted MRP. By 1981, more than 8,000 companies used some type of MRP solution. During the 1980s, there were more than 600 commercially available MRP solutions. Today, although only the best of those solutions still exist, you would be hard pressed to find a manufacturing company that does not use a computerized MRP or ERP solution for planning.
Fundamentals and Evolution of MRP
For several years after Orlicky’s second book’s publication, most MRP systems were homegrown or based on early IBM database programs, called Bill of Material Processor (BOMP) or Database Organization and Maintenance (DBOMP). IBM later introduced PICS, COPICS and MAPICS, programs specifically designed to run on IBM hardware to plan and manage manufacturing inventory.
From there, MRP systems proliferated and spread across multiple platforms, eventually evolving into MRP II and today’s modern ERP solutions, like QAD Enterprise Applications. Net change MRP and rapid planning were also concepts that Orlicky pioneered.
The fundamental questions that MRP systems set out to answer are still at the heart of manufacturing today, despite all the upheaval and hoopla that came with the lean revolution, the drive for supply chain visibility and the relentless need for speed. One basic concept that hasn’t changed is Orlicky’s assertion that a company should never try to forecast what it can calculate.
MRP tells companies what materials they have on hand, what materials they need to make or buy, and when they need to make or buy them. These questions, and a company’s ability to execute quickly and accurately on the answers, spell the difference between manufacturing success and the company’s slow death spiral. Although it is possible to perform the basic MRP calculations manually, it is laborious and too time consuming to perform in today’s fast paced world.
Orlicky’s seminal work was revised by George Plossl in 1994 and by Carol Ptak and Chad Smith in 2011 with a new focus on demand driven MRP. Even with the revisions, the basic tenets set down by Orlicky form the core of the processes described in the latest edition.
How have Joseph Orlicky’s principles impacted your manufacturing processes? Discover other Heroes of Manufacturing and learn more about the visionaries that transformed the world of manufacturing.