Understanding Material Requirements Planning – Part Two


In part two of this blog series, the focus is going to be on some advantages and challenges a business can face with MRP.

The most significant advantage of MRP is that it enables a business to eliminate waste, minimize inventory, and carrying costs by better managing resources. Order what you need and use what you order.  When you track your exact materials requirements, you can identify Economic Order Quantities, which is the specific volume and frequency of product orders.

Another advantage of MRP is it enables your company to schedule production time across multiple products while planning for upcoming production needs. Production and process advantages are not the only benefits of MRP. You can use and share the insights throughout the entire organization.

Even the best things typically come with challenges.

One of the biggest challenges with MRP is data integrity. The quality of your output is dependent on your input. If you have outdated data or input errors, then your output is basically worthless to you.  You can receive output results that may include missing parts, missed delivery dates, and order delays.

Varying lead times can also present a challenge for a business. When individual components have varying lead times, it can be challenging to manage master schedules that assume there is no variation.  This is not impossible to overcome. All you need to do is check the capacity of critical resources and you should still be able to get a rough estimate of what can be expected and when.

MRP systems are crucial for manufacturers. It takes time, money, and patience to get them up and running the way you need to, but it is worth it in the end.

Part three of this blog series will focus on the future trends we can expect to see with MRP. So come back tomorrow to read more!

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Understanding Material Requirements Planning – Part One

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