Analysing the implementation of a material requirements planning (MRP) system into an engineer-to-order (ETO) company ; the case of National Oilwell Varco Norway (NOVN)
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A material requirements planning (MRP) system is a computer-based planning and control system whose main objectives are to provide the right part at the right time, and to meet the schedules for completed products. The development of these systems revolutionised the manufacturing industry, and lead to it being adopted by many companies. The expectations of the systems were high, both from academia and industry in the subject area of production planning and control. However, the widespread use of the system has uncovered several failures, mainly because the systems are implemented under the assumption that “one-size-fits-all”, and thus do not differentiate between various operations strategies. Prior research has already identified MRP systems as successful production planning and control systems in several operations strategies. Despite its importance, the previous research on MRP systems has not thoroughly addressed the systems strategic fit with an engineer-to-order (ETO) operations strategy. This thesis therefore focuses on the use of an MRP system in an ETO environment, and the overall objective is to investigate if implementation of an MRP system supports the operations strategy of an ETO company. To help investigate the overall objective, a literature review and a case study has been conducted. The literature review was carried out to provide a theoretical base for the research and a foundation for the future work of the research. A case study was conducted to help get a better understanding of an MRP system’s strategic fit in an ETO company to draw parallels between theory and practice. Numerical data has been collected to conduct statistical analysis. The case study company is a large ETO company that is about to implement an MRP system and that previously have used a similar system in some of its departments. Qualitative data from the case study have mainly been conducted through interviews and informal conversations with key informants employed in the case study company. The result of this research shows that there is a clear misalignment between the decision support provided by an MRP system and the decision support required by an ETO company. The product-, market- and process characteristics of an ETO company are too much of a constraining factor for the MRP system, which may lead to reduced competitiveness. Furthermore, the research suggests that organisational factors, such as education level of employees, company size and culture have significant impacts on implementation of an MRP system. The results gathered from the research have a foundation from relevant theory, which strengthens the quality of the thesis. The thesis has therefore contributed with increased knowledge and provides a better understanding of the use of an MRP system in an ETO company. In particular the definitions in the thesis, the identified variables, and the frameworks should be of interest for researchers, management, and consultant in the area of production planning and control (PPC). The research also has important implications for top management and policy makers in implementing an MRP system, as these stakeholders need to communicate effectively with their organisation about their MRP adoption intentions. Case study findings suggest that MRP systems are not suitable for ETO products, and that MRP implementation is influenced by, but not necessarily bound by, existing national and organisational factors. The findings of this study aid the management of organisations that are implementing MRP systems to gain a better understanding of the likely challenges they may face and enables them to put in place appropriate measures to mitigate the risk of implementation failures.
Masteroppgave økonomi og administrasjon- Universitetet i Agder, 2014