MEASURING MRP SYSTEM EFFECTIVENESS : AN INVESTIGATION OF MRP PRACTICES IN SINGAPORE

Abstract

The worldwide economic condition and increased international competition in the manufacturing industries, have made the continuous pursuit of greater productivity, lower costs and better customer service a matter of survival. Materials Requirements Planning (MRP) system, the much proclaimed systems, have gained wide acceptance from both academicians and practitioners. Identification of factors critical to systems effectiveness has always been the critical concern for the MRP system users. Many descriptive literature establishing the importance of the factors identified have been published to provide greater insights. However, no study has ever attempted to develop a multiple regression to capture the simultaneous relationship between the factors and an effective MRP system. This study proposed that effectiveness of MRP system can be explained by the following elements 1. the degree of data integrity, 2. the level of management commitment, and 3. the amount of effort expended in education and training. The propositions were empirically tested by using logit analysis regression with effectiveness as the dependent variable and the indices of the 3 elements as independent variables. As inputs for the above analysis, a checklist determining the degree of effectiveness and the 3 elements was necessary. However, in Singapore, due to the lack of research in the area, a simple and comprehensive checklist is not available. Therefore, a checklist was developed for this study which incorporated both the academicians' and the practitioners' opinion to ensure that it is reflective of the local situations. Scales from the checklist were purified by conducting reliability analysis. In addition, an investigation into the current status of MRP system was made to provide greater insights into the local MRP practices. Data was collected from a survey of the manufacturing firms who are MRP system users using mailed questionnaires. Tha final usable sample was 36 companies. This study has provided important insights into the current situations and the implementation issues related to the MRP users in Singapore. Valuable implications can be drawn for practitioners to achieve greater applications and a more effective MRP system.