Material Requirement Planning Overview
Material Requirement Planning (MRP) is a production planning and inventory control system used to manage manufacturing processes. It is used to plan requirements for production, inventory, and purchasing for companies that manufacture discrete products. The system is also used for planning and scheduling customer orders, ensuring that materials, components, and labor are captured in one system.
MRP is primarily used to maximize efficiency by managing the supply chain, considering material inventory, and the parties involved in the manufacturing and distribution process. It gathers information from the forecast, inventory databases, and past customer orders to create a timeline and plan of action for the manufacturing process. Utilizing this approach, manufacturers can avoid costly errors, production delays, and potential stockouts of materials and products.
MRP takes into account the number of orders for each material, the frequency of orders, the lead-time for each material, and the quantity of each material that is needed for the entire production process. All of this information is taken into account when creating a production plan, which is a comprehensive view of all the materials needed to make products and services as well as the dates they need to be available to meet customer demand.
The output of an MRP system is a detailed report of the materials and components needed to manufacture each product and the expected cost of those materials. This report helps guide the decisions of departments such as purchasing and inventory control to secure the most cost-effective suppliers and materials.
In addition to planning production, MRP can also be used to plan material inventory levels, taking into account capacity and availability of materials, upcoming changes in customer demand, and forecasts of upcoming production needs. It can be used to create a safety stock of materials in anticipation of changes in customer demand. This safety stock can be managed by accurate optimization of requirements of material, resulting in better visibility and control of materials costs.
There are numerous benefits associated with using an MRP system for production. One of the primary benefits is that MRP brings together all of the necessary functions of a company in a single system. This integration results in increased efficiency and better tracking of the production process. Additionally, it can reduce the amount of manual effort and paperwork involved in production, increasing accuracy and minimizing the potential for errors. With an MRP system, companies can also accurately forecast inventory levels and anticipate changes in customer demand, allowing them to better manage their resources.
Ultimately, MRP is a system that enables companies to efficiently manage the production process, including inventory, costs, customer orders, and other variables. By taking into account the current state of production and applying it to the future needs of customers, MRP helps companies become more efficient and cost-effective.
