Understanding Material Requirements Planning – Part One
There are many processes involved with manufacturing, it is hard to understand them all. Material Requirements Planning (MRP) is a planning process based on the availability and flow of all materials involved in the manufacturing process, from start to finish. It consists of three primary steps: taking inventory of the materials and components on hand, identifying which additional ones are needed and then scheduling their production or purchase. This is the first blog in a three-part series to help readers get a better understanding of MRP.
MRP can use computerized production and inventory management to focus on what materials are needed, how much is needed, and date they need to be sourced during the production process. The overall goal of MRP is to have the minimum inventory level possible, with the lowest carry costs.
The main inputs of an MRP system are:
- Master Production Schedule: Includes details of materials needed for production, what amount, when it is needed.
- Bill of Materials (BOM): Detailed inventory of all needed items to create the product and includes part number, description, quantity per assembly, next higher assembly, lead times, and quantity per end item
- Inventory Records: Shows status of all raw materials and all completed products in inventory or already ordered.
The main outputs of an MRP system are:
- Primary Reports:
- Planned order schedules
- Order releases
- Changes to planned orders
- Secondary Reports
- Performance control reports
- Planning reports
- Exception reports
The most significant advantage of MRP is that it enables your company to eliminate waste and minimize inventory and carrying costs by ordering and using resources only as needed. In the next blog article, we will better understand the advantages and challenges MRP can bring to a business.