The implementation of material requirements planning (MRP) systems in Egyptian manufacturing companies : an empirical study

• Main Author: Salaheldin, Salaheldin Ismail
• Published: University of Glasgow 1998
• Subjects: 658; HB Economic Theory
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.341979

The new world economic conditions and increasing global competition have changed the way in which manufacturing companies view production/operations management and their role in achieving greater productivity, lower costs, operational efficiency and better customer service. Several manufacturing planning and control systems have been developed in order to enable manufacturers to meet these new challenges. Material Requirements Planning System-MRP I and its extension Manufacturing Resources Planning System-MRP II, the much proclaimed systems, have gained wide acceptance from both academics and practitioners. The research presented here concentrates on the key issues of MRP practices and the effectiveness of MRP systems. Evidence from the literature shows that over 60 percent of MRP I/MRP II users have failed to achieve the expected benefits. Also, a review of the literature reveals that very little work has been done to provide mathematical models to relate these benefits to their determinants. Furthermore, it reveals that much was written about MRP practices based on case studies, but very few studies survey-based have been conducted to investigate MRP implementation. None of these studies was conducted in less developed countries. The researcher has attempted to fill some of these gaps in this study by posing three key questions, namely: how have MRP systems been implemented in Egyptian manufacturing companies?, what are the benefits obtained from these which have been implemented?, and what are the explanatory variables of MRP systems effectiveness?. Accordingly, the objectives of the current study are threefold: " To investigate MRP practices in Egyptian manufacturing companies. " To assess the effectiveness of MRP practices measured by the benefits obtained from MRP implementation based on the expectations and perceptions of MRP users in Egyptian manufacturing companies. " To explorea nd examineth e explanatoryv ariableso f MRP systemse ffectiveness. This study has drawn on an extensive review of the literature and previous empirical studies in western industrialised countries and in newly industrialised countries. The strategy used to achieve the research objectives involved quantitative analysis of questionnaire data. Data for the study were collected by a postal questionnaire. One questionnaire was sent out to each company within the Egyptian industrial ex-public sector. Companies were asked if an MRP user in their organisations could respond (production manager or materials manager or inventory control manager or master scheduler or management information systems manager). Of 200 questionnaires sent out, 123 replies were received, giving a response rate of 61.5%. Of the 123 replies, 93 respondents were usable giving a usable response rate of 46.5%: some unusable responses were the result of a high proportion of missing values. The final usable sample was broken-down into respondents from companies which had implemented MRP systems and respondents from non-MRP companies (52: 41). Extensive quantitative methods to analyse questionnaire data were used i. e. Frequency Analysis, Mean Value, Standard Deviation, Mann-Whitney test, T-test, Kruskal Wallis, One Way Analysis of Variance (ANOVA), Paired T-test, Spearman's Correlation Coefficient, Bartlett's test, K-M-O technique, Principal Component of Factor Analysis, Eigenvalue criterion, Varimax Rotation technique, Skewness method, Cook's Distance measure, Scatterplots method, Adjusted R2, OLS technique, Forward and Backward Stepwise strategies and ACE model (Alternating Conditional Expectation technique). This study has provided important insights into the current situation and practices related to rvRP users in Egypt. The main findings of this study indicated that MRP practices in Egypt are relatively similar to those in the newly industrialised countries and in the west. The findings of this research indicated that Egyptian users believe that the expected benefits from MRP implementation have been obtained, though most of the companies which have installed MRP are relative beginners. However, not all MRP users attained the same degree of MRP benefits. Our findings indicated that the MRP benefit-determinant relationships take a nonlinear form for several relationships. Knowledge of this non-linearity may be advantageous for both MRP managers and users in order to manage these relationships effectively for achieving the effectiveness of MRP practices. Finally, valuable implications have been drawn for managers and practitioners to achieve more successful implementation of MRP systems.