ERP Glossary - M: Machine Hour Rate to MRP II

Machine Hour Rate

The calculated cost of running a machine under normal conditions for one hour. Machine hour rates attempt to incorporate the labor required, the energy required, the depreciation incurred, the machine parts and repairs required and so on.

Make to Order (MTO)

Make to order is a manufacturing and planning strategy requiring that an actual external customer order exist before any manufacturing resources are assigned. Make to order greatly reduces inventory cost, risk, and obsolescence but normally can only be applied when lead time is not an issue, or mass customization techniques make lead time irrelevant.

Make to Stock (MTS)

Make to stock is a manufacturing and planning strategy premised on creating a supply of finished product in advance of any actual customer order. The advantage of make to stock is that there is no wait time between the decision to purchase and invoicing. The disadvantage of MTS is higher inventory carrying cost and obsolescence risk.

Manufacturing

Manufacturing is the process of utilizing labor, machines, and materials to transform a raw material, or assembling semi-finished materials, into something that contains greater value.

Mark Up

The numerical amount added to a cost to arrive at a customer selling price. If the cost to manufacture a part was $7.00, and the selling price was $10.50, the markup would be $3.50, or 50%.

Market Share

The fraction, typically expressed in percent, of a market that is accounted for by one company's sales. 100% market share is a monopoly and is normally illegal; 33% market share typically represents a dominant player in the market.

Master Production Schedule

A manufacturing quantity and timing plan used to perform "what-if?" scenarios, estimate cost impacts, identify bottlenecks, and forecast labor and raw materials requirements.

Materials Management

In ERP Materials Management (MM) refers to a broad category of activities associated primarily with moving, storing, and assessing materials used or consumed in manufacturing. Inventory management, quality assurance, production reporting, cycle counting, much material master data and most inventory movements all fall within the scope of materials management.

Min/Max Inventory

An inventory control strategy in which the object is to always replenish inventory whenever stock levels reach or fall below a previously determined minimum level, and to never allow inventories to be replenished above a previously determined maximum level.

Mixed Mode Manufacturing

In ERP, the combination of both process and discrete manufacturing within a manufacturing process. Providing robust functionality for both modes simultaneously can prove to be extremely challenging, and often requires creativity in configuration as well as compromise on the business processes.

Mobile Application Development

The process of creating software applications for mobile handheld devices such as smart phones, or mobile bar code scanners. Mobile ERP solutions are now a common occurrence within the ERP market.

MRO (Maintenance Repair and Overhaul)

In ERP, MRO typically refers to a software module, or third party-software, that assists in managing the preventative maintenance, equipment failure, and production equipment management features of a manufacturing operation, traditionally under the organizational control of the engineering department.

MRP II

The precursor to, and core of most ERP systems, MRP II is a generic description of software applications that first combined supply chain functions like planning, inventory control, and purchasing, into a single integrated package.

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Phil Marshall

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Phil Marshall