MATERIAL REQUIREMENTS PLANNING (MRP)

Material Requirements Planning (MRP) is a computer-based inventory management system designed to improve productivity for businesses. Companies use material requirements-planning systems to estimate quantities of raw materials and schedule their deliveries. MRP is designed to answer three questions: What is needed? How much is needed? When is it needed?” MRP works backward from a production plan for finished goods, which is converted into a list of requirements for the subassemblies, component parts, and raw materials that are needed to produce the final product within the established schedule. By parsing raw data—like bills of lading and shelf life of stored materials—this technology provides meaningful information to managers about their need for labor and supplies, which can help companies improve their production efficiency. (Investopedia)

On a smaller scale an MRP can be maintained within an Excel sheet to control and coordinate the materials to have them available when necessary without having an excessive inventory. Some of the key factors to setup will require an understanding of Master Production Schedule (MPS), Bill of Material (BOM), gross requirements, beginning inventory, scheduled receipts, end inventory, net requirements, planned receipts, and planned receipts to mention a few key components. Additionally, for each item or component, a planner must know the lead time, lot size, and safety stock necessary for optimal usage of the inventory. Furthermore, understanding the difference between MRP and MPS is key. MRP is used to determine how many materials to order for an item, while an MPS is used to determine when the materials will be used to produce an item. Data integrity and maintenance are key to MRP, inaccurate input causes inaccurate output.

Manufacturing Resource Planning (MRP II)

Manufacturing Resource Planning (MRP II) is an integrated information system used by businesses. MRP II evolved from early MRP systems by including the integration of additional data, such as employee and financial needs. The system is designed to centralize, integrate and process information for effective decision making in scheduling, design engineering, inventory management and cost control in manufacturing. Both MRP and MRP II are predecessors to Enterprise Resource Planning (ERP), which is a process whereby a company, often a manufacturer, manages and integrates the important parts of its business. An ERP management information system integrates areas such as planning, purchasing, inventory, sales, marketing, finance and human resources. ERP is most frequently used in the context of software, with many large applications having been developed to help companies implement ERP. (Investopedia)

MRP II Software

MRP II software, helps streamline the manufacturing process through production planning, scheduling, and inventory control. Capterra lists 138 software applications and companies with such companies as Oracle NetSuite Manufacturing Edition, ProShop, WorkClout, and FactoryEdge to mention a few. Software Advice lists 172 such applications and companies.

A great deal of companies provides such solutions and before making decisions on what path to take, companies must also understand that most require custom packages based on need which will become costly thus, making a project plan extremely important by outlining what are the key requirements and not to give in to the “bells and whistles” sold by sales teams. Additionally, a clear understanding of Enterprise Resource Planning (ERP) which RREVENU covers under Services will need to be considered.

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