When it comes to production and purchasing schedules with JD Edwards, there are two tools at your disposal to help optimize inventory replenishment. The first is the JD Edwards PO Generator, and the second is Distribution Requirements Planning (DRP)/Material Requirements Planning (MRP).
Both options have their benefits and drawbacks, so how do you decide what is right for your organization? Take a look at the pros and cons below to help make your decision.
PO Generator is a basic purchasing tool that uses stock levels and safety stock to notify that orders need to be made. The PO Generator looks at the inventory’s minimum stock level and prompts to order if your inventory is below the minimum, calculating the number needed to reach an optimum stock level.
The tool can also automatically generate a purchase order. It requires a purchasing agent to review the screen and determine what is really needed.
Relatively simple to use, and very quick to get up and running
Easy to maintain
Unlike DRP/MRP, PO Generator does not take into account the timing and scheduling surrounding the distribution or manufacturing of a product
Not as sophisticated as DRP/MRP
Relies heavily on the purchasing agent to either accept or decline purchase order suggestions
DRP and MRP use demand, demand forecasts, productions schedules, supplier lead times, inventory levels, safety stock, and other parameters, to create a production and purchasing schedule.
They generate data that determines what you need to make, when you need to make it and in what order, and what you need to buy in order to create those items in order to manufacture and have available the products you need to sell.
DRP monitors what products your organization is buying and reselling, while MRP covers products that you are manufacturing for sale. MRP requires a Bill of Materials (BOM) and Routing to figure out what steps are needed to create the production schedule and finished product.
DRP/MRP is much more sophisticated than PO Generator
It doesn’t necessarily take more time to run than PO Generator
DRP/MRP works to a more accurate production schedule
If done correctly, it can significantly reduce inventory levels
Allows your organization to shoot for “just in time”
Not only will you not have the wrong things in inventory, you have the right items in inventory at the right time
DRP/MRP is much more complex than PO Generator, as it requires routing, BOM, forecasting/sales history, stock level information, lead times, manufacture times, and more
It requires more time to setup, configure, and monitor than PO Generator
With the additional sophistication of the process comes a more involved setup
Accuracy of stock levels, lead times, bills and materials, etc. become much more important, as inaccurate data tends to be compounded in the results
How to Choose
In the opinion of our JD Edwards team, if your company is sophisticated enough to generate accurate sales forecasts, and you have the necessary data on suppliers and inventory, then DRP and MRP is the preferred choice for purchase forecasting for the right inventory items. It can give you purchasing suggestions as far into the future as your schedule requires, and is a great option for high cost and critical items.
However, there are usually some stock items where it doesn’t make sense to monitor timing for replenishment. These can be set up to use the PO Generator to simply reorder when a minimum is reached. Examples might be cardboard packaging, screws, and other so-called consumables.
So, if your company can create and capture the data needed for DRP and MRP, then go for it! If your company is not yet at the point, however, then the PO Generator can meet your needs and provide a reliable alternative.
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