The purpose of this blog is to explains the benefits Material Resource Planning (MRP).
Definition of Material Resource Planning is production planning, scheduling, and inventory control system used to manage manufacturing processes. Most MRP systems are software-based, but it is possible to conduct MRP by hand as well.
An MRP system is intended to simultaneously meet three objectives:
- Ensure materials are available for production and products are available for delivery to customers.
- Maintain the lowest possible material and product levels in store
- Plan manufacturing activities, delivery schedules and purchasing activities.
Material Resource Planning (MRP) was developed back in 1964, as a response to the Toyota Manufacturing Program, in which Black & Decker best known for their power tools built the first computerised MRP system the same year, according to several sources.
In 1983, an extension to MRP called MRP II, broadened the planning process to include other resources in the company, such as financials, sales and operations, among many others. In 1990, the Gartner Group first used the abbreviation ERP to include the capabilities of MRP & MRP II. ERP evolved into a larger and centralised system across multi-sites and multi-departments beyond manufacturing. As technology has become more accessible, smaller businesses can now benefit from a ERP system with material resource planning.
Without a modern ERP system, any MRP Controller would tell you how difficult it is to budget the stock value, maintain it, optimise the stock levels to over stock, work with the production floor to make sure the specification of the stock is correct, forecast the trends in product usage to record correct turnover, and build a strong relationship with suppliers to agree to the best price possible.
The MRP Controller is the one who handles the relationship between the customer, product demand, production inventory and others and make sure that the relationship is balance between them.
Any modern ERP system should have the following key features:
- A planner dashboard screen needs shows you exactly what needs to be purchased and/or produced. From this one centralised location, all supply and demand can be viewed and production and purchase orders can be created directly from one screen.
- Shows the planner recommendations to defer, expedite, and delete supply items. Exception messages also identify late orders as well as displays any transfers that are available from another warehouse or site.
- Can be scheduled to run anytime, day or night. All existing planned orders for all items are wiped out. MRP starts all over, calculating gross and net requirements and then replans what materials are required to either be produced or purchased.
- Forecast maintenance allows the user to enter sales forecasts. These forecasts can be dependent and consumed by sales orders or can be independent. Forecasts can be input as a one-time forecast, weekly, monthly, or yearly.
- MRP plans requirements from every single demand; it does not compile requirements for a period of time. The system allows for flexibility by allowing user defined time buckets.
- Controls whether or not MRP will plan requirements by site or a combination of sites.
In short, a complete manufacturing automation system manage sales, ordering, inventory, warehousing, production, shipping, fulfillment, and accounting from a single, integrated solution.