MRP focuses on two concerns.
The technical world is full of acronyms, and in many case they are misunderstood by many that are not dealing with them every day. Today it is MRP or “material requirements planning” that we are referring to. Although it is an approach and term that the has been around for decades there continues to be improvements in the outcomes MRP capabilities provide.
Customers demand goods to be available when they want them, and getting that done can be a complex task. However, it is a fact that when it comes to production details, if you can measure it then you can improve it. That is the fundamental principle of efficiency and a driver for profitability.
MRP focuses on tracking two universal concerns of business — customers’ needs and the resources available to satisfy those needs. Although MRP was developed and is primarily required for manufacturing operations it can be valuable asset for most business models operating in highly competitive environments. It is an investment in operations management that provides ROI many times overs.
MRP has 3 objectives
- Ensure materials are available for production and products are available for delivery.
- Maintain the lowest possible material and product levels and meet expected demand.
- Plan and streamline production activities, delivery schedules and automate activities.
In fact, MRP follows customer demands from quote to shipment, informs the production manager as to when the materials will be available and how long the manufacturing operations will take. This allows the production manager to schedule production tasks and the activities that follow in just a few of clicks. It also provides an overall view of what needs to happen and when to meet production output goals.
The very essence of MRP System is to help all team members save time and work efficiently in one environment.
- Accurately schedules and assigns tasks.
- Provides real-time visibility into the manufacturing process.
- Automates document exporting: quotations, purchase orders, pick lists, waybills, shipments, invoices etc.
- Prevents human error and helps keeps a focus on priorities.
- Ensures on time availability of the right materials required for production.
- Reduces excess inventory (typically inventory reduced by 14% – 20%).
- Facilitates timely delivery of manufactured goods to your customers (typical increase 17% – 20%).
- Efficient use of manufacturing resources (typical downtime reduced 15% – 19%).
- Reduces capital costs due to optimized inventory levels and efficient use of production resources.
- Provides accurate, real-time business data for informed decision making.
As a rule, getting the most out of your MRP is like your accounting system and requires accurate data input. MRP value increases when your product is quite complex, has a long production cycle, and your CAD/CAM software can generate product specifications to your MRP program.
MRP can be implemented as a standalone software product but provides additional value when included in an integrated software suite, (ERP). Like any business information capability, integration across your entire operation is paramount to grow your business.